AAH #761 - The Serious Supplier Squeeze

TOPIC: Auto Industry Outlook PANEL: Paul Eichenberg, Eichenberg Strategic Consulting; Tom Murphy, Freelance; Tanya Gazdik, MediaPost; Gary Vasilash, shinymetalboxes.net

Episode Transcript

Speaker 1 (00:01):
Out online After Hours is brought to you by bridge
Stone Tires Solutions for your journey.

Speaker 2 (00:10):
Hey everyone, thank you for joining us this afternoon on
Auto Line after Hours, or if you're watching it on YouTube,
is maybe not this afternoon, Maybe it's in the morning,
the evening another time, or listening to the podcast. God
knows what you're doing. But as some of you may notice,
if you're seeing this, John's not here. So I assembled
a cast of the smartest people in the auto industry

(00:32):
by far. So we're gonna have a great show. We're
gonna talk about a whole bunch of things. And so
let me introduce who we have here. We have my
friend Tom Murphy, a longtime automotive journalist who we've traveled
the world again, we've traveled the world together.

Speaker 3 (00:47):
And uh Me and doctor Data.

Speaker 2 (00:53):
We have Tanya Gasdik, who is the automotive editor of
Media Post. Welcome back to the show. We've had you
on several times and it's always been illuminating.

Speaker 4 (01:02):
Thank you for having me, and I will do my
best to continue that streak.

Speaker 2 (01:06):
And we'll try to argue later in the show. And
our old friend Paul Eichenberg, consultant extraordinaire with particular focus
on the supplier industry, and he's also involved in the
tech industry, and we're going to ask him about both
of these things. So let's just kick this off, and Paul,
I got to ask you about what is going on

(01:27):
in the world supply industry. I mean, we're seeing that
ZF in Germany recently broomed its longtime CEO. They're in
the process of undergoing a restructuring. BOSH has announced what
is it, thirteen thousand people they're getting rid of. This

(01:49):
is globally, but most of these people are in BOSH mobility.
Last year Lear Corporation, which is here, they globally removed
fifteen thousand people.

Speaker 3 (02:01):
Apparently. What is going on?

Speaker 5 (02:05):
So I think this is where you were talking about,
where the supplier world and the tech world meet. So
what's really happened here over the course of the past
couple of years, is Hey, that tech bubble, We've experienced it.

Speaker 3 (02:20):
We've seen this.

Speaker 5 (02:22):
If you take for instance, ZF, if you take BOSH,
these are organizations who have invested heavily in new technologies
and electrification, in autonomy, and the whole ADS suite invested
heavily in software and software development. And as a result,

(02:42):
the EV market is not moving as quick as what
everybody had hoped. It's impacting the OEMs globally. You ad
us autonomy, all the investments that they've made there haven't
paid off. So as a result, what you've had is
the suppliers have made huge investments in the market has

(03:04):
yet to come. Now we could argue when do we
get to know is electrification going to happen or is
it just a matter of when. We could argue that
and debate that, but as far as the investments have
been made, this is an issue where hey, it hasn't
happened as fast as what people had hoped. And as

(03:25):
a result, you have significant restructuring starting in the supply
base around the globe. And this is really the issue
that's driving a lot of these changes in this situation
in the automotive industry.

Speaker 3 (03:38):
So if this is happening to the major tier ones
who granted they've had to keep investing in the internal
combustion technologies that they've been developing all these years, and
they've also then pushing into evs, so trying to play
on both sides of the fence. And now if even
they can't make it. What about the small to mid

(03:59):
size supplies? I mean, are aren't they even more susceptible? Yeah?

Speaker 5 (04:03):
Well, and again it's not just the supply base, it's
the OEMs also. The OEMs are struggling through it also.
So I think what you start to if you step
back and you look at the industry ten years ago.
Ten years ago, everybody is, you know, sort of peak volumes.
Everybody is is very certain in everything that they're doing

(04:24):
around the internal combustion engine, all the investments that they're making.
They have a finite understanding of what that looks like.
And what's happened over the past ten years is we've
started a shift towards electrification. You've seen a drop in
that foundation that everybody had. That capital investment that everybody
made around their powertrains, around their vehicles, etc. Started to fade.

(04:51):
So if you were let's say a second tier or
third tier supplier who's making forgings, you know you're making
forgings and you're making a ten twenty year capital investment
that is huge for your business. So what starts to
happen in forgings is as that market starts to dip

(05:11):
as a result of electrification, your margins get squeezed because
you still have that capital to pay off. So what
I would say is it's not just the big you
know suppliers, it's we're in this gray area in this transition.
And you know, you could argue the longer you delay

(05:31):
that transition, the harder it is on the supply base.

Speaker 3 (05:36):
And even I would say it.

Speaker 5 (05:38):
Was probably back in twenty eighteen, Mercedes at the time
started to build a bank for supplier this type of
supplier disruption bankruptcies, and what they saw was they saw
two types of bankruptcies taken as a result of the
transition between ices and evs, and that was the suppliers

(05:59):
as far as the ramp down, so those forging suppliers
as volumes started to drop. But then for the new
technology suppliers, you know, the rapid investment that was going
to be required, you know, were they going to have
the cash flow to be able to reinvest, to be
able to keep pace. And the longer and longer that

(06:19):
gets drawn out, the more and more difficult it's going
to be for the OEMs to manage the Tier one suppliers,
the Tier two, the Tier three suppliers. So we're entering
a real difficult time for the supply base and the
OEMs together to be able to manage this huge change.

Speaker 3 (06:40):
That's taken place in the industry. So okay, Paul.

Speaker 2 (06:43):
So these companies made huge investments and the investor and
so they were rewarded when they made the huge investments,
right because they were looking ahead and they were doing
their produciary responsibility by doing that. And had they said, oh,
I'm only going to be investing in I, then they
would be penalized by the market. Right now, we're finding that,

(07:06):
as you said, this technology is not being embraced as
quickly as it was thought to be. Maybe the competition
is too great. I mean, especially in Europe where you
know Chinese are coming in. So like going back to Germany, Ey,
we used to be Ernest and Young did a study
and they found out like fifty one five hundred jobs

(07:30):
were lost in the auto industry in a year, okay,
and it was like the biggest segment. Now, you know,
Germany's ev acceptance is greater than the acceptance in the
United States. So what I wonder is is will we
be seeing a big impact here Next week is when

(07:53):
the seventy five hundred dollars tax credit goes away, what
is going to be a situation for support who said, oh,
you know, we're going to invest in technology to make
electric vehicles.

