AAH #754 - 2nd Half Car Sales Forecasts Don't Look That Good

TOPIC: 2nd Half Forecast PANEL: Jeff Schuster, 5 Corners Holdings; Gary Vasilash, shinymetalboxes.net; John McElroy, Autoline.tv

Episode Transcript

Speaker 1 (00:00):
This is Auto Line after Hours, unscripted, uncensored, unapproved. Hey,
thanks for joining us on Auto Line after Hours. I'm
gonna be talking about all kinds of things going on
in the industry, right Gary.

Speaker 2 (00:16):
Indeed, we are, I.

Speaker 1 (00:16):
Mean, that's what we always do. We may as well
keep on doing try to what we do we do.

Speaker 2 (00:21):
Yes, absolutely, So.

Speaker 1 (00:22):
We've got to let everybody know we've got Jeff Schuster
back with us today.

Speaker 2 (00:25):
Jeff, we're glad to have you.

Speaker 3 (00:26):
Been great to be back with you. Guys, looking forward
to it.

Speaker 1 (00:29):
Jeff, you've got your own gig going now too, right.

Speaker 3 (00:32):
Yeah, I do so. I'm kind of doing some of
my own consulting also, just trying to figure out what
part of this industry I want to be part of next.
So in doing that, clearly, looking at trends, looking at
what's driving the automotive industry is core to my heart
and I'll always have a piece of that.

Speaker 2 (00:54):
So Okay, So you talk about like you're looking to
see what area, which means that you have to look
at all areas right now. How do you characterize what's
going on.

Speaker 3 (01:09):
Right now right now? Chaos, I guess is a is
a good way to characterize it. I amen to that, Yeah,
and it's it's not new. We've been in chaos for
quite a few years. It's different chaos, and I think
it really is challenging for anyone in the industry right

(01:30):
now to make a decision tactically and strategically just to
try to figure out what am I doing tomorrow, let
alone what am I going to do five years from
now and plan a business. And I think that's that's
really the area that I feel like I want to
gravitate toward and work toward helping helping make better decisions
in the in the chaotic market we're in right now.

Speaker 1 (01:52):
You know, we've we've been saying that every decade.

Speaker 2 (01:54):
We go, oh my gosh, this is so crazy the competition.

Speaker 1 (01:57):
But I would say the difference right now, though, I
believe the chaos is at a level we've never seen before.
And if you look at second quarter earnings, boy does
that tell the story. Everybody's profits are down sharply or
like you know, we saw a Ford report a loss, right,
I mean, which is shocking. It's not shocking that Stalantis

(02:17):
posted a loss because of the issues they're going through.
That's how I'm measuring the chaos right now is profits
are evaporating in front of our eyes.

Speaker 2 (02:27):
So I mean, okay, to what extent though, was much
of the chaos before predicated more on competition in the industry,
predicated on consumers shifting their focus ways, say, from sedan's
to sport utes, things that were just sort of organic

(02:49):
to the argost dynamics, right right, versus something that is
chaotic because it's imposed from top top down in terms
of tariff policy.

Speaker 3 (02:58):
Yeah, and I think I think you're right, John, I
agree with you. We're at a level that's just unprecedented,
and it's probably Earie. When I think about that question,
I think it's because it's coming at so many different angles.
Your top. It's coming from top obviously with policy, regulatory environment,
changes to policy associated with that tariffs of course, so

(03:22):
that creates a chaotic environment and a decision tree that
so far the industry is just saying, we're going to
wait and I'll get back to that. I'm sure we'll
talk more about that. But I think when you look
at all these different issues, so it's the consumer, it's
the policy, it's the technology disruption that you know is

(03:45):
going still going on in the background. That I think
the industry is having a difficult time really working around
all of these variables, which you know, it almost looks
like a tornado right now, I think. Yeah, so John.

Speaker 2 (04:05):
Jeff mentioned people having a difficult time making technology decisions
because of what's going on now. For the last several years,
the technology decisions seem to me to have been, Okay,
do we make one thousand evs or do we make
ten thousand EV's or one hundred thousand evs or by
twenty thirty to all EV's, And it seems to have

(04:26):
shifted to, well, let's ratchet that number down. But do
we then go back to the guys who we've put
in that back room who are developing ice engines and maybe,
you know, give them a lamp so they can see what.

Speaker 3 (04:41):
Work they're doing.

Speaker 1 (04:42):
Yeah. Look, I mean obviously automakers are postponing or eliminating
EV programs. That's the market reality that we see right now. Yes,
they are pivoting back to V eight power in some
cases bigger SUVs, full sized pickups and the like. But
guess but they already know how to make that stuff.
They've already made all the investment in that and with

(05:04):
the Trump administration taking away any penalties for missing GHG
emissions or fuel economy, well, you don't even really have
to improve those trucks either. I think the industry is
going to take this as a whopping big opportunity to
cut billions of dollars in new product development and put
that money to the bottom lines or help offset the

(05:25):
costs of the tariffs and things like that. But I
don't see Big R and D going into ic power trains.
They're there, they work, the customer seems to be happy
with them, at least in the United States. So the
rest of the world know that. You know, there's still
the emissions, there's still the efficiency requirements, there's still the

(05:48):
ZEV credits that you have to buy that's going away
in the US. So I think this is of all
the chaos, this is actually kind of a windfall for
the industry that part of the ledger, you know.

Speaker 3 (06:00):
I agree, I think it is in the short term.
I think the potential problem or risk is we all know,
and you know you can if you're a if you're
a manufacturer supplier, that competitive pressure that you're always faced
with the whatever the issue of the day is that
that COVID the financial crisis, we saw innovation come out

(06:25):
of that because you had to. If you don't have to,
I worry a little bit about the competitive environment in
the US. If everyone is allowed to do basically what
they want, they don't have to push any technology or
push improvements to the whatever the IC or or development

(06:47):
into evs or In that case, you're probably extending life
cycles a little bit longer unless consumers push back and
say no, I want my vehicle needs to be new.
That creates I think a different environment.

Speaker 1 (07:02):
Sure, because look what's managements going to be under pressure
from They're going to be under pressure from their boards
to maximize private profits and drive shareholder value. And then
it becomes an easy decision. If I put all this
money into EV's I'm not going to get my big
bill bonus.

Speaker 2 (07:17):
I'm not.

Speaker 1 (07:17):
I'm not going to do that now. But I do
think they have the enough smarts to know that EV
is the future. It may be farther down the road
line than we thought, and so you better not just
give up on it, because there's probably going to be
some period in the twenty thirties where you're going to
get your head cut off because you just were not competitive.

Speaker 2 (07:38):
Okay, So who's running any one of these companies that
worries about what's going on in twenty thirty five. I
mean it's just like, look there, does they're measured on
what they're doing right now?

Speaker 1 (07:49):
No? No, No, you're absolutely right. But Bill Ford worries
about what's going to be going on that, I would
say the kids, because it's it's a family operation. Would
say same thing with Akiyo Toyota. He's going to worry about,
you know, future generations and.

Speaker 3 (08:05):
It's a legacy.

Speaker 1 (08:06):
It's a legacy exactly. So. But the others are just
guns for hire.

