AAH #768 - Horse Powertrain Enters the Motorcity

TOPIC: Horse Powertrain PANEL: Thomas Lewis, Horse Powertrain; Jack Keebler, Consultant; Gary Vasilash, shinymetalboxes.net; John McElroy, Autoline.tv

Episode Transcript

Speaker 1 (00:00):
I'll don't line. After Hours is brought to you by
Bridge Stone Tires Solutions for your journey.

Speaker 2 (00:08):
The John Welcome back.

Speaker 3 (00:10):
Yeah, I know. I've been gone for the last couple
of shows and on vacation, had a great time. But
now my batteries have been recharged. I am so glad
to be back here on the set.

Speaker 2 (00:20):
Well, the audience is prep for you, johny.

Speaker 4 (00:25):
Maybe they are.

Speaker 3 (00:26):
So let's tell everybody who's on the show today. We've
got Tom Lewis from Horse. We're going to get into
what Horse is all about. We've got Jack Keebler here.
How do we identify you?

Speaker 1 (00:37):
Jack?

Speaker 4 (00:37):
Former journalists?

Speaker 3 (00:39):
You were in what product planning at General.

Speaker 4 (00:41):
Motors Product planning and vehicle development? Yeah, okay that was
twelve or thirteen.

Speaker 3 (00:46):
Years yeah, and now doing consulting consulting Yeah, okay, good,
several different makers. Oh cool?

Speaker 2 (00:53):
All right, Horse just like the four legged creature.

Speaker 5 (00:58):
That's right.

Speaker 2 (00:59):
Yeah, So tell the audience what this is.

Speaker 5 (01:02):
Yeah, absolutely, So we're Horse Powertrain. So we're a new
joint venture with one hundred and twenty five years of experience.
So essentially we are the carve out of the powertrain
divisions of Renault Volvo and Gili, so they took out
their powertrain groups. We formed a joint venture and now
we make next generation powertrain solutions. We sell that to

(01:23):
external companies.

Speaker 3 (01:25):
So let's go through your product portfolio a little bit.
What you make both engines and transmissions, right.

Speaker 5 (01:31):
That's right. Yeah, so, and we continue to make engines
and transmissions for the you know, these previous companies for
no Volvo and Gili. Of course, we're focused big on
hybrids and you know, high efficiency internal combustion engines, turbocharged engines.
I would say, also, we're kind of more in the
small displacement space. Yeah, so two point oh leader, one

(01:52):
point oh leader. You know, I would say, looking in
North America and our customer base here, we're not interested
in competing in V eight engines. You know, it is
cool to see a resurgence there. You know, I love
to see the hemiback, you know, in the RAM truck
and to see that sell out. You know, we're not
playing in that space. We're playing more in high efficient engines, hybrids,

(02:15):
hybrid transmissions and internal comm.

Speaker 4 (02:17):
Powertrain is commodity, yeah exactly.

Speaker 3 (02:20):
So yeah, so let me set the stage a little
bit for the discussion. I want to see us get
into you here. A decade ago, Sergio Marcion, CEO of
Fiat Chrysler, wrote a significant white paper and you guys
all know this Confessions of a Capital Junkie, and in
it he said, look, gm Ford and Chrysler build almost
exactly the same powertrain lineup, same engine, same transmissions. You know,

(02:45):
you take any aware there, I'll say two liter engines.
They're all within a fraction of a milimier of size.
They weigh the same, they produce the same emissions, they
produce the same fuel efficiency more or less. And guess what,
Ninety percent of the car buying public could care less
what's under the hood, especially when it comes to transmissions.

(03:05):
They never bought a car or a truck based on
the transmission that it had. And so Renault really gets
the credit. Luca Demeyo, right, the CEO of Renault, said
he read the paper obviously and said, you know, this
is a great idea. Why don't we just spin this off?
And that's how Horse was created. And then Jelie quickly said, hey,
sign us up, we want to be there and pulled

(03:27):
Volvo along with them, or maybe it went the other
way around. But I'm intrigued that Horse has got an
office in Detroit because for GM Ford installants, or even
if it's just GM and Ford, the opportunity to spin
off their powertrain operations or at least a portion of it,
could free up billions in capital that they could invest elsewhere. Absolutely,

(03:52):
what kind of phone calls are you getting here that
Horse is open to an office in Detroit.

Speaker 5 (03:57):
It's been busy, John, So I can tell you that,
I mean, we we have a ton of opportunities here,
very interesting conversations, very mature conversations about business in the
United States. Yeah, so such that we're far along the
path and defining our production strategy. So a plant in
the US, like I said, in office in Michigan. So currently,

(04:18):
you know, I'm just working from home in Brighton, Michigan.
But you know, I'm deep in the study to establish
an office for you know, what will become the initial
phase of our tech center, and then we'll expand to
something a bit bigger, you know, with garage space and labs.
But that's exactly the points. Yeah, So there's still going
to be a lot of internal combustion engines in the

(04:41):
you know, into the midterm, you know, by our projections,
and even these are some old projections, it's even changing
into a more internal combustion way, especially in North America.
But in our latest we expect six out of ten
vehicles produced in twenty forty globally to have internal combustion engine.

Speaker 3 (05:00):
Includes plug ins, E revs, whatever happens to be. Yeah, absolutely,
that's pure rice.