Speaker 5 (08:05):
So I so the first saying as far as your
comment there, if you remember, a couple of years ago,
the CEO of VW went to his board to say, hey,
we're making a ninety one billion dollar bet in evs
and he looked for a confidence vote from the board
on that. So now think about that in just a

(08:26):
couple of years later where we're at. And so those
were the big bets at that point in time, and
right now what I would expect to happen here is
and I'm would expect it to happen in Europe, is
you're going to see more legislation around the idea that
plug in hybrids, range extender vehicles. These are what we're

(08:48):
going to start seeing. As far as alternative strategies to
these emissions targets, you're going to see, you know, you know,
on the way over it was announced in the news
in Europe they're only in about fifteen point eight percent
b evs, where the target is to be closer to

(09:10):
twenty five by the end of the year, So there's
a ten percent gap to close there between now and
the end of the year. In my expectation, as you said,
in Europe, what's going to happen is the government is
going to give some type of relief because the whole
industry in Europe, the whole industry globally, is under attack
by Chinese b evs, in Chinese suppliers that are coming in.

(09:34):
And I think what you're going to start seeing is
everybody pulling back on the you know, the climate strategy
and start saying, hey, what's the industrial policy that we
have to have to be able to protect these industries
because Europe's got to do something again before the show
heard it on the news. You know, TESLA isn't really

(09:58):
growing anymore in Europe, but who's game aiming the greatest
share in Europe. It's BYD. So this creates a problem
for all the OEMs in Europe. It creates a challenge
for the suppliers because BYD is bringing their suppliers in.
Other Chinese suppliers are coming in, So that whole industry
in Europe is under attack in a very different manner

(10:19):
than what they've dealt with before. And then when you
add on top of that the OEMs are continuing to
lose share globally, what are they going to do other
than step back and say, hey, we have to do
things differently to protect this industry.

Speaker 3 (10:34):
That's what I.

Speaker 5 (10:34):
Would expect to start to happen as we start to
look at.

Speaker 2 (10:38):
So, Tanya, what are you seeing in terms of the
consumer base and its interest in beev's post next week?

Speaker 4 (10:50):
Well, I was going to say as far as this,
you know, statistics go about the twenty five percent goal.
Last month, EV's only accounted for ten percent of all
new car sales in the US, even with the poll
ahead an anticipation of the tax credit spending. So if
you can only get up to ten percent.

Speaker 2 (11:04):
Yeah, but isn't that isn't that exciting? Or are they
popping champagne court to me, like, wow, ten percent, that
was the goal, We've hit it.

Speaker 4 (11:10):
Well, they're planning on cutting ev production for the rest
of the year. You know, they know there's nobody's gonna
be buying in third and fourth quarter, So I mean,
no marketing is going to fix that.

Speaker 2 (11:21):
So, I mean, I guess the question is is that,
I mean, there is a market for evs but is
it just that the market didn't develops as broadly as
it was thought to.

Speaker 4 (11:36):
Well, the infrastructure is still lacking. Ironically, the sixth month,
after a six month free freeze, the Trump administration is
actually resumed their federal program for for highway superchargers. So
the timing is interesting. So all those people who bought
in August and September, will you know, have more chargers eventually?
Is is that that's a big part of it. There's

(11:58):
a lot of apprehension about out the lack of chargers.

Speaker 2 (12:01):
All right, Tom, you you've probably driven more EV's than
the other three of us combined. Do you see some
intrinsic specialness to driving an EV that you don't find
in driving anything else?

Speaker 3 (12:18):
I do, I do. Uh. The infrastructure is the is
the biggest problem right now. But I you know, when
you talk about ninety one billion dollar bet by the
Volkswagen and that's the Volkswagen group, and I think of
what they've put on the road alone. Portia Taikon, Yeah,
Volkswagen IB four. I know you might not like it,
but it was early, it was it was it was

(12:39):
out there pretty early, and I know a lot of
people didn't like the user experience and all. But I
thought it was a pretty darn good car. It had
decent range. Think about what Audi's done, you know, the
the GT, I'm sorry, the e Tron GT. I think
it's what a fantastic looking car. And then I think
there's gonna be a Bentley EV coming along, And it's

(12:59):
like they really did think holistically about about the EV market,
and Gender Motors was kind of doing the same thing.
And I feel like those are the companies that deserve
to be rewarded for putting some really interesting vehicles on
the road. The Chevy Equinox very inexpensive vehicle, especially a
factor in those those credits. You're down below thirty thousand

(13:22):
dollars for a good, practical two row suv.

Speaker 2 (13:27):
So you couldn't you buy one of those that was
called an Equinox that had an ice engine and it
under thirty thousand.

Speaker 6 (13:33):
You still can't, which is still which.

Speaker 2 (13:35):
Probably had pretty good range too. Yeah.

Speaker 3 (13:37):
I get it, but but there are people out there
who are buying tuslas partly because this is something different,
This is something that is better for the environment that
may perceive it this way, whether their energy is coming
to their house through coal fired plants or through nuclear
or water, you know, hydro power. Whatever that's you know,

(13:58):
that's a topic for another day. But there are people
who really perceive battery electrics as something really advanced and
something worth pursuing. And I mean I tend to agree
with it. To your question about what's so special about them,
just get behind the wheel and step on the accelerator
and the torque that you feel is just so immense.
Whether it's an equinox or it's a Porscha ticon, I mean,

(14:21):
it's it's astounding. And so you know, if you can
get three hundred miles of range, I think that's fantastic.
I test drove the four hundred and ninety two mile
Chevy Silverado EV work truck and I towed a twenty
five foot airstream with it. And yes, the range fell
almost by fifty percent while I was towing it. But still,

(14:43):
you know, fifty percent from a four hundred ninety two
mile range is still pretty good mileage. Anyway. I just
think it's it's really sad that automakers and the suppliers
were really pushed kind of from a regulatory environment and
then from the spectacle of Tesla you know, everybody wanted

(15:03):
to be Tesla ten years ago or seven, eight years ago,
and you know what did they get for it. They
basically got slapped, you know, because they spent a lot
of money on product that people didn't buy, that didn't
warm up to it. And you know, politically in this country,
we've had it. You know, it just goes and fits

(15:23):
and starts depending on who's in the White House. But
you know, Biden spent all this money to put in
new chargers and then Trump wanted to pull them out,
and I'm glad to hear that they might be coming back. Yeah,
that program, it's just a wild market. It's it feels
to me like the wild West, where I mean, if
I was in this business as a CEO of a
supplier or an automative, I would have no idea what

(15:46):
to do. You know, there are people who want evs,
but there are more people who still want.