Speaker 2 (08:12):
Right So it seems to me that okay, if if
your bonus is predicated on what you did this quarter
or yeah, And I mean it's just like so you're saying, okay,
they don't need to spend all of this R and
D money. Okay, So do they take that R and
D money and do something else with it, or do
they take the R and D money and say, we

(08:34):
don't need to spend it, We're going to keep it,
or we'll buy back stock, or we'll do something that
will have a financial impact on right now sure versus
what's going to happen five years from now.

Speaker 1 (08:46):
That's the incentive for them. There's the carrot, you know,
maximize shareholder value, and they're going to be under enormous
pressure to do that, except that, as I've said, there's
certain family entities, the Chung family at Hyundai for example,
the what's the family that owns BMW. I'm blanket out

(09:07):
on the name right now.

Speaker 3 (09:09):
Quant.

Speaker 1 (09:10):
Yeah, the Quant family. I mean, they they're not gonna
want to see BMW go away.

Speaker 2 (09:16):
Right, Okay, But but see I would make the argument that, okay,
if you look at Hyundai or you look at BMW,
that they are still facing the competitive pressures that we
talked about before, because basically they're competing around the world,
and around the world still has things like emissions regulations, right,

(09:37):
and so they're needed.

Speaker 3 (09:41):
I think that's a big challenge for those type of
companies because they're pushing hard into evs and if that's
not what this market wants, they're going to So now
you have to you have to serve multiple markets, and
I think you're spreading yourself out. And yeah, I totally agree.
We're not going to see development R and D into
into ice. It's just it it's going to be what

(10:03):
it is, and you can do some tweaks here or there,
but that's that's just going to run good enough. It's
good enough. Could it be if could you do more?
Of course, but it's not worth it. It's diminishing returns,
I think at this point.

Speaker 1 (10:15):
Look, we've been working on the internal combustion engine for
what one hundred and twenty years or something like that.
It's about at its maximum. You know. The thing I
like to point out is internal combustion engine actually very inefficient.
And the point I make is Formula one engines, which
cost ten million dollars a piece and they throw every

(10:38):
tech trick in the book at them, are fifty thermodynamically
efficient i e. They waste half the energy in a
gallon of gasoline. These are the bleeding edge and cost
is no object kind of engine, right, And that shows
you you're never going to get better than that, and
so why invest more to get you know, e C

(10:59):
tenC fractions of an mpg? Now when there were MPG
fines for missing it? Sure, oh yeah yeah, Now it's
worth fraction money to avoid the cost of the fine.

Speaker 2 (11:10):
Okay, So let's say there's a person who is going
to be going into a buy a new vehicle, and
they can buy a Hyundai that has been doing lots
of development on ice engines as well as on fuel
cells and hybrids and plug in hybrids and evs. I
mean they've covered the table with bets yep, and their

(11:33):
MPGs are ten miles per gallon greater than something you
can buy from a FOURD or a GM. Isn't Hyundai
in a better position to get the sale?

Speaker 1 (11:45):
Absolutely sure? I mean there's going to be a lot
of the car buying public who's going to do their research,
look at the fuel economy ratings and go boom, this
is the one for me. If it's made by Hundais,
who cares? That's what I want?

Speaker 2 (12:00):
So, Jeff, I mean what you're suggesting earlier that it's
going to be more of a regional market rather than
a global market. Now is it? Is it three regions
or just two regions? With the two regions, I would
say you take the EU and you combine it with

(12:20):
China and say, okay, they're sort of looking for the
same things. And in the third region being the US
or the second region.

Speaker 3 (12:28):
Second, Yeah, and obviously then you've got more emerging markets,
and not everyone's competing in those, you know, parts of
South America, Southeast Asia. Some of those markets are going
to be different obviously in Africa, of course, so you
have nuances in each of those markets. India is a
unique market as well, so there are multiple markets. But

(12:48):
I think, yeah, when you're looking at your mainstream markets
that drive most of the volume, yeah, you're down to US,
maybe even more isolated than calling at North America market now,
and then you've got the other EU in China. I
think in Japan, Korea you could maybe a little different

(13:10):
as far as how it's being developed, but similar patterns there.
So in terms of the regulatory environment, So yeah, I
think it really isolates the US in the current environment.
And yet it is also for a consumer that wants
whatever they want and doesn't want to be told what
to drive or where it has to go. I think

(13:32):
it's potentially good they like that, but I think again
that's it's a more of a short term benefit and
maybe a short term benefit to the manufacturers on the
regulatory side. Obviously, the tariff side is still playing out,
and I think I throw some caution on not to

(13:53):
pivot on you guys yet, but throw some caution on
sales to date look better than they probably will at
the end of the year.

Speaker 1 (14:01):
Yeah, no, I totally agree. Let's talk about that because
you've done a lot of forecasting work. I read I
haven't gone in and dug into all the numbers. That
the Star last month was sixteen point nine million, Is
that right? Yeah?

Speaker 3 (14:17):
Six high sixteens. Yeah, I think I had. It floored me,
absolutely floored me.

Speaker 1 (14:22):
You know, I thought by this time the automakers would
have run out of all the pre tariff cars and
that they would have had to raise prices or at
least remove incentives on even stuff built in the US.
I was sure that sales were going to start dropping
in July. In fact, they hit the highest SAR rate
that we've seen in a lot quite a while. Yeah, yeah,

(14:43):
what's going on that?

Speaker 3 (14:44):
July was read quite an interesting month. June was definitely soft.
So I think you've got to if you look at
the trend between the two, you've you've got a little
play there. So maybe there were some reasons why things
pushed into July. But then I think if you look
at consumers are paying attention to headlines and when they
are expecting tariffs to impact pricing and potentially availability or

(15:11):
choice because certain vehicles are going to possibly rise higher
than others. I think it's more of us spreading it
out than what general consumer probably thinks. But that notion
of rising price is coming, and if it hasn't yet,
let's get it. If I need something in the near future,
let's buy now. And I really think that drove July.
It obviously had the you know, we saw EV's through

(15:34):
the roof because of the credit disappearing next month. So
if you pull all of that together, it was a
fantastic month. But I think it comes with some caution
on did we buy from future months?

Speaker 1 (15:48):
That's how I feel. But you know, like I said,
I was pleasantly surprised at the July numbers, but I
think it's pull forward.

Speaker 3 (15:56):
Saying I think it's pull forward.

Speaker 2 (15:58):
So this is Aaron Keating of Automotive wrote this. The
coxs onnotive team still expects consumers to see retail prices
climb by four to eight percent by year end, with
price increases accelerating as twenty twenty six model year vehicles
hit the market. In other words, the sticker prices will
go up for those higher than they probably would have
where they're not tariffs, right, okay, John, she wants to write,

(16:18):
we expect the average price of a new vehicle in
the US to break the fifty thousand dollars barrier in
twenty twenty five as automakers begin to pass along the
cost of tariffs and the market sells a larger share
of higher end vehicles. Our forecast for new vehicle sales
remains below the sixteen million new unit mark for the year,
a decline compared to twenty four as higher prices continue

(16:38):
to move the auto market in a direction that favors
high net worth households with excellent credit, leaving many on
the outside looking in. So what happens to the auto
market in the United States when it's above fifty and
lots of people can't afford.