Speaker 5 (05:04):
Yeah, that's right. So somebody has to take care of that,
and somebody needs to continue to iterate development and make
these very efficient engines, right. You know, five years ago,
a lot of companies have got to a point where
they said, this is our last generation of internal combustion engine.
You know, I was, that's yeah, Alling Electroc, that's right,

(05:26):
this is your last chance to get in as a
tier one because we're not changing anything since after this,
you know. And of course along the way, our internal
companies continue to innovate, you know, and we have made
huge strides, and so we announced that I a recently,
you know, our current internal combustion engines are reaching forty
three and a half percent BTE.

Speaker 3 (05:48):
But that's for an EREV application, correct.

Speaker 5 (05:51):
That's for a hybrid application.

Speaker 3 (05:52):
Yeah, but EREV particularly, I mean you're using these it's
non extended range.

Speaker 5 (05:57):
Yeah, it's beyond These are just with dedicated hybrid transmissions.

Speaker 3 (06:01):
Really.

Speaker 4 (06:01):
Yeah, that's the same ballpark as Toyota, isn't it.

Speaker 5 (06:05):
Well we're going beyond that too, And I can't speak
for Toyota, to be honest, but currently we are developing
engines that are more efficient than that, cresting forty five percent,
and we do have some developments underway to even pass
fifty percent, which was thought to be impossible.

Speaker 3 (06:23):
That's like Formula one levels, yes, and as you know,
Formula one levels. It's almost as if cost is no
objective or no hindrance, right right, And you can throw
everything in the kitchen sink at it. And they're only
at about fifty one percent, I want to say.

Speaker 5 (06:36):
And I'm glad you mentioned cost because I mean also
we've been able to innovate over this last five years,
has been tremendous in terms of cost. And I mean
this is where we see really the speed of our companies.
You know, we've got Renault over their powertrain group is
in Spain, you know, and now part of horse power Train,
and you know Volvo and Swede and Jeli in China
the collaboration of these groups has been tremendous, John, and

(06:58):
I think, you know, take for example, one of the
conversations that we've been having, you know, with a with
a customer over the past half a year. Within that time,
we've been able to iterate our technology and release something
such that we're able to bring the cost down twenty percent,
bring the weight down ten percent.

Speaker 3 (07:16):
By designing cost out or is this just simply the
scale that you're getting with these companies mashing their powertrain
ops together.

Speaker 5 (07:24):
It's both, but mainly cost mainly design. So it's mainly
design elements due to the you know, the integration, the
further integration that we did bringing down size.

Speaker 3 (07:35):
Taking out example, you know, any example of how you
took cost.

Speaker 5 (07:39):
Out well, reducing material is certainly you know, a big
part of that, integrating different functions within the electronics for sure.
Now when you talk about scale too, being that we
have been pushing you know, scale and a future, a
bright future for our supply base too. We been working

(08:00):
with our suppliers to bring in more efficient, higher technology
into our electronics and into the components that we purchase. Yeah,
so there's quite a bit going on there.

Speaker 4 (08:11):
What about fuels, Are you we earn anything or I
mean methanol, ethanol, yeah, CNNG, LPG whatever.

Speaker 5 (08:20):
So yeah, we definitely do have some studies for.

Speaker 4 (08:24):
Is there looking at low carbon fuels, right, that's part
of what the future is looking.

Speaker 5 (08:28):
At, right. And we have some big studies for methanol
for hydrogen combustion as.

Speaker 4 (08:33):
Well green methanol.

Speaker 5 (08:35):
Yeah, okay, So.

Speaker 6 (08:37):
Okay, all this exuberants aside.

Speaker 7 (08:41):
If I think.

Speaker 6 (08:42):
About what is available out there right now, and I
think about what's been available for the last many years, okay,
the OEMs basically say part of what makes a car
a Chevy or a Ford or a Doe is what.

Speaker 2 (09:01):
We put under the hood.

Speaker 6 (09:03):
There has been very little purchase of I mean, yeah,
everybody buys Pistons, you can buy Conrad's.

Speaker 7 (09:10):
You can buy blocks, let's say.

Speaker 6 (09:11):
But when you get right down to it, the engine
is the heart and soul.

Speaker 2 (09:18):
Of a given company, and and so.

Speaker 6 (09:23):
Who is interested in buying this from you? You're you're
basically giving them a package, right and saying, hey, put
that on your Carrie.

Speaker 4 (09:30):
I think maybe the technology has evolved to the point
where it's gotten so smooth, so quiet, so fuel efficient,
and all those manufacturers are sort of they're coming to
the same point. Technically, the powertrain isn't really it's not
on your radar screen anymore. As a consumer, you're just
looking for something that's called smooth, right.

Speaker 2 (09:52):
Well, but at the very top of the show he
said he was glad that the Hemmy is back.

Speaker 7 (09:56):
Okay, we know.

Speaker 3 (09:57):
What those are, toys, right right?

Speaker 6 (10:00):
I mean, but so you know, doesn't Ford still promote
the Echo boost engine? Yes, okay, and that's nothing special.

Speaker 4 (10:11):
You know, quiet, not a commodity.

Speaker 6 (10:14):
But no, but Chrysler's come out with another hurricane engine.

Speaker 7 (10:19):
Okay, I mean these.

Speaker 3 (10:21):
But people don't want it. They want the Hemmy.

Speaker 6 (10:23):
Well, but my point is, but I mean there's character
given to vehicles by and large. I mean, and we
can even see in batteries. I mean, so l TM batteries.
I mean, who cares about that? Well, obviously the OEM
thinks it's important they.

Speaker 3 (10:40):
Did because now they've dropped that whole branding affort.

Speaker 4 (10:42):
Character is still available though, right, I mean that can
be tuned in by you know, good NVH squad at
whatever car manufacturer you're working with, right, Yeah.