Speaker 5 (15:50):
To buy their you know, one thing coming in is
is the issue of the industrial policy. And here we
have a polarized industrial policy. And I think that's one
of the things you can say about China. You know,
a strong central government. What do they've had for the
past you know, ten years is they've had a real
focus in Hey, we can scale electronics far differently in

(16:14):
this industry and we can dominate when it comes to
evs and frankly, that's what they've done. And I think
now we're at a pause because if you look what's
happening in Europe, if you look at what's happening here,
how do you really compete with that industry for that product?
And I think that's where you'll start to see different

(16:36):
industrial policy come in because Europe's going to have to
do something to protect that German automotive industry, you know,
and the French and you know, the Italians and everybody
is going to look at that very differently. And I
think we could start to see a very different type
of electrification strategy come as a result of these type

(17:00):
of industrial policies are being a value.

Speaker 2 (17:04):
But Paul, do do you think this strategy will be
a strategy that will encourage electrification? With the electrification will
not be full BEVs, They'll more likely be hybrid vehicles
or plug in hybrid be plug in hybrids.

Speaker 5 (17:17):
It could be range extenders, range extenders, and it takes us.

Speaker 3 (17:21):
Back to square one. Yeah, yeah, yeah, we've gone full circle.
Like we started out with internal combustion like, oh, let's
start easing into EVS, and then it was like full
speed into EVS while they're still making internal combustion engine
and now we're going to go back to that. So
how you know how a company can survive. Yeah, we've
got to be cutting edge on you know, the latest

(17:41):
EV technology, but we also have to have a good
internal combustion engine with a plug in hybrid and a
regular hybrid at the same time.

Speaker 5 (17:48):
It's like it's so, I just a side note. I
have a gentleman that worked for me at Magna and
now he's running the EV program for four and they
just launch this week their first EV and hey, it's
a range extender, okay, And it's got a fifty gallon

(18:11):
fuel tank on it, fifty gallon. And the reason they
came up with a fifty gallon range extender vehicle was
because it's going to give them four hundred and fifty
four miles of range. And why do you have to
have four hundred and fifty four mile range? Because that's
what they find the average you know, customer drives between

(18:32):
stops for their RV. So they went through this in
a very deliberate manner, and they've had this launch this
week around that whole idea. The only way you get
to that type of range is through a range extender,
but then you have all the benefits of you know,
what they feel is an ev So will we see

(18:54):
those kind of strategies. I think you will. As a
matter of fact, range extender in in China, plug in
hybrids in China are the fastest growing segments in the
Chinese market, and the higher end luxury vehicles are going
with range extenders or plug in hybrids. So I think
you may see a change in strategy as a result

(19:18):
of this pause that we're in right now, as everybody
starts to look, what do we need to do going
forward at this point.

Speaker 3 (19:26):
But it doesn't make vehicles any cheaper, no, no, because
you're paying for that range extender.

Speaker 5 (19:32):
But you were also talking about, Hey, if you look
at the audies, if you look at the Porsches, if
you look at those vehicles, those are great looking vehicles,
but they're not cheap vehicles either, because there's a cost
associated with making you know, that initial investment. So this
is the vehicles aren't cheapy, no no, But this is
the investment.

Speaker 2 (19:52):
You put a premium on top of that.

Speaker 5 (19:54):
Yeah, a premium on top of a premium. So yes,
this is the challenge that the industry and China's gotten
over that hurdle. You know, as far as getting to scale,
how does every OEM follow and get to scale to
really be competitive with those products?

Speaker 3 (20:12):
GM has really got to scale.

Speaker 4 (20:13):
Well, I was going to say the non luxury makers.
I just drove the Nissan Leaf and it's actually the
new one is cheaper than the original one, and the
range is quatching group on quadruple the range. You went
from seventy three miles of range to three hundred and
three miles of range and from thirty three thousand to
thirty thousand they went down and it's a great vehicle.

(20:36):
So I mean, I think there's still good evs that
people will buy, like belief.

Speaker 2 (20:40):
Okay, But see the thing I wonder about is, you know,
and again we're talking about billions of dollars of investment
that the industry has made in evs right across the board.
Billions of dollars.

Speaker 3 (20:50):
Okay.

Speaker 2 (20:50):
So so my question to you guys is is this
a case of technology push rather than market pull? And
haven't we learned from the past, but that doesn't work
so well. Regardless of what the technology is.

Speaker 3 (21:04):
It takes time. I mean, was it technology push when
Toyota and Honda pioneered with the first hybrids and nineteen
ninety nine, I mean, it took a little time once
they caught traction. I mean, Toyota was off and running
with the prius. So call it what you want, but
it takes time for people to figure out. How long

(21:26):
did it take for Tesla to you know, to catch
on the roadster was just this kind of novelty thing,
but then when the Model Esque came along, all of
suddenly people were really interested. And if you're going to
spend portion of money on a car, it better be
really nice. It better give you the performance that you
that you want, that you demand. And when you drove
that first Tesla Model Less for the first time, you're like, wow,

(21:47):
now this is groundbreaking stuff, so you don't mind paying
the money. So is that polar push? I mean it's
hard to say.

Speaker 2 (21:55):
Well, but I mean I'm talking about the industry at large.
Versus is a particular case of a particular product. And
if we go back the first the nineteen ninety nine
Civic Hybrid didn't do all that well the inside the insight, Okay,
so it yeah, it So it's like and and if

(22:17):
we also go back in time, Hant Toyota had to
be pretty damn it, you know, persistent saying hybrid hybrid
hybrid hy're kind of smart, you know, seem to be
kind of smarten.

Speaker 3 (22:28):
They have across their entire lineup everything.

Speaker 2 (22:32):
Yeah, but again, I mean I just wonder if you know, Paul,
you've undoubtedly seen this in various technologies that you know, oh,
this is gonna be great. So I mean I begin
to wonder whether you know, if if you're you know,
Porsche has announced that it's pulling back on its EV
strategy and it's going to be dealing new ice product. Okay,

(22:52):
so you know, Germans do really well in terms of
machining metal and making gears and and forging and casting.

Speaker 3 (23:00):
They're also not giving up entirely on EV. I'm not
saying the Caman and in the Boxer seven eighteens they
were originally planned to be all electric. Now they're going
to also have so they're going to stay on both
sides of the fence they want to. They're they're kind
of following in the BMW model, where you know, Mercedes
wanted to have separate and I think they wanted to

(23:20):
have their their models looking like EV's, and they wanted
to have their their their non EV's looking like the
you know, the traditional vehicles. But BMW, I thought was
smarter saying let's put them all together. The I five
is going to be the same as a as a
gasoline driven five series, and so in that sense, I
think it. I think it's kind of smart to be

(23:41):
on both sides of the fence if you can without
without spending so much on bespoke designs. So we like
the designs.