Speaker 3 (16:54):
That affordability has been an issue, it will continue. That's
a major driver obviously demand and volume. Ultimately where volume
ends up and I think you again have the risk
of displacing a lot of would be new car buyers
when prices continue to edge up. Because of this, we've
already seen the pullback and incentives maybe not as great

(17:16):
as I would have expected. At the initial announcement, I
guess of terrorists. The delays, the some of the deals
being made is impacting things favorably, so they're not as
dire as they were looking like they might be. But
I think at the end of the day, vehicle manufacturers
cannot continue to absorb this cost. We've seen what it's been,

(17:38):
what it's done so far.

Speaker 1 (17:39):
It's really their bottom line at the bottom lines, and
it's only going to get worse.

Speaker 3 (17:43):
Well, the in the warnings that they've put out in
their in their earnings calls, if that doesn't signal something
that it's going to get much worse unless something changes,
So they are going to pass They can't continue to
absorb it. They're going to have to pass.

Speaker 1 (17:58):
It on, right, because you know, I thought that they
would share the pain with their customers. They haven't, so
they've eaten most of the pain. And the pain's really
going to the shareholders because when all these earnings came out,
boom stock prices went down, right, and they're going to
hear bloody hell from shareholders and investor groups, which is
going to put pressure on their board. And the board's

(18:20):
going to say, look, you gotta raise prices.

Speaker 3 (18:24):
And then that has spillover effect that affects production levels.
It affects then those those workers at those plants that
potentially are going to be shut down temporarily. So yeah,
this will ripple through the industry, I think. So there's
definitely some concern in my mind when I look at
the rest of the year as we as we just

(18:44):
try to navigate all these these variables that are out there.

Speaker 2 (18:49):
So you were mentioning that EV sales, I mean people
are like, oh, we got to if you want one,
you get one now. You don't wait until after the
seventy five undred dollars tax incentive goes off of them.
What do you think is going to happen to that
segment of the market in the United States?

Speaker 3 (19:08):
I think the second half is well call it, call
it the fourth quarter. So after September, I think it's
going to be quite challenging because you've not only are
you are you going to have that issue of the
credit disappearing for future buyers, but any again, anyone that
was considering or even had a thought of an EV,
they're rushing out and buying it. So you've got a

(19:30):
massive pull forward. So there's going to be a vacuum.
I think for EV sales in the fourth quarter that
are going to be quite challenging. So it's and then
come back to earth because you know, we saw over
the course of the last eighteen months or even longer,
we saw the kind of the weaning of the consumer
with with EV growth not necessarily disappearing, but the growth

(19:56):
that we have been experiencing in the US has disappeared,
and then recently it just has recovered. And that that's
all because primarily because of the credit pull forward. So
once that's gone, the drive goes away. So ultimately, you know,
that's something we've in the industry. I've talked about for

(20:17):
a long time. The evs are going to eventually have
to stand on their own without a credit. So does
this pull that notion forward a little bit maybe and
create an opportunity for an automaker or or not consumers,
an automaker and product developers to figure that that formula out.

Speaker 1 (20:38):
Yeah, I think it's going to depend on the segment
to a degree, in the sense that I think luxury
evs will probably not be too impacted by the credit
going away, because either the vehicle was too expensive itself
and didn't qualify or the person buying it has too
high of an income to be able to qualify exactly.

(20:59):
And so I don't see those sales being affected one iota.
The real thing is going to be, what the hell
is Ford going to announce on Monday with the skunk
Works project. When is GM going to bring well, we know,
next to your GMS bringing back the bolt. Were they
going to price that, you know, if they price it
at twenty eight thousand dollars or something like that, I'm

(21:19):
making it up. I don't know where they're going to
price it.

Speaker 2 (21:21):
Okay, But but before we go to I mean, I'm
going to get back to back these more expensive vehicles
that you were assuming are going to be just fine. Okay.
So Lucid came out with its numbers and it had
a net loss of senner hundred ninety million dollars. Okay,
and it's lowered, it's it's production outlock, and this I
think is the biggest red flag you can possibly have.

(21:41):
So this is from Mark winterhoff In term CEO at Lucid.
In Q one, we mentioned our ongoing relationship discussions to
develop new revenue streams for our EV technology and beyond,
meaning we got to figure out something else to do
with this technology. You want somebody else to buy it,
you know, the expensive cars. He goes on to say,

(22:02):
the Robotaxi partnership we announced with Uber and neuro is
a perfect example aligned with that strategy. Now here's the big,
big red flag. We also continue to double down on
increasing our brand awareness, introducing Timothay Chalomey, an award winning
actor and cultural icon, as our first global brand ambassador.

(22:26):
So they're rolling out Bob Dylan Jr. And saying he's
going to be the brand ambassador for Lucid and this
is going to save us.

Speaker 1 (22:33):
Right.

Speaker 2 (22:34):
Okay, So Lucid at this point, high end cars, right,
Lucid Gravity, which would be lower but still at the
higher end of the lower scale or wherever we want
to look at that. Then Rivian net loss of one
point one billion, and they're all happy because it's an
improvement over its one point five billion loss last year.

(22:54):
At this time, how can these companies afford to lose
this money?

Speaker 1 (22:58):
Well they can't, number one, But I would say you're
cherry picking the data there. So I would say, look
at Cadillac EV sales. They're strong, they're going pretty good.
I think they'll be largely unaffected by the seventy five
hundred dollars.

Speaker 3 (23:15):
Going and I think Lucid and Rivian have other issues
going on. They're trying to gain awareness, still build a brand.
That's a tough road in itself, it has been.

Speaker 1 (23:27):
But remember about this time next year, Rivian will have
the R two out. Yes, much cheaper vehicle. It's still
not cheap. I'm just saying cheaper and cheaper than what
they've gotten than what they've got, Smaller size, more garageable,
blah blah blah kind of a thing. I bet their
numbers start to look a whole lot better when that.

Speaker 2 (23:46):
Okay, but didn't we just sort of posit that EV
sales are going to go into the tank. Therefore, where's
the demand for these?

Speaker 1 (23:55):
You know? What I've said is I think it's going
to be segmented to pans.

Speaker 3 (23:59):
I think there are two, well two, maybe more than
two markets, But I think the luxury I would agree John,
the luxury EV market is somewhat isolated from that now.
It may not be growing substantially as a whole, but
it probably holds its own certainly more than the mainstream market.
The under fifty thousand dollars EV and for those that

(24:22):
are launching and trying to find an affordable EV without
that credit, I think again it's going to be challenging.
So it'll be interesting to see what forward and ultimately
then what GM does with the bolt.

Speaker 1 (24:32):
Right, So.

Speaker 3 (24:35):
You guys are still EV positive, Cautiously, I think it's
going to be a really challenging market, tough. Some will
end up being okay, and I think those that push
into those high networth individuals going after that market, they're

(24:58):
probably going to be okay, but they still have to
convince that buyer to buy an EV. So I think
there's still our challenges.