Speaker 5 (10:50):
And I think that we will see a kind of
asurgence of people caring about what's one what's under the hood,
Especially with e revs and these more advanced hybrids, they
are getting more exciting. Yeah, and I think when you
can offer you know, smooth power delivery and the let's
say the feel of a battery electric vehicle, but the

(11:12):
security of having extended range, that's cool and I think
that is a selling point, you know, And if you
can have an efficient version of that, you know, readily
available from a company like horsepower Train, it makes it
easier for an OEM to integrate that, you know, because
like you said, they they do have to figure out
what they're spending their money on. And connected services are huge,

(11:34):
you know, ADS and autonomous driving. Even though it kind
of took a bit of a dip there in terms
of you know, implementation, it's still very important. And I
mean higher levels of ADS is becoming more standard. So
companies have a limited amount of funds and resources where
they have to focus their energy on creating usps and

(11:55):
the brand image. But this is going to be an
important point to consumers, and gosh, it'd be nice just
to get that from a tier one like horse Powertrain
at a lower cost of entry.

Speaker 3 (12:04):
Sure, and you know, Gary make a really good point.
The engine still is kind of the heart of everything.
But I don't know is that it matters to ninety
percent of the car buying public, whether Horse supplied that
plug in hybrid or Horse applied that e rev or
Horse applied that three and a half liter turbov six.

(12:28):
But when it comes to the other ten percent.

Speaker 6 (12:30):
The noisy ten percent, the gear heads, right, that engine
matters a lot.

Speaker 3 (12:37):
It's a hemy. They don't want the hurricane, even though
the hurricane is more powerful and more fuel efficient. They'll
pay an extra two thousand bucks to have a hemmy
under the hood instead of that.

Speaker 4 (12:48):
True.

Speaker 3 (12:49):
And you know it's same with GM's V eights, Fords
V eights and I'm guessing maybe that's one reason why
you're avoiding V eights. But play this scenario out for me.
How do you think think Legacy OEMs might approach this?
Would they say here, of course, you take everything from
one leader to three and a half leaders, but we're
going to keep the performance stuff in house. How do

(13:12):
you think it would play out?

Speaker 4 (13:13):
It's effectively, It's like a band aid, isn't it in
terms of uh, it's capacity without the investment. In other words,
they're going to need these engines for sure, and you
can supply them and look like we've just been talking about,
it's this Stuff's this texture that you guys are talking about.
It's really not on the customer's radar screen.

Speaker 5 (13:33):
Yeah, but no, I think you're absolutely right, John. I
think it's that sweet spot you know that uh, you know,
where they don't have this legacy of big V eights
and the following behind it and high profitability. I'm sure
as well, you know, we can provide these engines that
you know, probably are ones that people care less about

(13:55):
what's under the hood. They more care about the fuel efficiency,
the range you know, for these e revs, like to
point B charging, charging speed, you know, and having that
optionality to say, all right, I'm either going to add
gas to my vehicle or I'm going to charge, you know,
depending on their preference.

Speaker 3 (14:11):
And I think it's coming down to user interface. These
stay That's what they care about more than anything. Yeah,
the electronic connection.

Speaker 5 (14:18):
Oh that's true too. Yeah, And I came from a
background in that space too, so I had definitely have
a you know, a spot in my heart for enfotainments
and connectivity.

Speaker 3 (14:26):
So could the Horse provide these legacy auto makers with
engines at roughly the same cost that they're doing it now?
And I'm I'm thinking that with your innovation and your
scale that you could achieve. Yeah, you could probably give
them an and sell them an engine, maybe even cheaper
than that's right themselves.

Speaker 5 (14:46):
That's the big point, John, because we will have bigger
scale because we have, of course all of these different companies.

Speaker 3 (14:52):
Essemaking right now. It's a big number, right.

Speaker 5 (14:55):
Yeah, So we have seventeen plants. I believe it's eight.

Speaker 3 (14:59):
Million million a year. And you're a startup, right, so
I mean, have a few more legacy OEMs jump on board.
Your your skill is going to be enormous. So I
would think you could sell them engines cheaper than they
can make them.

Speaker 5 (15:13):
Absolutely.

Speaker 4 (15:14):
Is it okay to mention some of the manufacturers you're
already selling to So you've got so yeah, publicly document Renault, Yeah,
and publicly.

Speaker 5 (15:23):
There's there's more that we can say, and so.

Speaker 4 (15:25):
Of course the Mercedes Benz that's.

Speaker 5 (15:28):
Right, Yeah, so you know what really have it? Yeah, Mercedes,
we announced that we're providing the engine for the next
generation A class, So I mean.

Speaker 6 (15:35):
We've been talking here about price, but I mean it
seems to me that you guys are developing some clever
technology that others aren't.

Speaker 2 (15:41):
So I see, you guys came out with the horse
C fifteen.

Speaker 4 (15:45):
Yeah, and.

Speaker 6 (15:47):
You you you package it and it's described as the
dimensions of a large briefcase.

Speaker 4 (15:53):
That's right.

Speaker 2 (15:53):
So I mean, tell us about what this thing does.

Speaker 5 (15:56):
So that's so we have a few different areas of focus, right,
one of them is extended range EVS. So that's all
about making these systems have compact as possible and of
course maximizing the efficiency for that specific operating range, you know,
to just charge the battery.

Speaker 4 (16:16):
Right, it runs ato like a pretty steady state speed too.
I mean everything else about the way the vehicle moves
is all electronically controlled, right.