Speaker 5 (23:54):
So what do you think, Paul, So I think, you know,
again you step back and you look at will there
be bespoke designs. I think when you look at the skateboard,
you know, and that whole concept, it's just a much
more efficient and effective way to make vehicles. I even
go back to you need sixty percent less manufacturing space

(24:15):
to make vehicles that way. And I think that was
the enticement for the OEMs to say this is what
we have to do. We have to be able to
move in this type of direction. But then if you
step back and you think about, now, what are you know,
all the OEMs looking to do. They're reevaluating their entire

(24:35):
power trade strategy. You know, many of them are, you know,
coming out and saying, hey, we're just extending these programs
for another three, four or five years as we figure
this out. And my expectation is they're going to do
just like what you're talking about. You know, oh, here's
a here's a standard IC version, here is a plug

(24:58):
in highbred version, and here's an e V version for
you that's going to be very costly for them, and
you know, in a number of different ways. And then
that creates again this gray area for suppliers to say,
and for everybody in the industry to say, hey, how
do we manage this very costly transition from one powertrain

(25:22):
source to another? And that it's really who Yeah, And
you know the company I put my money on is
is Toyota. You know, if you look at how they've
performed consistently year after year after year, and if you
look at their strategy, their strategy is to offer this

(25:43):
wide spectrum of product, and I think you'll see more
and more OEMs looking to duplicate that kind of strategy.

Speaker 3 (25:49):
And isn't it ironic that they were considered to hold
out on evs for the longest time while everybody else
was more committed to battery electrics, Toyota.

Speaker 6 (26:00):
More cautions.

Speaker 5 (26:01):
I mean, you can look at so many OEMs like VW,
how much share they've lost in China, how their share
is under you know, threat in Europe. But look at Toyota,
you know, just consistently, consistently, consistently, so they're not making
big bets. They're still assuming this isn't this is not

(26:23):
a revolutionary industry. This is an evolutionary industry. And you know,
and I think that's maybe the real lesson everybody learned
from the big bets.

Speaker 2 (26:34):
All right, so so let me ask you. I want
all three of you to answer this question.

Speaker 3 (26:37):
And we're going to beginning to the bottom of the show.

Speaker 2 (26:39):
And then I promised the next half of the show
will not talk about evs.

Speaker 3 (26:43):
Okay.

Speaker 2 (26:44):
All right, So in the US, OEMs are not going
to have the regulatory issues in terms of selling evs. Okay,
that's not going to be an issue, right.

Speaker 3 (26:58):
The meaning like a mandate.

Speaker 2 (27:00):
To s minisorts, right, you know EPA regulations.

Speaker 3 (27:05):
Yeah, so you know, no matter who's in the White
House you're saying, or just.

Speaker 2 (27:08):
Well, I'm just saying right now, at least the next
three years, I don't know who's going to be in
the White House. And I'm saying right right now, right now,
I mean, okay, we're still talking like October first, right
the the Textrich goes away. Okay, Now they've got to say, oh,
we've got to face what's going on here?

Speaker 3 (27:25):
Okay. So there's no mandates.

Speaker 2 (27:29):
It's pretty well known they're not making any money off
of these things, right. Maybe they're covering your variable costs,
which Paul could explain to us and so we could
understand it, but none of us can understanding. But Paul, okay,
and we can see that. You know, Tanya, you mentioned
earlier the ten percent like ten percent, okay, which means
ninety percent are not evs. Right, So if you're an OEM,

(27:55):
where do you put your money?

Speaker 4 (27:59):
Well, Honda to announce that they're ending us production of
the of the Electric Accurate zd X, and dealers have
been notified they're not going to get any more allocations
of the vehicle.

Speaker 6 (28:08):
So I think Hanna answered that question so well.

Speaker 2 (28:13):
Of course, had also said that they'll be coming out
with the r d X.

Speaker 3 (28:18):
I believe it is.

Speaker 2 (28:20):
Yeah, they're going to have a product. But yeah, I
thought that was shocking. The ZDX, you know, lasted one year.
One year, Thank you, Sean.

Speaker 3 (28:31):
Okay, So so.

Speaker 2 (28:34):
Point taking. So you're you're betting on the ice.

Speaker 4 (28:38):
Well, I think they're going to be shifting. I don't
think they're going to give up on EV, but the
market's going to shift. They're going to shift.

Speaker 3 (28:44):
Pah, what do you think?

Speaker 5 (28:45):
So I do think we're going to start seeing a
big shift to plug in hybrids and range extender vehicles
in my bet, Like again I said in China, I
think you're going to see a softening of the policy
in Europe that's going to allow you know, those type
of vehicles to become much more a prominent part of
their you know, uh foundation around their mandates. And then

(29:11):
I think you'll see the same thing here here in
North America that those will be the solutions that start
to emerge as people start to say, hey, you know,
it was interesting a year ago I did a project
with a commercial vehicle OEM and.

Speaker 3 (29:30):
You know, again the management team mainly came out.

Speaker 5 (29:32):
Of Europe, but they felt we've got a we've got
a moral obligation to be able to start to solve
this climate change thing. And I think we won't see
just an abandoning by a lot of these OEMs around
the idea of you know, we're going one hundred percent
back to the evs, and I think this is.

Speaker 3 (29:53):
That common ground that will start to see ice. Ice. Yes, ice,
the thing is is.

Speaker 2 (29:59):
And I think it's it's needs to be continually emphasized
that when we talk about hybrids and talk about e revs,
they still have an internal combustion engine. Yes, so of
some type. Most of those forting companies are still gonna
be happy.

Speaker 3 (30:11):
I'm all in on hydrogen fuel cells.

Speaker 2 (30:16):
And we can end the show there.

Speaker 6 (30:20):
Europe basically.

Speaker 3 (30:24):
So, uh, yes, I still think there is a future
for evs. You gotta you gotta look at the market
as this EBB and flow process. You know, like when
no evs were available, there was this huge demand, you
know what I mean. Once once Tesla was out there,
you know, they they kind of proved that hey, there

(30:46):
can be a good looking car that gets long range. Yeah,
it's gonna be expensive, but you're gonna you're gonna love
this car. So at that point demand.

Speaker 2 (30:53):
Just how dismissive he is of high costs.

Speaker 3 (30:55):
Seems to be no, no, not at all. Heck no,
but those prices have come down quite a bit. Uh.
Demand outstripped the supply at that point. So then the
market was flooded. Everybody, every every mainstream and luxury brand
said like God, we got to catch up to Tesla.
We have to we have to get this, We gotta

(31:16):
flood the market. And then things turned and so these automakers.
You know what General Motors has done here in Detroit
at Factory.

Speaker 2 (31:25):
One zero Fakore zero, Sorry I owed you that.