Speaker 2 (25:06):
Okay, But we've also heard that Mercedes high end basically saying,
you know about those evs, we still got ice in
our plans until twenty thirty five.

Speaker 1 (25:17):
Mercedes has done a pretty poor job with its evs.
They have not contrasts their performance and evs to BMW's.
BMW's doing a great job. They're just about to launch
their new class of vehicles this year.

Speaker 2 (25:34):
Which is a portfolio approach. They've gotten across many powertrain options.

Speaker 1 (25:40):
Right, correct, Right, But yeah, Mercedes has not done a
good job. Audi seems to be stumbling right now. Portia
got out of the box really strong, but it's only
had the tye can and everybody who was going to
buy a tyke in has essentially bought one, and so
you need more product out there are fresh product, but

(26:01):
you got to be careful too, because the pies not growing.
You know, we had Michael Robinant here last week and
he made the point, Look, the pie is this big,
and how all these new EV models are coming in,
so you're just going to slice the prel center cinner.

Speaker 3 (26:15):
Yeah, and that's something that we've you know, we've looked
at for a while now. When you look at the
EV market, it's it's going to have to grow like
this to accommodate all these new players and all the
push into that market and getting looking at average volume
per per model that has to go to hout.

Speaker 1 (26:35):
So I would say I'm pessimistic on EV's short term,
but I still believe the future is EV.

Speaker 2 (26:41):
So, so, Jeff, is the is the EV pie going
to stay essentially the same size or is it going
to grow? And if it grows, how is this growth
going to be comparable to the growth that we're likely
to see in hybrids? And plugins and straight ice.

Speaker 3 (27:02):
You mentioned a portfolio approach, and I think that's probably
the smart decision right now is and yeah, again you're
kind of spreading things. You're spreading inventory thin as far
as having a lot of options available, but that's I
think the best approach for this type of an environment.
So Eve, in terms of PIE, if we talk specifically

(27:24):
about the US, I think the near term and call
that two three, four years, EV sales probably take a hit.
I think that's pretty clear from where maybe not from
where they are today, but from where they were projected.
That's all come back. The road to fifty percent market

(27:46):
share has been pushed out as well, So the near
term what's happening right now with the regulatory environment here,
that's probably not forever, but I think what it's done
is pushed everything out as far as adoption. So the
growth I think will still come to the EV market.
It may look different than it was going to, and

(28:09):
it's going to be a lot slower than it was
going to. But I kind of share what you said, John,
I think ultimately that's still where things go, unless out
of nowhere comes a technology that we're not talking about
right now exactly.

Speaker 2 (28:22):
You mean a technology in terms of propulsion systems.

Speaker 1 (28:25):
Or yeah, right, No, I know, and I don't know
much about it, and I'm probably not free to talk
about it. But I know of a radically new kind
of engine that would be brilliant as a range extender,
very small, very lightweight, very very efficient. So to propel

(28:47):
a car, probably not, but to run a generator bingo,
this thing could take a lot of costs out of
the revs O.

Speaker 2 (28:56):
Hey, John, I'm looking at the Cadillac sales numbers for
the first half, and it seems to me that the
Escalade alone sells all yeah, no, and including the Escalade IQ. Yeah,
they're electric version, of course.

Speaker 3 (29:11):
No.

Speaker 1 (29:11):
But what you have to look at is the sales
growth at Cadillac with EVS, and it's really impressive. And
I want to say they ended up at the end
of June with like thirty percent of their sales EVSE.

Speaker 2 (29:25):
So I have to adjust my glasses here, so I
can think, sure, those small numbers. So so the Cadillac
Lyric first half down twenty eight correct, But that includes
the the introduction of the optic, and I think if
you add the two sales together, you're going to see

(29:48):
that it was way better than Lyric did before. I
think cannibalize Lyric, you just add more product than Yeah,
you're naturally going to have greater numbers.

Speaker 1 (29:57):
The Optic is awfully compelling. The package at the price, Man,
that's a price point is a sweet spot I think
in the market. It visually and.

Speaker 3 (30:08):
What it offers I think is very competitive. So yeah,
I would agree. Challenge is still I think, you know,
playing which shoulder do you want to sit on? I
think makes sense. But when we look at it, I
do I expect.

Speaker 2 (30:26):
To see growth with Cadillac, Okay, but if we look
at if we look at overall market in terms of
purchasers of evs, Okay, So now I mean we still
haven't busted ten percent, right right, okay? And this year
it was looking like maybe we get to nine percent
this year, probably not going to get to nine percent,

(30:48):
not going to get to nine percent, Okay. So then
the question becomes of Okay, if we hit eight percent
this year, what will next year be? Will it be
ten percent or will it be nine percent? And if
it's still ten percent or lower, and we've discribed that
the pie is being all sliced up, where does any

(31:10):
get any scale, and where does anybody make any money?

Speaker 1 (31:13):
Well, this is why I like GM's Ultium platform. You know,
where you have one platform essentially, you know, uh, one
set of electric motors, inverters, chargers, everything. You just changed
the top hat. Maybe you change the kind of modules
or amount of modules, the batteries that you got, but
everything else is pretty much the same. So you get

(31:35):
the scale and the really expensive stuff.

Speaker 3 (31:38):
Yeah, absolutely, you get scale by spreading that across the
entire EV lineup instead of you know, a traditional ice
platform might have three four vehicles on it. They're more
obviously they go more than that, but on average. But
if you can do that EV platform and spread that

(31:58):
across your entire EV lineup, and if you're again, if
you're planning it accordingly, planning it correctly. Not everyone does
that when they're developing vehicles. But if you can share
as much as you can that that doesn't matter to
a difference between a vehicle or a brand, it can
it can go a long way to help with that

(32:19):
efficiency and scale. It's not easy to do, that's the problem, right,
And if you expand that a bit to certainly E
revs they use the same batteries maybe smaller, but same batteries,
same motors, same inverters, same charge or same everything. So
that's why I'm intrigued by the extended range TV segment.

Speaker 2 (32:44):
Okay, So if I'm if I'm General Motors, am I
going to make more money off of a Escalade, Yukon,
Silverado combo versus fill in the blank ultium?

Speaker 3 (32:56):
Yeah, so of course you are.

Speaker 2 (32:58):
So if I'm if I'm running General Motors, what do
I do?

Speaker 3 (33:01):
Which is the challenge when we bring that back to
shareholder value and what do you do in the short
term with your decision making. That's that's a tough conversation
to have with your board and your management team on
well we need to stay the course and keep pushing
into this. When I mean your Yukons and Escalades that

(33:24):
they can go on autopilot essentially, I mean, of course
you've got to put development into it, but that still
needs to pay the bill.

Speaker 1 (33:32):
We make a beer grill, but you know other tail lights.
GM is kind of being hurt by this because they
went all in. Because they went all in, they went
all in, and now they've got this full lineup of
evs that are tooled.

Speaker 3 (33:48):
You got to go through with the factoring. Yeah, conversion talked.