Speaker 5 (16:24):
And so you can imagine that like the use case
behind that is a lot of companies have made these
BEV platforms, you know, and they have fronts and they
have small front ends, you know, and have kind of
optimized space around this electric platform. So now that the
consumer is saying, wait a second, I'm not ready to
make the big jump, and there's a you know, an
obvious push back to hybrids. There just isn't the space

(16:45):
to put an engine, you know, one of their traditional
engines into that. So they have a choice to make.
They're either going to scrap this platform, which has the
newest connectivity, impertainment features, eight ass features, all the latest
and greatest tech, and still sell the legacy platform in parallel,
like we've seen happen recently, or they have to figure
out a way to get an engine that does fit,

(17:07):
you know, And that's what we can bring. We can
bring something that can fit into a creative space. Yeah,
so maybe it's not in the front, you know, maybe
it's behind the wheels in the back.

Speaker 8 (17:17):
You know.

Speaker 5 (17:19):
Because of the compactness of the solutions that we're bringing,
it opens up options to fit into BEV platforms.

Speaker 6 (17:25):
So you can take a BEV and just take the
front and say we're sticking this here instead, you know
what I mean, And.

Speaker 4 (17:31):
We're putting our briefcase in the front, and.

Speaker 6 (17:33):
You guys really need to make very little way in
the terms of packaging for this vehicle.

Speaker 5 (17:39):
And that's one way to do it. But one of
the cool things is that even the EV platforms here
in North America are still pretty big vehicles. So there's
other places to put that briefcase size engine right and
still keep the fronk. So that's the goal. You know,
if we can keep the fronk, that's even better.

Speaker 4 (17:55):
I mean the other the other issue is you're not
if you were. If you were, you know, you were
advancing along and you were doing these electrified vehicles. This
means that you're not going to have to do yet
another iteration of an IC vehicle. You can use the
electrified vehicle platform with your powertrain in it.

Speaker 5 (18:16):
Yeah, that's exactly it.

Speaker 4 (18:17):
We would save you a lot of money.

Speaker 3 (18:18):
You're going to save EV platforms that otherwise might have
to be written exactly.

Speaker 5 (18:23):
That's right. And we're not only bringing you know, these
generators for that. So one thing that we showed an
Ia is we call the future hybrid system and that
has a transmission which can also drive the wheels you
know from the internal combustion engine. So this is you know,
also focused on being extremely compact fitting in these EV platforms.

(18:44):
But it's not just a generator, so one speed transmission.

Speaker 3 (18:48):
Yeah, that's been one of the knocks on E revs
is because they're not mechanically connected, they're not as efficient.
So you're you're making that mechanical connection.

Speaker 5 (18:57):
That's right, that's right.

Speaker 3 (18:59):
How do you think this might work? Again? Prognosticating into
the future in North America visa the the UAW because
all GM ford AND's plant is powertrain plants engine or
transmission are represented by the union. Do you have to
have talks with the union? Have you initiated anything like
that or is that for the OEM to do well?

Speaker 5 (19:20):
One thing is for sure, John, we are bringing jobs,
you know with what we are doing. You know, we're
bringing a plant into the United States. In some cases,
bringing this plant in the United States might not mean
you know, a trade off with jobs here in the
United States, but rather jobs in Mexico or somewhere else too. Yeah.
So I don't think that there's going to be a

(19:41):
consistent or only one situation that happens as we you know,
start to provide you know, engine and transmissions to customers here.
But what's what's great news is that this is dedicated
jobs within the US. Now what that means, you know,
related to to unions is something that we're going to
have to figure out. Yeah, so we haven't gotten there yet.

Speaker 3 (20:04):
Yeah, So what about none Detroit, three OEMs, Toyota, Honda, Nissan, BMW, Mercedes.
I have big operations here in the US. Are they
interested in Horse? Absolutely in North America?

Speaker 5 (20:17):
Yeah, so we have of course broad conversations there with
a variety of OEMs, but absolutely right. I mean our
target here is to provide engines and transmissions to those
companies that build vehicles in North America. Yeah, that's you know,
not focused targets here, that's right.

Speaker 7 (20:38):
All right.

Speaker 6 (20:38):
So you guys, Horse recently exhibited at Agritechnica twenty twenty
five for ag equipment. So I mean, is this something
else that you here in North America are interested in
doing as well as your European colleagues.

Speaker 5 (20:57):
Yes. Of course, our main focus and my main focus
is more on passenger vehicles. Yeah, so I think as
well there will be a place for us to support
some different industries. Of course, as we build scale you
know here and build up a production facility in the
United States. I mean that has to be based first

(21:18):
on larger business. Once that's here, you know, and maybe
we want to expand upon that, then other questions can
be answered, right. I mentioned we have seventeen plants, so
I mean in other areas of the world. Maybe we've
got some room to fulfill the you know, production requirements
for some.

Speaker 4 (21:36):
Of these have Do you have a sense of urgency
about getting your message out to these manufacturers, because I mean, okay,
you guys are clever, but so are all these manufacturers.
I mean they could form joint ventures and start building
engines themselves. Why are you guys the answer?

Speaker 5 (21:51):
Yeah, it's a great point. I mean one of the
one of the reasons is our cost and our technology
that we continue to innovate, like I said, because we've
had that continued focused in other regions and you know,
one point five liters two point zero leader engines have
been the sweet spot, right, you know, in Europe and
in Asia. I mean, what we're bringing to the US

(22:12):
is a lot of you know design know how that
is well fitting to that space you know, already available
by US. I think the other side is, you know,
OEMs tend to struggle to collaborate sometimes sometimes, so it
kind of helps to have a third party, you know,

(22:32):
like us, because you know we're we're a tier one. Yeah,
we're a tier one. We're providing them a service based
on a contract, and that adds a little bit more
comfort for our customers.