Speaker 3 (31:31):
Michigan by the way, historic place you should go. But
Factory zero. You know, they're making the Silverado pickup truck there,
they're making the Escalate i Q, They're making the Sierra Ev.
They're they're making the hummers there. You know, even if
they're not selling a ton of them, they've invested a
ton of money into that plant. And they were supposed

(31:52):
to do the same out of the Lake Orient plant.
They were going to make the Silverado and the Sierra
Ev there. They had to change those plans based on
what was happening in the marketplace to build there, I
have to hold on, got to wait, wait and see,
wait and see. But think about all the other investments
Kia and Hyundai, down and down in Georgia. I mean,

(32:14):
a dedicated plant for making evs Ford has that is
the huge battery plan out in Marshall that they're they've developed.
It's just like this, these investments cannot be just quickly
dismissed or or pivoted to you know, we're just going
to retool for internal combustion. I mean, it's it's a

(32:37):
really difficult time to be deciding where to spend your money.
And you know, your simple question does not have a
simple answer. Yeah, you're saying, what do you do?

Speaker 2 (32:48):
I find it seemed to be able to do it.

Speaker 3 (32:50):
Well, she did for one company, for Honda. But you're
asking you, like the whole industry, what does everybody do?

Speaker 5 (32:55):
It's the domestic industry, okay, all right, well yeah, well,
and then again we haven't got to the topic yet.

Speaker 3 (33:01):
But it's the issue of tariffs. So again, you know
raise that after the break, we're going to take a break.

Speaker 2 (33:05):
We're gonna take a break, and then we're gonna come
back for your TIFFs.

Speaker 3 (33:08):
We're going to come back for your terriffs.

Speaker 2 (33:09):
So we're going to take a quick break here from
our friends at Bridgestone that we are most appreciative of.

Speaker 7 (33:19):
Knowing that a little rain won't slow down your day.
That's what really matters. Breach doone to runs the quiet
tract times confident control in wet conditions.

Speaker 2 (33:32):
All right, and we're back in Paul. I stepped all
over you.

Speaker 3 (33:35):
You were going to talk about tariffs.

Speaker 2 (33:37):
And it's a good thing that that you like maybecause
otherwise you might get there or something or have have
Tom do it. He might just want to do it himself.

Speaker 5 (33:45):
No, So what I was going to say about tariffs,
because you were on the point of what do you do?
How do you how do you make bets? You know,
how do you how do you make capital investments in
an environment where you know, you have these huge technology
shifts that are taking place and some of those bets
are still a long ways off.

Speaker 3 (34:08):
And then you've got.

Speaker 5 (34:10):
Tariffs and the disruption of tariffs also, so then what
do you start looking for as far as your footprint
And is it a long term you know shift that
we're moving into, you know, these markets that become far
more protective, or is this a short term game, and

(34:30):
this is a real challenge if you're running an OEM,
you're running a large supplier or any type of supplier,
what type of investments do you make?

Speaker 3 (34:40):
And just this.

Speaker 5 (34:42):
Environment of uncertainty, and that I think is the real
challenge that organizations have going forward here, not only over
the next three years, but then what happens after that
and what big bets do you make as a result
of just this polarization that we have, you know, happening
around the globe.

Speaker 2 (35:02):
Well, you know, you're speaking of the tariffs, and Jonathan
Smoke of Cox Automotive today said that they calculate it's
going to cost the industry one hundred billion dollars a year.
So so, Tanya, let's talk a little bit about affordability.
I ask you, Ton.

Speaker 6 (35:18):
Doesn't care, Well, it's going to affect everybody.

Speaker 2 (35:22):
But I mean, right now, we see that that cars
are you know, average transaction price, you know, forty nine
thousand bucks you know, across the board, which clearly is expensive.
And how does the how does the industry continue when
many people in the market can't afford to buy a

(35:44):
new car.

Speaker 6 (35:45):
Well, some of them aren't that expensive.

Speaker 4 (35:47):
I mean belief twenty nine thousand, So I mean the
Equinox another one there.

Speaker 6 (35:52):
You just have to be particular about.

Speaker 2 (35:54):
Once you be in the electric cars, they're they're going
now we're talking about ice fields.

Speaker 6 (35:58):
Yeah, for hybrids.

Speaker 3 (36:00):
No, I think she's right. I mean we should keep
the evs in the conversation because I mean, we are
going to see there's a new bolt coming. There's Yes,
there are affordable vehicles out there that are battery electric,
that are that are still part of the conversation. I
think to your point about the fifty thousand dollars, it's
forty nine thousand and nine to fifty years. It's like

(36:22):
forty five dollars short of the fifty thousand dollars. Market's
like right on the cusp. You say that's expensive. Tell
that to a pickup truck buyer. You know, the average
I think the average transaction price for a full sized
pickup truck these days is sixty thousand or above. And
it's easy to spend one hundred grand from full size
pickup and it doesn't even have to be the heavy

(36:44):
duty pickup truck, you know, with a diesel engine. So
you know there are people out there who apparently don't
think twice about spending at least fifty grand first.

Speaker 2 (36:55):
All right, so maybe this won't be surprising to you,
But I looked at numbers I'm experience for second quarter.
So this is this is the average of what people
are paying. A monthly payment of seven hundred and forty
nine dollars. The loan amount is forty one nine hundred
and eighty three. The interest rate is six point eight percent,

(37:17):
the loan term is sixty eight point eight seven months. Okay,
and call me crazy, but you know that that seems
somewhat expensive to me. And so then I thought, okay,
so you know that the FED cut the interest rate,
and so I wildly cut that six point eight percent

(37:40):
in half and said, okay, what would that be? What
would the monthly payment be, you know all those conditions,
and that goes down to six hundred and sixty bucks
a month.

Speaker 3 (37:52):
Okay.

Speaker 2 (37:53):
So then I looked at the what that would be
of the median income of a household in the United
States right now. So if they're doing the you know,
the the six point eight percent interests, and that is
that payment is fourteen point five percent of their monthly

(38:13):
take home. And if we go down cut that in half.
It's twelve point seven percent. It's just like, how can
this industry operate when there are so many people who
just can't do that well.

Speaker 3 (38:24):
And also the industry relying on those people taking on
that much debt. That's that's that's that's the really scary part.
I personally want to drive my cars into the ground.
I want to pay for them, I want to own them.
I want to drive them as long as I can
before it's time to get another car. That's just that's
just me thinking. But then every time I read a
story like that, I hear, you know, what what the

(38:47):
what the monthly payment is for most people who are
buying Alexis or a Cadillac or a Draguar. I'm like, so.

Speaker 2 (38:55):
Tom mentioned pickup trucks, Tanya, you pointed out that today
but earlier that Hundai is working on a mid sized truck.
What do we know about that?

Speaker 4 (39:07):
It's going to be a competitor of the Tacoma and
the Ranger, And I mean that segment has been popular historically,
and it's got a real interesting look to it's it's,
you know, not going to be like those other vehicles.
It's got a real muscular stance, so it might it
might grab some attention.

Speaker 3 (39:25):
And it's supposed to be body on frame.

Speaker 6 (39:27):
Yes, body and frame.