Speaker 1 (33:52):
About you know, they didn't go down that route at
least not at the speed GM did. And now GM's
got to take all these products into production and go
through their life cycle. And Ford is sitting back and saying,
we'll step into the market in about two years when
everything should be better, and that's going to be an

(34:13):
advantage for them.

Speaker 2 (34:15):
But will things be better in two years? I just
I don't understand how the numbers play out here.

Speaker 1 (34:20):
Here's how because in two years you're going to see
second gen platforms that take a lot of cost out.
Everybody's flipping over to LFP batteries right, which are twenty
to thirty percent cheaper right off the bat there, and
they keep learning and learning and learning bit by bit,
nibble by nibble, how to make these things more cheaper

(34:41):
and efficient. So in two years you're going to see
a better cost of MAB.

Speaker 3 (34:48):
And I think if we kind of take that notion
and talk about that risk I mentioned earlier about the
environment in the US of not driving innovation, but remove
being that text incentive the credit, maybe that does potentially
create an opportunity to drive innovation, to push How do

(35:10):
we take cost out of these How do we improve
the efficiency of the development of manufacturing of an evy
to compete in a market when I don't have that credit.
So not everyone's going to take that challenge on because
there's cost associated with that. But I think there were
those that are able to do that and are successful.

(35:30):
That'll set them up I think for the long term.

Speaker 1 (35:33):
I agree, and they got to pick their targets. We're
not going to do all these vehicles. We're going to
do we think we can hit success here in this segment,
in that segment, and then to your point, let's put
all our resources into taking cost out and then you.

Speaker 3 (35:46):
Can apply that to the rest of the lineup once
you've figured it out. Right.

Speaker 1 (35:50):
There was odd buick that came out this week in China.
Did you guys see that? I did see the electra orbit, Shohn,
I got a picture of that.

Speaker 3 (36:00):
Really interesting.

Speaker 1 (36:01):
Oh you don't have the electric orbit? That was electric,
wasn't it?

Speaker 3 (36:05):
Yeah?

Speaker 1 (36:05):
Yeah, so to me, and I'm sorry, we should have
had a picture to put up. You guys can all
do a search for it. That is a compelling product.

Speaker 2 (36:15):
I was not doubt Okay styling, Okay, you saw the styling.
Would you care what was under the hood or wherever
it's located.

Speaker 1 (36:26):
No?

Speaker 2 (36:26):
No, right, So so again it's the design was.

Speaker 1 (36:31):
Was very compelling. Yes, But if you were Buick and
said yes, and the only way you can buy this
design is to get an electric version, people are going
to say, damn, I want an electric.

Speaker 3 (36:41):
Take an electric vehicle now, okay.

Speaker 2 (36:43):
And let's say that you're you're running Buick and you say,
the only way you can get this vehicle is to
buy one, and we will put whatever powertrain you want
in this vehicle.

Speaker 1 (36:54):
What do you tell more of You're going to sell
more ice or hybrid, probably because hybrid.

Speaker 2 (37:00):
So this is the thing that you know, you guys
are both saying, Okay, in two years, we'll take the
money cost out blah blah blah blah blah blah, it'll
still be comparable. I mean, this is what they're talking about.
We want ice.

Speaker 1 (37:12):
That would be a good example, Gary. And this goes
back decades. I remember when the Japanese automakers started putting
four speed transmissions automatics in their cars, and I remember
the then head of engineering at Ford saying, you don't
need it. You don't need a forest speed. It's not

(37:34):
going to get you a better acceleration, it's not going
to get you a better fuel economy. Versus the way
that we have paired our three speeds with our big
V eight engines. It would make no sense for us
to go to for speed. We're only going to add cost. Well,
guess what the Japanese were able to sell the advantages
of forest speed. Oh, it's got four speed and the

(37:55):
public money. Yeah, that's what we want. And that's the
danger I see is that if you don't stay current
with ev technology, there's gonna come a point several years
down the road where you're gonna get you're gonna be
caught with your three speed automatic that nobody wants.

Speaker 2 (38:11):
Okay, And to go back to to the last week's
show with Michael Ropinette of S and P Global Mobility
said he is afraid we are going to become a
technology backwater. Correct, Okay, And it seems to me that
what he's saying in that statement is, yeah, you will
have the guys back there in that room. They'll they'll

(38:32):
be they'll be reading up on these new developments current,
They're gonna be staying current. So yeah, we we we
will fall behind.

Speaker 3 (38:40):
We're good.

Speaker 2 (38:40):
We may not talk to them very often. But but
because you know what, we're gonna sell the hell out
of all these other vehicles. And I mean, but they've
they've lost so much money, you know, I mean, so
what General Morters is thinking is gonna it's gonna lose
five billion dollars this year, okay on EVS. On no,
because of the tariffs five oh yeah, five billion. It's

(39:03):
probably another five billion with EVS, but probably you know,
at some point, I gotta start making this money, and
they're not going to make this money and.

Speaker 3 (39:12):
Trying to stop the bleeding somehow, and that comes probably
at the cost of development right there.

Speaker 1 (39:19):
And there are some offsets, like we know for a
fact they're going to save billions not having to buy
ZEV credits, not having to pay fines for missing few
economy targets, being able to throttle back on their capital
investments and on their R and D because you know,
they can build a lot more ice products that are

(39:39):
fully engineered.

Speaker 2 (39:40):
So okay. So so the question then becomes if if
you are well I'm speaking out of like eight size
on it. Okay, So you're Mary Bearro or your Bill
Ford or Jim Farley or you know, I mean, and
and suddenly you're saying, Wow, I can sell these V eights,
this good stuff. How do you tell the market those

(40:03):
EV things are They're fine, They're they're good, But two
different customers, you know what, Okay? But are there a
sufficient number of customers even to address these guys, these
EV people? I mean, isn't it sort of like saying,
you know what, we need more convertibles because you know what,
there's a certain segment of the public that really likes convertibles.

Speaker 3 (40:22):
So I think, I think what we're missing in what
the industry was going through heading up to this pullback
in the rags and in the credits and the push
for EV's, and this goes along with it too. And
this is maybe a risk for that two years and
after two year period, is we were still educating consumers

(40:45):
on EV's, the benefit of EV's putting some of the
concerns at Bay they're still out there as far as
some of those issues, the infrastructure, which is now going
to take longer to get where it needs to get.
So I think there's still a lot of risk and
this pause that we're on is going to again extend things.

(41:08):
We don't ultimately know what that looks like because of this,
because you still have to convince a consumer, and I
think right now those that want an EV probably have
and that yeah, there's some that we're considering, and that's
going to push them off for now. If you then

(41:29):
don't convince them that the infrastructure is there to support
their EV that they just bought when they want to
go on a road trip or just want to charge
somewhere away from their home, I think you have more
challenges in front of you. So I think, yeah, I'm
again going back to pro positive on EV market growth,
but I think the risks are still mounting, and things

(41:52):
that we were talking about and dealing with and said
had to be solved before we saw a market move
heavy into EV that's all still there. And convincing the consumer.
There's been movement in that, and I think those that
are considering EV's those numbers had gone up prior to
this pullback, But you still have to ultimately convince them price,

(42:17):
the performance aspect or just the characteristics of the EV
driving experience, the infrastructure, what do you do about the
battery range, what do you do about the battery life?
All of that, you know, it was still something consumer,
the consumer has to deal with, and we hadn't gotten
far enough, at least in the US to make that happen.