Speaker 4 (22:43):
Hey, I hope this is not a trick question. It
looks like all the stuff that you're currently doing is
all four cylinder. Why did you guys avoid the three
cylinder thing? Because I mean a lot of manufacturers are
looking at that reduces parts parts and reduces the internal
friction and things like that. Why fours instead of three?

Speaker 8 (23:03):
The course S ten three cylinder that's I love the
research and yeah, absolutely so we uh, I'm focused on
four cylinders here so far.

Speaker 4 (23:14):
You know in North Does that have to do the
weight of the vehicles in North America?

Speaker 9 (23:18):
Maybe?

Speaker 5 (23:18):
Yeah, I mean we have certain performance KPIs that we're
focused and of course vehicles here need to tow right
for the most part, so that that's where we've been
predominantly focused in North America. Also, you know, we need
to build that scale and hit a sweet spot in
the market. We have the greatest amount of volume. But

(23:41):
you know, as Gary mentioned, we do have three cylinder
engine technology and regions we could bring that here.

Speaker 4 (23:46):
Is that is that any rever is that? Ah?

Speaker 5 (23:49):
The C ten is yeah? Okay, okay, So that's that
is in that same compact ultra compact range extender platform.

Speaker 3 (23:58):
Okay, Tom d Horse building power train plants or taking
over existing ones if automakers want to go on board
with Horse.

Speaker 5 (24:08):
I love the question. I mean we were looking into both. Yeah,
but yeah, if we can find a good brown field opportunity,
you know that that helps. Yeah, it's cheaper, it's quicker
to get it tooled up and running. There are viable
candidates for that right now in the United States that
we're looking at, but we haven't.

Speaker 4 (24:29):
Did you see using their castings and things or would
you I mean, how how much of a tear down
on the plant would you have to do to make
it Horse versus who are with manufacturers?

Speaker 5 (24:40):
I love the question because we're looking at all options. Okay,
So we are actively investigating options like that, and we
haven't made a decision yet. Yeah. So whether we bring
everything in house or whether we are collaborating there, there's
certainly many options on the table.

Speaker 2 (24:57):
Okay, Tom.

Speaker 6 (24:57):
Was there big celebrations at Horse when the seventy five
hundred dollars tax credit for evs one way?

Speaker 5 (25:05):
You know, I think I think ed Horse. You know,
there was I think certainly a lot of celebration as
the market really started to prove that there is a
longer life for internal combustion engines. So I think that's
maybe one of the symptoms of what has been happening.

(25:25):
But you know, before I joined, of course, you know,
I was in a different company, and looking from the outside,
I'm like, man, these guys, that's prophetic what they're doing,
you know, because they they carved out, they formed this
joint venture before the market really started to turn. And
then once you started to see that, you're like, holy moly,
you know, that's a great idea, and you know they're

(25:46):
already there. It would take a you know, another company
years if they started to do that now, and you know,
we're really we've hit a sweet spot.

Speaker 6 (25:55):
So I think so this wasn't an issue of Renault
and Julie saying, you know what, this internal combustion engine
thing doesn't have a future, let's just offload this. And
I mean I think that was the original I mean,
at the time, that would would have been you know,
irrelevant thing. Especially, I mean, you see, you know, Juliet,
you know, Chinese company EV's going madly, you know, Europe

(26:17):
with Renault, a lot of you know, the regulations pushing
evs and you know, suddenly they've got all this capacity,
she said, seventeen plants, five R and D centers.

Speaker 2 (26:27):
I mean it's just.

Speaker 4 (26:28):
Like, yeah, what do we do.

Speaker 5 (26:30):
I'm sure there was some recognition, you know, looking at
the projection of internal combustion engines moving forward and saying, hey,
we have to do something here that makes sense, you know,
because no matter what, there's going to be many internal
combustion engines in operation and in production for several years now,
and we can't let that technology be what was released
twenty or thirty years ago. I mean, a lot of

(26:51):
the engines you know in circulation nowadays, we're launched, you know,
two thousand, you know, so that that can't be the
case in twenty forty, twenty forty five, twenty fifty. You know,
we're not really moving towards a sustainable future if we are,
you know, carrying on this legacy old technology. So I
think there was this recognition that, on the other hand,
no matter what, there is this gradual decline and we

(27:15):
need to do something appropriate to have let's say, appropriately
sized you know, manufacturing capacity globally and make sure that
we're innovating and spending money and as great as scale
as possible.

Speaker 4 (27:28):
So a lot of these engines that the domestic manufacturers
in the United States have, they're sort of running out
of emissions headroom. In other words, they can't meet those
next level of emission standards, you know, reduction to COEO
and Knox and so is that the kind of things

(27:48):
you guys are working on, because my sense was you
guys are still working on these engines. They're they're not
really ready to plug and play yet. They're they're getting
there and they're close, but there's still some development time.

Speaker 5 (28:00):
Oh yeah, so we I meanly, yeah, we're continuously launching
new engines, you know, with the with our legacy companies
right with with Jee. So yeah, there isn't one point
in time when the next generation engine is there, right,
I mean each generation we're bringing is you know, iterated, a.

Speaker 4 (28:23):
Little more clean, a little more fuel efficient.