Speaker 3 (39:29):
You know the Santa Cruz, the small Tucson with an
extended bed that is you know, that is unibody. It
drives carlike, it doesn't feel trucky. And now, and they've
been talking for years, even before they had the Santa Cruz,
they wanted to have some sort of an authentic pickup
truck for the US market. It's taken a long time
for them to get to it. But didn't you see

(39:52):
some numbers on the mid size segment that was doing
terribly well.

Speaker 2 (39:56):
Yeah, So basically I looked at the Colorado, the Canyon,
the Ranger, and let's not forget because you talked about
Nissan the Frontier.

Speaker 6 (40:03):
Yes, the Frontier.

Speaker 2 (40:03):
People forget about the Frontier, and I find it very
interesting that the Ranger isn't selling that much better than
the Frontier. So credit to Nissan on that one. So
I took all of those and their sales in the
first half and added them together. And then I looked
at the sales of the Toyota Tacoma. So if we

(40:25):
add all the other ones together, it is one hundred
and thirty four seven hundred and twenty nine one hundred
and thirty eight seventy three, So it's a difference of
three thousand, eight hundred and fifty six.

Speaker 3 (40:38):
They've owned the segment for a long time.

Speaker 2 (40:40):
Yeah, And I remember when when the Colorado and Canyon
we're going to be you know, being you know, coming back,
and they were, you know, Chevy can do big thing.
And I was talking to the guys at Toyota and
I asked them, I'm like, well, gosh, aren't you concerned,
you know, you you have such a big part of
this market. And they're like concerned about what they were saying,
the pies and get bigger, you know, we'll just you know,
it was like, we'll take less percent of a big,

(41:02):
bigger pie.

Speaker 3 (41:03):
We don't care.

Speaker 2 (41:03):
But you know, the interesting thing is is that you know,
the Ford Maverick has been doing like fantastically well, Santa
Cruz not so much. So is it possible that we're
going to get like you know, we we've talked on
the show, not now, but about you know, Pete Carr
and I just wonder are we going to reach peak

(41:25):
truck that people are going to be tired of buying trucks.

Speaker 3 (41:27):
Have We've been asking that question for the last twenty
five years.

Speaker 5 (41:32):
Yeah, but it isn't this Hyundai's ultimate move into the
truck segment, you know, so they enter with a smaller
truck and then eventually start moving up to the full
size pickup truck.

Speaker 3 (41:41):
That's got to be Yeah, I'm not sure that they
want to do that. I mean, Toyota hasn't even done
all that well with the thunderin full sized truck. Nissan
they tightened, they killed the Titan. You know, all you
got to do is look at the Titan as an
example of let's let's not go there. It's hard enough
for them to make me. So what's the uti for Hyundai?
Then that's a good question. Uh. Maybe they're just looking

(42:05):
at their whole portfolio and just wanting to fill in
a gap. And because they're looking at Toyota like, well,
Toyota can do it, why can't we do it? And uh,
maybe they're not seeing enough other space to grow their sales.
You know, how many more Santa Fez can they sell?
How many more Tusuns can they sell? You know, as
as it is the Sedans that they had stuck with

(42:26):
for a while not doing as well as they were,
so you know, it's it's it's hard to figure out
what exactly they're you know, is motivating them.

Speaker 2 (42:40):
So so okay, so shifting a little bit. And I
know you've written about this, Tanya. We've been speaking about Nissan.
So a few weeks ago, their head marketing guy who
came to them from Lexus left And it doesn't sound
good when the guy's been there for two years and
decides to leave.

Speaker 6 (43:01):
I know, ben A Shahani, That's that's what we're talking about.

Speaker 4 (43:04):
And he went to AT and T and he has
actually been commuting from Dallas to Nashville or Franklin for
the last two years. He's got a young family, a
wife back in Dallas, so he got a job back
in Dallas, which she's probably gonna make just as much
money and have less headaches and less with commute. So
I don't know that it's a reflection on Nissan, fair enough.

Speaker 2 (43:29):
When I saw that he went to AT and T,
I was thinking, do you leave the auto industry and
go to another industry?

Speaker 3 (43:35):
So you know what I heard.

Speaker 5 (43:37):
So I was talking to somebody this morning was based
in Europe, and said, hey, do you know what the
number one job of a CEO of a European automotive
supplier is?

Speaker 3 (43:48):
And I said, no, what is that? To find a
job outside the industry.

Speaker 5 (43:53):
So, you know, here is a perfect example, very timely
this morning that that came up. But yeah, I think
it's just it's tough. It's a tough industry right now,
and we're in unprecedented times as far as all these
challenges that are now coming on the traditional players, you know,

(44:15):
the influx of competition coming from everywhere, the technology change,
all of this really creates a difficult time to operate in.

Speaker 2 (44:25):
So these guys are looking for somewhere else to go. So,
speaking of speaking of you know, technology and changing, what's
going on? I mean, so there was the announcement that
the H one B visas are not going to come with.

Speaker 3 (44:38):
A price tag hefty price tag.

Speaker 2 (44:42):
Okay, this industry needs more people who are tech savvy.
The people in Silicon Valley are rather concerned about this
one hundred thousand bucks for they should be per person.
What is the impact of this going to be on auto?

Speaker 5 (45:03):
So I think what you're going to start seeing is
more and more investment in India. You know, you're going
to start seeing that software development, that technology development around
that is going to start moving offshore.

Speaker 3 (45:19):
It's been happening for you. Yeah, yeah, it is, It is,
it is.

Speaker 5 (45:22):
But I think this is only going to continue to
expedite that because nobody is going to be able to
afford to compete with software engineers out of some of
these third world countries where they're producing them at a
very hefty rate. It's hard to do it without one
hundred thousand dollars price teck, you know, to bring somebody

(45:44):
into the country, let alone you know, you know, just
trying to keep pace with these third world countries. So
if you look at Bosh, if you look at you know,
ZF they have huge, huge netw works of supply or
you know, the suppliers and full time employees that are

(46:05):
based in you know, Mexico, you know, India doing this
type of software development.

Speaker 3 (46:13):
So my expectation is is.

Speaker 5 (46:15):
More of that is just going to go offshore because
you know, somebody will come up with the idea here,
but they'll find a team of engineers to develop it
somewhere else because it's just cost prohibitive.

Speaker 3 (46:25):
It makes sense, but doesn't that run counter to the
philosophy behind tariffs. I mean, isn't the idea that we
want all this activity here. We don't, we don't want
to be expert. Yeah, you know.

Speaker 5 (46:35):
And one of the things I would say, and I
had this discussion with my thirteen year old about tariffs,
and and the issue is is ultimately, hey, at the
end of the day, you know, if you're going to
make a coffee pot, where is the cheapest plates to
make a coffee pot? Is it here or is it
where the labor rates are a dollar two dollars an hour?