Speaker 2 (42:38):
So I mean, talking about the consumer, Edmunds had some
shocking numbers, I thought, in terms of people who are
going to buy a new vehicle and trading in their
existing vehicle. So the for twenty twenty five, the share
of vehicles purchased with the trade in was forty five
point seven percent. Some almost half people have a t

(43:00):
in they're gonna buy a new car. Right. Share of
trade ins with negative equity twenty six point six percent.
Amount of negative equity on average six thousand, seven hundred
and fifty four dollars.

Speaker 3 (43:16):
It's a bit of a red flag. Oh my god.

Speaker 2 (43:18):
I mean it's just like, so.

Speaker 1 (43:20):
Look, it's not a new problem. No, it's not a
new This has been around for years where people are
upside down in their car loans, i e. They owe
more than the vehicle's worth.

Speaker 2 (43:31):
But if you know, they go back to twenty nineteen
in their numbers and we're setting a record.

Speaker 1 (43:37):
Yeah, I look, I can believe it. And the reason,
of course is car prices are super high, interest rates
are super high.

Speaker 3 (43:45):
Right, and so terms are getting extended.

Speaker 1 (43:47):
Correct, And so somebody that might have had a good
credit score when the the interest rate was three percent
do not have a good credit score when it's at
nine percent. And so if they're buying a new car correct, right.

Speaker 2 (44:02):
Average trade in age in years three point eight.

Speaker 3 (44:08):
Yeah, so that's young.

Speaker 2 (44:10):
Yeah, and we're talking about like, oh, but they're going
to buy evs, Well, how where's the money going to
come from?

Speaker 1 (44:22):
Look, people, they make sacrifices. Not not everybody, but people
who want a new car and are on the edge
of not getting a car loan or at lease, they'll
make sacrifices to get what they want. And you know
the people who are coming in trading cars that they're
upside down on. You know what they do. The dealership

(44:42):
will happily roll that money that they owe into their
new loan. And all they care about is can I
afford that month the monthly payment.

Speaker 3 (44:51):
They don't even look at what happened to get to
that monthly payment, right, right.

Speaker 1 (44:54):
But if the if the dealer says, and I think
we're at seven hundred dollars a month average right now,
if the deal says, hey, look I can make this
work for seven hundred a month. Bingo, I'm in sign
me up. I want a new car, all right.

Speaker 2 (45:07):
I want I want to talk about a fun topic. Now.
What So there was a motorist on July twenty eighth
who was clocked on the Autobon going one hundred and
ninety nine miles per hour in a Porsche Panamera.

Speaker 1 (45:22):
He should have gotten a Corvette z R one acs
and gone two hundred and thirty three miles an hour.

Speaker 2 (45:28):
So it was more than one hundred and twenty four
miles per hour above the speed limit.

Speaker 1 (45:36):
Because everybody thinks there's no speed limit on the Autobah,
there's a lot of speed limits on the audubon these
days there are area opens, very few open.

Speaker 3 (45:45):
Yeah, so he was then he had hundred two hundred
two hundred.

Speaker 1 (45:54):
Should have folded the mirrors in.

Speaker 2 (45:57):
So we got a fine of one thousand and forty
three dollars and two points on his on his license.
So what do you think about that?

Speaker 1 (46:06):
Jhen? What that he should not have been going one
hundred and ninety nine in a speed limited area. He
should have waited until there was open auto bond. Maybe
he ran out of open out of bond. But you
know this gets to you know, I mentioned the zero
one X. They just announced the price today, two hundred
and seven thousand dollars. I mean it's a track car.

(46:28):
It's two hundred and thirty three mile an hour that
Mark Royce himself president and GM was able to clock officially. Meanwhile,
Ford's got this Mustang GTD, which was also a track car,
for three hundred and twenty eight thousand dollars, so one
hundred and twenty thousand dollars more than the Corvette. The
Corvette's got two hundred horse power more than the Mustang.

(46:50):
Lapped the Nurburgring at I think it was two or
three seconds faster than the Mustang. And I can't wait
to see what Ford comes back with, because you know
they can't is sitting down.

Speaker 3 (47:00):
I really can't, no no question about it. They've just
been been smacked.

Speaker 1 (47:05):
They've been smacked good, and uh, you know, how does
Corvette do this? I mean, two hundred and seven thousand
is way above what I'm not very going to pay
for a car. But you know, three hundred and twenty
eight thousand for a GTD versus two hundred and seven
thousand for a that's a bargain, right, Yeah.

Speaker 2 (47:27):
So I mean, so is what's the market like for
these vehicles?

Speaker 1 (47:32):
Very small?

Speaker 3 (47:33):
It's very small.

Speaker 1 (47:34):
It's not about volume. It's about brand image. It's about
keeping you know, the base Corvette Stingray relevant. It's about
keeping the two point three liters turbo Mustang relevant to this.

Speaker 3 (47:47):
And you know that my car is similar to that.
It's related. Yeah, it's it's a halo. It's a halo.

Speaker 2 (47:53):
Does it work?

Speaker 1 (47:55):
You know?

Speaker 3 (47:55):
It has? It has worked over the years, So yeah,
I think it does. It's from image standpoint and just
kind of creating that buzz around that the entire vehicle line.
It does work, and there are buyers.

Speaker 2 (48:09):
So some guy who's going in and he buys a
Chevy Colorado pickup goes, but you know what, this is
a Chevy saying no, I don't know about that, but
I might be pushing it a little too far.

Speaker 1 (48:20):
Right, That does. But look at how well Dodge managed
the charger and the challenge, your oldest platform in the book,
Old as the Hills. But they came out with the
three ninety, they came out with the hell Cat, They
came out with all these special packages that had a
limited run. It created a demand. I want to get that.

Speaker 3 (48:40):
One before it's gone. Yeah, So he.

Speaker 1 (48:42):
Kept that car line going, like I camp, and they
made good money off it as old as it was.
I mean, there's a lesson in that, right if you
if you mark it well, if you keep the thing
fresh and relevant, you don't have to spend a whole
lot of money doing There's different ways, platforms, different ways
to keep it fresh and relevant. Obviously, get the specs
up creates something that and again there that doesn't appeal

(49:05):
to every buyer clearly, but there's the enthusiast out there
that it does appeal to.

Speaker 3 (49:10):
And and strongly. And it it that marketing and creating
those special run vehicles brought some youth back also excitement
into the enthusiast market and for those products.

Speaker 2 (49:25):
Right Okay, So so John maintains we've reached peak car,
meaning peakatto, peakato because you know, well, okay, more than
just cars, trucks fans. So so we're on the downward slope.
And so here's a vehicle that's bringing in some enthusiasm
as you look out, how does it how does it

(49:47):
look globally even for the automobile.