Speaker 5 (28:25):
A little more efficient, a little more compact, a little lighter,
a little less costly, and so all of this just
comes in waves. And I think that's also what we
can really offer is that we're not only are we
doing that now and proving that technology out, we have
a commitment to continue to do that.

Speaker 4 (28:41):
Right, You're still making the investments that maybe some of
these other manufacturers have stopped.

Speaker 2 (28:46):
Right because they thought they were.

Speaker 3 (28:49):
Going to right and now the market is shifted. You know. Look,
we've been talking about internal combustion, whether it's hybrid included
the same theory could have fly to electric power trains.

Speaker 2 (29:02):
No one's interested, John, No, one's interesting.

Speaker 3 (29:05):
I'm wondering his horse at all.

Speaker 5 (29:06):
Interested in making our own Uh you know, pure BEV technology, right,
not battery.

Speaker 3 (29:11):
I'm just saying the whole drive train.

Speaker 5 (29:14):
It's it's not in our scope today. Yeah. So yeah,
it's really just not in our focus.

Speaker 3 (29:20):
We have.

Speaker 5 (29:21):
We have to focus on really what makes sense for
us and where we have a unique selling point. Uh.
And that's what we determined, is that spot for us?

Speaker 3 (29:29):
No? No, And that makes all the sense of the world.
But like I'm saying, if I'm an automaker and I'm
looking at hey, it makes a lot of sense to
offshore or spin off a big chunk of my ice opera.
I'll keep the specialty performance stuff in the house. Yeah,
but it would make equal sense for an electric power train.

Speaker 6 (29:46):
So is I think Ampere is the oh yeah, yeah,
yeah right, yeah, analog to horse Yeah right, Yeah, so.

Speaker 3 (29:55):
Good point, Gary, I forgot about that.

Speaker 5 (29:56):
Right, I mean, that's that's separate. But I would say,
you know, within a hybrid transmission, of course you have
dual inverters. You have the same high technology that you
would bring into you know, an electric drive. Plus we've
got two motors inside. We have a P one and
a P three motor electric motor within these transmissions. So say,

(30:18):
we're no stranger to the technology by any means, but
we have a certain area that we're focusing on and
optimizing and that's what we're bringing to the market today.

Speaker 6 (30:27):
So let's just say, sake argument that you know you
have this this product, could you see selling it to
three different companies, ideally selling it to three different companies
and it would basically be the same, or would each
of those companies say, you know, we need something a

(30:50):
little bit different.

Speaker 4 (30:52):
Yeah, well that's part of the conversation, isn't it when
you go to pitch a particular company. But to your
earlier point about the that texture that some customers might want,
let's say to throw one out there. I mean in Alfa,
Romeo or something like that, might want something with a
little more I don't know, a little more vibratory quality
or a little more sound quality, but again, yeah, higher revving,

(31:15):
but all that stuff can be talked about and tuned
into into what is essentially the same powertrain.

Speaker 5 (31:21):
Yeah, and I think that so far we don't have
a consistent same answer to that question and all discussions
that we have with customers, we certainly do have customers
that are saying, yeah, loop me in, group me in,
get me the most efficient and cost effective you know
system that you've got, synergize synergize away. And of course

(31:45):
we've got you know, some customers that are saying, I
really need something that fits exactly for these specifications. What
do you got for me?

Speaker 6 (31:53):
You know, so you have a portfolio, I mean, would
would you likely have something for them or would this
be another.

Speaker 5 (32:00):
So with our portfolio, which I would say is relatively broad,
you know, and when you look within the space that
we play, the size of the engines and dedicated turbo
non turbo, yeah, so we have a pretty broad range
of products within that space. So for these customers that say, hey,
hit my specs, you know, we find a way.

Speaker 4 (32:20):
How close can you get?

Speaker 5 (32:21):
There's a way we can tune that or change gear ratios,
you know, in order to meet what they need within
our portfolio. But you know that maybe comes at the
expense of synergizing with somebody else and taking advantage of
that scale.

Speaker 3 (32:35):
Well, you know Tom Stevens, who some years ago ran
GMS Powertrain Operations, Explain to me what an engine is,
he said, John, It's a box. And if the program
people come to me and say I need an engine
for my new program, I always ask him what size
box do you need? You tell me the size, You

(32:57):
tell me the power output, You tell me the emissions
and fuel efficiency that you have to hit, and I'll
give you a box that does that. And to me,
that just simplified everything. Yeah, and so I think you
guys can probably come up with the box.

Speaker 4 (33:15):
I mean an engine. An engine is basically an energy
conversion device. It changed changes the chemical energy that's in
the fuel, whatever it is. And you guys are saying
you're you're you're willing to work with any kind of fuel.
It turns that into electrical electrical energy through the generators
that are on board the vehicle and then pushes the
power into the battery and then again when the vehicle

(33:37):
needs to move, power comes out of the battery and
goes to the motors.

Speaker 5 (33:41):
Yeah, so it's absolutely right. So, and I would say
where it's become a little bit more complex than that
is with hybrids, because hybrid systems then they're they're factoring
in other elements like the size of the battery, the
voltage of the battery, whether this is also made it
too a P four drive you know, uh, rear drive

(34:01):
you know, like an electric machine that is also powered
directly from the battery. Right, So you're looking in a
broader scope than in conjunction with these other pieces. Uh,
where that box has to fit.

Speaker 3 (34:15):
Into right, Right, Look, we're gonna have to wrap this
segment up. This has been a fascinating discussion. I think
your timing or horses timing is brilliant because here is
an industry that is struggling. I mean, they're they're they're
searching in the couch cushions right for more capital. Strip
And if they could just take their powertrain ops or

(34:37):
a big chunk of them and spin them off to horse,
why does that free up a lot of capital?