(46:57):
You know, at the end of the day, that's what
you're trying to compete with as far as labor intensive products. Now,
will technology be produced in areas like this potentially? You know,
and I agree with you. The idea behind tariffs is
to bring more and more keep more of that work here.

(47:17):
But ultimately you've got to sell products in a global market,
you know. And the coffee pot that's made here versus
the coffee pot that's made in a lower cost country,
can you really tell the difference? But modern manufacturing techniques
you can't. So that's the issue I think you ultimately
get into when you start talking about tariffs in this manner.

Speaker 2 (47:41):
So basically, what I think I hear you're saying is
in the two of you, is that we will make
stuff here. That's the goal, right, we bring reshore manufacturing
and we'll be making this stuff here, but the smart
stuff will be being done somewhere else.

Speaker 5 (47:58):
Yeah, where you can leverage lower cost labor to do that.
And the issue that we have here is, you know,
and it's been this way for the past several years,
we're just not producing as many engineers as you know
other areas of the globe, and those engineers from other
areas of the globe have far different salary expectations.

Speaker 3 (48:22):
As a matter of.

Speaker 5 (48:23):
Fact, you can go to any US based you know,
master's program and the engineers are always from outside the country,
you know, because the engineers here that go get advanced
degrees want to get business degrees because they see that
as their path to affluence, where somebody in India or

(48:44):
somebody in China sees their path to affluence coming here
to get that advanced degree so they can get into
an international company. So I think this is a challenge
that we have that you have to step back, and
again my view would be to look at the broader
and dust drill strategy and say, hey, what are we
really trying to accomplish here, and how do we incentivize,

(49:05):
you know, the system to make the system work the
way we want it to see.

Speaker 3 (49:09):
But when I hear like the state of Michigan talking,
they they want all that smart technology here because the
state has lost a lot of manufacturing jobs. We've got
the GM Tech Center and Warren and Tech Center in
Auburn Hills and Dearborn, I mean, and then also the
suppliers who have set up a lot of a lot
of tech centers all over here. Isn't that really important

(49:32):
like to the state economy, not to let that that
that intelligence outside the country. But you know, let's let's
make this a hub for the most advanced technology that
you know that the mobility sector can can muster. But
can they afford it?

Speaker 2 (49:50):
Therein lies the problem on a more fun subject, Tanya,
let's let's discuss that Ford has announced that it has
a new tagline ready set forward. Okay, so someone in
this room had asked me the question of whether none
of you guys.

Speaker 3 (50:14):
Question this is a very perfect question.

Speaker 2 (50:15):
I want to involve everyone in this conversation was was
was basically that Ford has had a bit of an
issue regarding recalls, and so the question then becomes Sean,
the question then becomes whether they should spend more time
going back to a tagline of quality as job one
and fix these problems, or whether they should spend what

(50:39):
will undoubtedly not be a trivial amount of money on
positioning themselves as your friend in your life going forward,
as they seem to be trying to do well.

Speaker 4 (50:50):
I don't think ready set forward means they want to
be your friend. And just to be clear, they've they've
been working in this campaign for two years. Lisa Mata
Razzo got higher by Farley explicitly.

Speaker 6 (51:02):
To do this campaign.

Speaker 4 (51:04):
So yes, they've had quality problems, They've had some recall issues,
so they've had a lot. But you can't just take
the marketing budget and put it toward the you know,
product development budget. It's you know whatever the quality budget,
whatever that would be. It's two different, you know, two
different things. And we when we saw the campaign at

(51:25):
headquarters a couple of weeks ago, that came up. Of
course we all asked her, you know, how how can
you put out this campaign when you're having all these
quality issues, and she said, this is not about that,
this is about our overall brand image. And you know,
people buy our vehicles for a lot of reasons, not
just because of the quality. They feel like the recalls
are an acknowledgment that they're trying to fix the problems.

(51:47):
You know, they're trying to make the vehicles better for
the long run before somebody dies. So you know, she
acknowledged that they It does see there seems to be
a disconnect. But people want exciting vehicles. They want, you know,
products that aren't toasters on wheels, is what I think
she said. And they don't sell toasters on wheels, and
that's what they're that's what they're trying to communicate.

Speaker 3 (52:09):
You know.

Speaker 2 (52:09):
It's sort of funny is that you were speaking about
design before, and I'm going to ask you a design
question any moment. But you know, it used to be that,
you know, designers in this town Ford, designers in particularly,
used to refer to Toyota cameras as being toasters, and
that all the products from Toyotas were toasters. It seems
that those toasters are doing pretty well in the market.

(52:31):
If you look at the market share of Ford versus Toyota.

Speaker 3 (52:34):
You see cameras running at NASCAR, so I mean, do
they raise toasters apparently.

Speaker 4 (52:40):
Well, it's interesting you say that because Lisa came from Toyota.

Speaker 6 (52:43):
She was there for twenty years.

Speaker 4 (52:45):
So if anybody can make fun of toasters on wheels,
I think she probably.

Speaker 3 (52:48):
Came from Toyota.

Speaker 2 (52:49):
Yeah.

Speaker 3 (52:49):
And also it's not necessarily fair to pick on Ford.
I know that peking on Ford.

Speaker 2 (52:53):
I'm asking a question.

Speaker 3 (52:54):
They've got a lot of recalls, but at how many
recalls across the industry. I mean I was on one
website today where like seven automakers have announced recalls in
the last week, and I was like, wow, this is
just talk about peak truck, about peak recall, you know, and.

Speaker 4 (53:11):
There have been studies that consumers actually pay less attention
to recalls than you may think unless there are deaths involved,
like driveway.

Speaker 3 (53:20):
Because you know, they become white noise.

Speaker 4 (53:22):
Well, yeah, there's so many of them. There's so many
of them, not just from four, from other automakers. So
unless there's a death involved, you know, if it's something
like exploding airbag. Oh I didn't say that exploding airbix
or something there indeed.

Speaker 2 (53:35):
All right, so we're going to lighthearted, morel like. So
this is a design question. So I read this Australian
thing of publication that they're talking to these senior BMW designer.
You're talking about BMW four and they're designed Oliver Helmer,
and he said, and this is a quote, and I
want your reaction to this. For instance, what we have
learned is that the station wagon is becoming more popular

(53:57):
in the United States. Now, as you're in automotive journalist,
you're gonna tell me a station wagon with a with
a manual transmission and a diesel engine is what anyone needs.

Speaker 3 (54:07):
Could be yeah, you're you're right, you're right, or it
could be just a Miata, you know, so anyway, but yeah,
I do find that a little odd. If if you
think about what the US market has done with crossovers
and SUVs, you would think that the station wagon would
I call the station wag because that's what I remember

(54:28):
growing up in and sitting in a rear facing thurd
row seats and looked out the back window that would
go down, the thing would pull. It's just it was
wild stuff. You know, wood panels, the wood panel Yeah, yeah,
absolute country Squire. Yeah, So in that sense, you know,
it would make sense that that the wagon would would
be popular in the US.