Speaker 3 (49:51):
Industry, are we at I don't think we're at peak
per se, but I think the growth and the track
that we are on pre all the various market disasters
that we've gone through over the last fifteen years, I

(50:11):
think that has taken the wind out. And I think
it comes down to affordability, and that's an issue not
just in the US but everywhere. And I don't see
that issue going away. So I think if you pull
that in as a driver, and if that's a given,
that vehicle affordability is going to be challenging for most
consumers around the world. Maybe we are at peak or

(50:34):
or growth rates certainly slow immensely, and we don't see
these recoveries back to the high volumes of the seventeen
and a half and eighteen twenty seventeen, right. I don't
think we get back to those days globally. I don't
think we get back to them in the US either.

Speaker 1 (50:54):
Yeah, And it's not just affordability. I think that's number one.
But you have an aging popular, you have a middle
class whose income has flatlined for years, and I you know,
you put all that together, and that's why I believe
we're at peak out.

Speaker 3 (51:09):
And maybe to argue toward that peak. And again I
think this is a little further out as well. Now
it's certainly not going to happen as soon as previously thought.
But and whether you call it a robotaxi or just
car sharing or ride sharing, that's still going to be
a factor at some point, and I think will affect
auto ownership and affect annual volume. And there's different arguments there.

(51:33):
These large fleets are going to have to get replaced
to turnover on those as much faster than an ownership model,
but I think you need less of them than you
do if if we're going by home or by individual ownership, right.

Speaker 1 (51:46):
And I would also argue that if leats are going
to have robotaxis, they're going to start specifying their vehicles
that they buy differently. You know, look at Class eight
semis the tractor. They'll last a million miles easily, and
you know what, all things considered, they're not that expensive.
I mean a tractor cab sleeper is about one hundred

(52:10):
and forty hundred and fifty thousand dollars. I mean, so
you could easily design robotaxi fleet vehicles to last a
million miles and without them being cost prohibitive.

Speaker 2 (52:23):
So you know, you were mentioned earlier about different markets.
I thought it was interesting yesterday that Hyundai and GM
announced that they're going to be collaborating on an su.

Speaker 1 (52:31):
What do you make it?

Speaker 3 (52:31):
There?

Speaker 2 (52:31):
Your pickup? So we got to give the background, everybody, Yeah,
give them. So they're they're doing design and engineering work
for new vehicles for the Central and South American markets,
and this will be for a mid sized truck, the
car and suv, and then they're going to do an
electric commercial van for North America, so meaning here. So

(52:54):
I mean they announced that they were going to be
collaborating I want to say about eight nine months ago
that they didn't say what they were going to be
collaborating on. And every event it will be supply chain.

Speaker 3 (53:04):
And they'll they'll be doing efficiencies and purchasing.

Speaker 2 (53:07):
Yeah. Right, and now they're saying, no, we're gonna we're
gonna do vehicles. They're gonna do vehicles for what arguably
is mainly emerging markets still, I mean South America is
you know.

Speaker 3 (53:17):
I found that really interesting because of I mean, the
volume really isn't there. These are markets that especially Brazil.
Was this the market that everyone kind of said would
be one of the next growth markets, and it just
for various reasons, hasn't gotten there. Yeah, it's still it's
still a strong market in the sense of three million

(53:39):
issue units. But and if you combine that with Argentina
and Chile and yeah, you can you can build maybe
a decent sized market. But that it's it's it strike.
It struck me as an odd focus on where you
would develop the vehicles for.

Speaker 2 (53:55):
So would you think that they would develop them for
this market or or a Western market as it were.

Speaker 3 (54:02):
I would have thought more of a call it Asia, Europe, Japan, Korea,
you know, throughout mature market. I would say, mature market
is what I would label it as. That's where I
thought they might go and try to get scale there.
The CV for the U or for the North American market,
I think built in the US is the plan from

(54:23):
what I what I.

Speaker 2 (54:24):
Read on the commercial van will be manufactured in the
US as early as twenty eight.

Speaker 3 (54:29):
That's interesting. See.

Speaker 2 (54:30):
But the thing I wondered about was, Okay, what happened
to break Drop? Yeah, I remember Carrious Like, that's a
good point.

Speaker 1 (54:36):
What happened to bred Drop?

Speaker 2 (54:38):
And you know, and here was it? You know, I
mean and if you looked at the specs of that thing, Wow,
this is a pretty amazing vehicle. And remember they had,
you know, FedEx announced Oh yeah we're gonna we're gonna
buy movies and and uh and now there's gonna be
this commercial van.

Speaker 3 (54:52):
I think Hundai takes the lead on this.

Speaker 1 (54:56):
Sunday Hondai has Hondai Kia have developed a a really
interesting commercial electric platform. Uh you know that can be
sized up and down. I'll bet it's built right off that.

Speaker 2 (55:09):
Okay, but here here's the thing. The the development is
for vehicles that will have either internal combustion or hybrid
propulsion systems, not evs for the for the commercial vehicle,
but it's the SUV current pickup as well as a
mid sized pickup, all with the flexibility to use either
internal combustion or hybrid.

Speaker 3 (55:29):
I think that's for the South. That's South America market, right,
I think the US I'm not mistaken.

Speaker 2 (55:34):
The electric commercial yeah yeah yeah, But and.

Speaker 3 (55:37):
Those markets are just not ready for evs from an
affordability state.

Speaker 1 (55:41):
Don't tell that to b y D.

Speaker 3 (55:43):
That's a fair point. I should say non Chinese EV's
that are priced like they are not EV's to.

Speaker 1 (55:50):
Me, it kind of makes sense for GM and Hyundai
to look at South America first. Here's why, let's stick
our toe in the water. You know, Uh, we don't
know really how we're going to work together. Remember GM
just had this great deal going with Honda and then
at all what came apart, and they've never explained what
the hell happened there. Now they've got a new deal

(56:10):
with Hyundai. I'd say let's go a little slow, let's
test the market before we get into the serious stuff. Also,
remember most of GM's vehicles that it sells in South
America are either made in South America or imported from
China and South Korea. You know, so GM's already got
a bunch of vehicles going to South America from Kia,

(56:32):
from Korea. And so I could see them saying, you
know what, why don't we go to South America first?
Because of what I already said, But also the Chinese
are they're taken over and we can't possibly take them
on by ourselves. Let's split the cost.

Speaker 3 (56:50):
Could be a way to look at that from a
competitive standpoint, to try to go after the Chinese, taking
that market or blocking that market to go to the
Chinese companies, and it could also be a way to
not not do this in the major markets right now
with each other as they're trying to develop this relationship.

(57:12):
That does make sense, John, I could see that point.

Speaker 2 (57:14):
Okay, So if we look at if we look at
Hyundai Group, I mean, they are doing well in other parts.
You mentioned India earlier. I mean they're they're they're very
strong general motors. Noe. What is the possibility now? This
is this is going a way out on a limb.
The company is combined. I mean maybe not tomorrow, maybe

(57:38):
not five years from now, but maybe within the decade.

Speaker 3 (57:43):
They certainly don't overlap like they might have previously or
used to overlap. If you look at how JAM has
changed their focus and and you say North American and
China will take China out of that mix now and
it really to degree anyway. Obviously they're still doing some
development there with the buick that launched.

Speaker 1 (58:04):
But.