Speaker 2 (34:43):
See, it's great that you guys are further developing the
entrunt combustion engine because some people just stop them, I
don't want to.

Speaker 7 (34:54):
Listen.

Speaker 3 (34:55):
A lot of my thinking was based on interviews with
the vps of power that's what they Yeah, but anyway,
Tom Lewis, thanks so much for coming on the show. Well,
we'll have you back later, you know for a progress report.

Speaker 5 (35:07):
I'd love to, but this has been terrific. Thank you
so much, Thank you so much, Thank you for having me.

Speaker 3 (35:10):
Yeah, we'll be back in just a moment with some
more news of the week.

Speaker 1 (35:17):
Making the life full of memories, one road trip at
a time, that's what really matters.

Speaker 3 (35:23):
Rich Don Weather Pete Tires with the seventy thousand mile
womited warranty. All right, we're back and there's news of
the week to talk about. And Gary, where do you
think we should start?

Speaker 2 (35:35):
So, John, we had our last show last Thursday. You
weren't here.

Speaker 6 (35:41):
It was we didn't know what was going to happen,
whether Elon was going to get the trillion dollar package.

Speaker 2 (35:48):
Right, he's going to be getting he's getting it.

Speaker 4 (35:51):
Looks like, what do you think, Well, he's still got
to meet some requirements.

Speaker 2 (35:54):
Yeah, I mean there's there's uh, there's some benchmarks here.

Speaker 6 (35:56):
There's some some very serious benchmarks here, and you know,
he's got to increase market cap he's got you know,
the revenue's got to grow with certain tranches, and there's
got to be technical breakthroughs in AI, robotics, autonomous vehicles.

Speaker 2 (36:13):
Yeah, the guy's got a lot on his plate to
do this. But what do you think?

Speaker 3 (36:19):
Well, look, you know, if he can grow the what's
he want to hit an eight trillion dollar market capitalization
for the company. He's going to earn the money eight
and a half if he can take it from roughly
a trillion today to eight and a half trillion. If
you give him one of those trillions, why should shareholders
be upset? I mean the rest of us will be upset.

(36:41):
How dare he earn that much money? But the question
is can he do it? Can Tesla do it as
a car company? Nof and way, There's just no way
Tesla is going to be able to do it. It's
all going to be a body, AI and robots. So
now can he do that? Are going to see how
good Elon really is? Can he pull that off?

Speaker 6 (37:03):
All?

Speaker 7 (37:03):
Right?

Speaker 6 (37:04):
So you are saying that the company that we know
as Tesla, the company that makes these things like Model
Wise and Model threes, that's that's basically irrelevance.

Speaker 3 (37:17):
Irre irrelevance as to whether Elon will ever make this
money or not, whether he can grow the value with Tesla,
you know, eightfold from what it is today. He's not
going to do it with cars. I mean, Tesla is
struggling right now. They you know, their idea of keeping
up with the market is software updates. God bless them.

(37:37):
That's really cool. Maybe getting a little bit more arranged,
but the styling of their cars has not changed, with
the exception of some minor, minor updates. Meanwhile, by D
is eating their lunch in China because it's throwing every
kind of car into every kind of segment.

Speaker 7 (37:54):
Okay, so.

Speaker 6 (37:58):
In the past several months, Tesla has lost the program
manager for cyber Truck and Model three, the program manager
for Model why uh, former senior director of North America
and European Sales and manufacturing, head of engineering for the
Optimist Robot, vice president of hardware engineering, human resources director
for North America, a top battery executive and VP of

(38:21):
North American sales.

Speaker 3 (38:22):
Yeah.

Speaker 7 (38:22):
So that's just this year. Yeah, yeah, yeah, just this year.

Speaker 3 (38:26):
So it's lost a bunch last year.

Speaker 7 (38:28):
So how's he going to do this?

Speaker 3 (38:34):
Well, look, number one, it's I don't care what company
it is, and I don't care what industry it is.
When you see a string of executives going through the
revolving doors and not coming back, that's a sign of
trouble within the company. It doesn't necessarily mean financial trouble.
It just means people don't want to work there anymore.
And that's not a good sign for any company.

Speaker 7 (38:56):
So, you know, I get back to this thing of.

Speaker 6 (39:02):
The threat of Elon leaving the company was perceived as
a potential cause for a collapse of the valuation.

Speaker 4 (39:15):
I would say that that's almost a foregone conclusion. Okay,
if Elon leaves, I don't think that company has a future.

Speaker 7 (39:23):
But okay, what's his secret, sauce?

Speaker 6 (39:26):
I mean, what what is it that he knows about
humanoid robots that.

Speaker 2 (39:32):
Robotic professionals don't know?

Speaker 7 (39:34):
What is it that he knows about AI that AI.

Speaker 6 (39:37):
Professionals don't know about? You know, I mean this is
the thing that mystifies.

Speaker 4 (39:40):
Well, he knows how to drive a team. Obviously he's
done that. I mean we've seen him, you know, get
in some pretty serious trouble in the past, and they
managed to you know, they managed to pull their you know,
pulled out of the fire at the last minute. So
he's not He's a clever innovative, there's no question about it.
I mean as you know, crazy as some of the
things he says and does. He does know how to

(40:03):
put put together a program.