Speaker 2 (54:49):
You think it's gonna be a comeback.

Speaker 3 (54:51):
I mean, I would love for it to make a comeback,
but it's not. It's it's not realistic. When you look
at how many Rev fours and crvs they sell every day,
it's it's astounding. So the whole market has just migrated.
They've they've adopted that that body styles as the future
of cars in the United States. And yet I saw
a Volvo Wagon on the road the other day. I'm like, damn,

(55:14):
that's a good looking car.

Speaker 2 (55:15):
You know it was was this Tom Murphy auto journalist
or Tom Murphy, Tom Murphy.

Speaker 3 (55:19):
Consumer, Tom Murphy consumer. Who can find one of those
cars used and get a good deal on it. And
you know there there's yes, there's some nice bmw and
Mercedes wagons if you can get your hands on the oh,
the the all road. Yeah. And when you look at
the Ferrari Purosang, does that not look like a little

(55:42):
station wagon? You know, Ferrari's answer to the suv. It's
about as low as a Miata. How they can get
away with calling that an suv. I have no idea,
but when I look at that, I think of a
station wagon profile. I think of also the the BMW
M Coop if you remember the high top sneaker from
the early two thousands, which is a really cool, kind

(56:04):
of groundbreaking body style that was like a station wagon,
except it was two doors, it was compact, it was
real sporty, and you get an M version, the M Coop.

Speaker 5 (56:15):
So it's interesting that that comes out of Australia because
any OEM would have briefed him if you were being
interviewed here, don't refer to it as a station wagon,
refer to it as a crossover or anything but a
station wagon, because we all have that wood panel, you
know idea. Just as you described that, I don't think

(56:37):
you know, my wife has always said I'm never going
to drive a mini van.

Speaker 6 (56:41):
I just station wagon. Different.

Speaker 5 (56:44):
So I think it's interesting that you brought that up
that way, that this was in Australia, that this was
said so that they could quickly articulate to the market.
But there's no way Ferrari would refer to that car
as a station wagon, you know, although you look at
it and you're right, that is the perfect profile for
a station wagon.

Speaker 3 (57:05):
Not quite long. I mean, yes, the station wagon in
my mind has to be like twenty feet long. It's
got to be enormous lots of room in there. So
it's and I don't even know what the market's like
right now for for station wagons in Australia. Apparently, well I.

Speaker 2 (57:21):
Think he was there and this just came up during
a law It was it was a broader conversation with
the past, but I saw the station wagons and I
just had to ask it. But I didn't know that
you'd be so excited about the station.

Speaker 3 (57:31):
Well there, I mean, there is the is it the
M five touring that is you know the BMW five
series touring that I think they showed at Pebble Beach
maybe a year ago, and it's going to be on
sale now. And I think that's he's probably talking about it,
because that car could really be kind of a canary
in the coal mine, like let's see how this one does.
Let's you know, this could be something that would gain

(57:55):
some traction.

Speaker 2 (57:56):
So predicated on your positivity here, I'm thinking that hund
I missed the mark and they should not be developing
a pigm truck they should all right, all right, Tanya,
last one racing. So Cadillac is spending a boatload of money.
You have a figure which is astonishing to make. You're

(58:17):
here to find that. While I also point out that
today that Ford announced that the Ford Racing hyper car
team for Lawan twenty twenty seven is established and they're
going all in.

Speaker 4 (58:28):
So what was the Cadillac is spending an estimated one
billion dollars total to enter Formula one in twenty twenty six,
including the four hundred and fifty million dollars upfront fee
to join the grid.

Speaker 2 (58:39):
So how many Cadillacs are they going to sell?

Speaker 6 (58:43):
You know, it's.

Speaker 4 (58:44):
It's racing is just a halo thing. You can't really
measure it in terms of like somebody saw it and
consumers don't even know it. It's just they're going to think, wow,
Cadolek's cool. I don't know why I feel that, but
CADOLEC seems cooler now, you know, and then it did
five years ago or ten years ago.

Speaker 3 (59:01):
Think about the brands. Think about Porsche and BMW for instance,
they are not in Formula one, Mercedes in Formula one,
But does it do you think less of Porsche or
BMW because they're not in Formula one racing. I mean,
I don't really see a huge connection between sales and

(59:22):
the fact that, you know, a brand is active in
a in a particular race series. I mean, maybe it
impacts Camaro sales or Mustang sales. I know Camaro's gone.
I don't know if it affects Camra sales. But anyway,
it's uh, it's it's it's an odd question that you know. Yeah,
we all think about it. We all wonder is there

(59:42):
some sort of a connection there. But when I think
about Porsche, they would or should be in Formula one
of all the brands out there, and they're not.

Speaker 6 (59:51):
They don't need to be. They don't need to they
don't need to be.

Speaker 3 (59:53):
They don't need to spend a billion dollars or two billion,
whatever it takes. And think about Cadillac in their in
their first race, didn't didn't do so hot, you know,
and I think there was there were a lot of
expectations for that team Formula Yes, you're right, you're right,
Porsches and Formulae, so they were they were invested in
by electric racing for now is cool, that's good, that's awesome,

(01:00:19):
you know, good for them. They they win a different course.

Speaker 2 (01:00:23):
So all right, Paul, final question you what could a
company do with a billion dollars?

Speaker 3 (01:00:28):
Oh? Wow? I think that's the topic for the next show.
All right, all right, every years worth of recalls?

Speaker 2 (01:00:35):
Maybe harsh. All right, So we're at the top of
the hour. This has been a lively discussion.

Speaker 3 (01:00:48):
I think. Good.

Speaker 2 (01:00:49):
That could be wrong, Tom Murphy, what thank you?

Speaker 3 (01:00:53):
Oh I'm glad to be here.

Speaker 6 (01:00:54):
Thank you for having me, Thank you for having me again.

Speaker 3 (01:00:57):
Paul is always great to have you on the show,
and very much.

Speaker 2 (01:01:00):
You make us all smarter.

Speaker 3 (01:01:02):
Maybe you make me smart these guys who are already smarter.

Speaker 6 (01:01:04):
I feel like I learned a lot today.

Speaker 3 (01:01:05):
Yeah, thank you very much. I want to thank everyone
for watching.

Speaker 2 (01:01:09):
Come back next week.

Speaker 1 (01:01:10):
We'll be here.

Speaker 2 (01:01:11):
Well they won't, but I will. So we appreciate your
time and are thankful for it.

Speaker 5 (01:01:18):
Thank you, Gary, Thank you, Gary

Speaker 1 (01:01:23):
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