Speaker 3 (58:07):
That focus. Yeah, so the overlap in the markets isn't
as strong as it used to be. I don't see
that happening anytime soon. But could that happen sure?

Speaker 2 (58:17):
Well, I mean if we go back to the point
of you know, peak Audo.

Speaker 3 (58:21):
Yeah, and the I mean man's validation is natural then
if if you can't grow another way.

Speaker 2 (58:27):
Right, So that's what I wonder about. Or is it
a situation where you say, okay, you know untapped markets
at least for Western companies. Africa you mentioned that earlier.
I mean there's a place. I mean, they're not buying
very many vehicles right now, but.

Speaker 1 (58:40):
That's that is a market that it's a continent of
a billion people, is it can be a big market
something And India is a large market potential there, right,
So those are probably the last two big growth areas
of the world that are left. But I don't think
they would ever become one company. I don't think the

(59:01):
United States, especially would tolerate a Korean company acquiring General
Motors and their partnership.

Speaker 2 (59:09):
They just they just one to another partnership of equals.

Speaker 1 (59:12):
And there's no way you've heard that before that the
Chung family in South Korea would allow Hyundai, which is
I mean, it's it's to South Korea what General Motors
was to the United States and the mid sixties, right,
it is a massive part of the economy. But I
think what you're going to see is a lot more
collaboration amongst the big legacies recognizing that let's split the

(59:34):
cost of a program.

Speaker 3 (59:35):
And I think market forces will dictate how that happens
and ultimately to what degree it happens, because if if,
if we do hit peak auto and we have all
these pressures and we're still moving into these these portfolio
of technologies and trying to leverage how to do them
all and by the way, moving to Avis, at some

(59:56):
point you can only do with scale. So and if
you can't pay for it with volume growth yourself, then
you're gonna have to find other ways to do it.
So that's going to be a natural outcome of this.

Speaker 2 (01:00:11):
So what it's Ford is for it to get closer
to VW again.

Speaker 1 (01:00:15):
Or great question. I mean they're going to have to.
I'm sure top management at Ford is under pressure from
the board. General Motors just went out and tied up
with Hyundai. Who are you tying up with?

Speaker 3 (01:00:25):
Find some of them? Fur They're all gone?

Speaker 1 (01:00:29):
So what do you think, Gary, what do you think
Ford would do?

Speaker 2 (01:00:33):
I think I think Ford is the recall problems are
not sufficiently being addressed by that company. A in a
you know, pants on fireway that I think they need
to be. I think that they probably are not even
paying any attention to that. They're trying to divert, you know,

(01:00:54):
with their Model Team moment, and I think that that
is a horrible phrase for them to use because I
don't I think I think the.

Speaker 3 (01:01:01):
Model is not a model team moment.

Speaker 2 (01:01:03):
I mean, the Model t is is truly an icon
I mean, I know they call their vehicles iconic vehicles,
but you know what their iconic vehicles because the public
said they're iconic vehicles, right. It has nothing to do
with the corporation seeing their iconic vehicles so huge, you
know what, over ninety recalls so far this year. How

(01:01:25):
can management?

Speaker 3 (01:01:26):
How can manage still have launch problems? Right with plants
and vehicles that they've launched and that are just redesigned.
So that's that's an issue. Manufacturing is an issue.

Speaker 2 (01:01:36):
And so until they address that looking to do other things,
it strikes me as is being silly. So, I mean,
you know, I what can they introduced on Monday, Jen,
I mean they've announced basically it'll be a mid sized truck. Yeah, okay,
and let's say that they're gonna you know, I mean

(01:01:59):
it occurred to me that maybe if we go back
two or three years ago, we were talking a whole
lot on the show about skateboard. Right. When's the last
time we said skateboard on this show? I don't remember, right, right,
And it's all it's got a skateboard and you can
put whatever you want on top of it, and it's
you know, easier to make. Well great.

Speaker 3 (01:02:19):
Is that going to put the will in the world
of information? Is it?

Speaker 2 (01:02:22):
Is it the warl on wheels?

Speaker 1 (01:02:23):
Nope? I think what I expect to see is a
very cost competitive, small electric pickup that has decent profit margins.
That's what I expect to see. Because if they come
out with something and say, well, we're going to lose
less money on this one dead, it's dead on arrival.
But if they say, look, this has got a twenty

(01:02:45):
percent gross margin on it at at the base level,
now you're talking.

Speaker 2 (01:02:51):
Okay, and and we established earlier in the show that
fewer and fewer people are buying evs hell of a
market to get into.

Speaker 3 (01:02:58):
I think that's I think that's going to be challenging.
It's going to have to be something really compelling that
that we're not expecting totally.

Speaker 1 (01:03:08):
It better knock our socks off, because you're right, Gary,
if we come out and go, well, that's nice, but
it ain't no body t of evs they're gonna have
egg on their face. I don't expect that to happen.

Speaker 3 (01:03:19):
Do you think they're gonna see I.

Speaker 1 (01:03:20):
Think they're gonna show us something that we go Wow.
Didn't see that one coming.

Speaker 3 (01:03:26):
I hope so for their I really do, I really do.

Speaker 1 (01:03:30):
That's right. Yeah, Okay, one quick one to end the
show on. I think did you guys see this thing
that Tesla has taken out a patent for a sucker car?
We put four fans under the car. If you know
the the Chaparral two j Canam car which Jim Hall
who ran Chaparral invented it, and then brab Them actually

(01:03:52):
did a sucker car in Formula one. It was so
good it was banned essentially after one race. And then
Gordon Murray, who did design the Brabum came out with
a performance. What was that the T five? I think fifty.

Speaker 2 (01:04:06):
Did you ever sell any They sold all of them out.

Speaker 1 (01:04:11):
They made like one hundred or two hundred and they
were gone. Okay, came out. Yeah. Gon's saying that they
sold every single one that they built. But anyway, uh,
that's the kind of thing that number one I think
Tesla needs, I think, to get when they need something
where go wow.

Speaker 3 (01:04:32):
Yeah, but I think that's that's the innovation and the
creative thinking that I think has gotten Tesla up until
this year to where they where they were. That's right.
So it'll be interesting to see if how that how
that develops in and if they they bring it into
a production vehicle.

Speaker 1 (01:04:51):
Yeah and not five years from now. Yeah, I'm sick
of waiting for Tesla to deliver they analyzed us.

Speaker 2 (01:04:57):
Maybe they'll put that technology in the roadster.

Speaker 1 (01:04:59):
Wait, no, that's what it's supposedly going to go into,
is the roadster.

Speaker 3 (01:05:04):
But mm hm that somewhere in space right now. I
think there is one floating around out there still.

Speaker 1 (01:05:10):
Anyway, we got to wrap it up. Jeff, thanks so
much for coming on.

Speaker 3 (01:05:14):
Always enjoyed it, really good good time.

Speaker 1 (01:05:16):
And Gary, maybe next week we'll talk about this this
Ford model.

Speaker 2 (01:05:20):
T of VVS. I think we will got there.

Speaker 1 (01:05:23):
Anyway, I want to thank all of you for having
tuned in