Speaker 3 (40:04):
Yeah, But Gary think he raised a really good point
because when Elon was competing against legacy auto makers with
one hundred years of procedures for processes, specifications, Tesla could
be a steamroller and just blow through those kinds of companies.
Now he's competing against other AI companies, Bleeding Edge, very

(40:25):
well funded. He's competing against other robotics companies the same story.
This isn't like competing against General Motors and Ford and
Toyota and the Life. This is going up against the
best in the world, largely out of Silicon Valley in China.
It's not going to be as easy for him to
do that. But if he left Tesla and now Wall
Street viewed Tesla strictly as a car company, he doesn't

(40:48):
get one hundred and seventy plus times earnings with his
stock price like he does today, he'd be down in
gm and Ford Territory. What are they trading six to
eight times earnings? You would see? I mean, we could
all make ourselves fabulously wealthy by shortening the stock if
that were to happen. But I mean, yeah, Tesla stock

(41:08):
valuation would be toast without Elon. You could also make
an argument it might be the best thing that ever
happened to Tesla the car company, because Elon's interest clearly
is not in Tesla the car company. It's in AI
and robotics, because that's his pathway to a trillion dollar income.

Speaker 4 (41:25):
That's what he's been talking about.

Speaker 3 (41:26):
And so I can see where a lot of people
are going, Oh, well, if Elon's not interested in Tesla,
what am I wasting my time here at Tesla the
car company. I'm leaving. And that's why I think we
see a string of executives leaving the company.

Speaker 4 (41:40):
There's been a lot of skepticism around full self driving too,
I mean not just not just industry experts are talking
about their concerned about just using the cameras.

Speaker 3 (41:52):
Yeah there's that, Jack, But I've talked to some people
who own Tesla's who've gotten there. Wow, they are until
they I don't until.

Speaker 4 (42:01):
They hit that edge case John, where the camera doesn't
Oh no, that's that's right.

Speaker 3 (42:05):
And you know, I think most of them are going
in eyes wide open, but I keep my hands right open.

Speaker 7 (42:14):
Well so so so basically.

Speaker 6 (42:17):
To your point, Jack, I mean, it's it works until
there's a lawsuit.

Speaker 2 (42:22):
There becomes question.

Speaker 4 (42:24):
Right. I don't know if it works until there's a lawsuit.
I mean there have been lawsuits. I mean the company
continues to trundle along. I think that they're kind of
running out of momentum in terms of to John's point
about the styling not changing again, then the skepticism around
full self driving. I mean I think he's he's put

(42:46):
his you know, his money is on robotics and ai.

Speaker 2 (42:51):
Yea that robotics thing. I don't think he's gonna work
out farm very well well.

Speaker 4 (42:55):
To John's point, I mean, China's coming on strong with
robotics too. They're a lot of you know, cutting edge
companies that are working the robotics angle, so we'll see,
I mean.

Speaker 2 (43:05):
Are a lot of robot companies working at robot angle.

Speaker 4 (43:08):
And yeah, I mean he had his two robots what
they danced the last meeting they had. I mean Okay,
let me see them build a car.

Speaker 3 (43:17):
Yeah, that's right, right until that starts to happen. Who
cares about this stuff?

Speaker 6 (43:21):
So you know we've been we were sort of like
stepping on EV's Twitter. Has opened a three point nine
billion dollar battery plant in North Carolina.

Speaker 7 (43:34):
What do you think?

Speaker 3 (43:35):
Well, look, you know, Toyota's made no bones about it.
Hybrids need battery, and what it's.

Speaker 4 (43:40):
Going to do is solid state batteries.

Speaker 3 (43:43):
Well, this is not going to be a solid state plant.

Speaker 4 (43:45):
But I mean that's that's Toyota's committed itself to getting
to solid state. And but and when that happens, the
battery either be smaller or the car will have more range.
But solid state is the future.

Speaker 3 (43:59):
I know, I totally agree. And there's a lot of
hype centered around solid state. There is, in fact, some
top Chinese we just reported this in Outoline Daily today.
I think it was that top Chinese automotive battery experts.
Whoa WHOA slow down on all the hype. We're talking
next decade before it hits.

Speaker 4 (44:19):
When it's ten years away, and it keeps getting ten
years away and ten years away, you know you've got
a problem.

Speaker 3 (44:24):
There's progress being made, make no mistage, but for them
to be at line speed, mass production, affordabill blah blah
blah that even the Chinese, the top experts are going.

Speaker 6 (44:38):
So basically so basically be a lithium something or other
plant that they're they're I guess doing, but your point, Yeah,
they're going to use it for the camera which is
all hybrid. Yeah, and a yet to be announced all
electric three rozhw b e V which will happen.

Speaker 2 (44:59):
Someday, Yes, someday, but okay, when it's ready.

Speaker 6 (45:03):
And then Toyota is announced that within the next five
years it'll spend ten billion dollars in the US.

Speaker 4 (45:10):
Yeah, I saw that.

Speaker 3 (45:13):
Well, I take this with a grain of salt. I'm
sure they're going to spend a lot of money in
but right now, all the autumn makers know, in dealing
with the Trump administration, you want to take every single
penny that you will possibly spend in this country, wrap
it up in a nice president and present it to
the Trump administration and go, look at all the money
we're spending here. So I take it with a grain

(45:36):
says well in Washington plays really well in Washington if
you go and say here's how much money I'm spending.
Here's how many American jobs I'm creating, and here's how
many vehicles I'm exporting I eat to reduce the trade deficit.
They'll kiss you on both cheeks.

Speaker 6 (45:53):
So you're suggesting that perhaps this money will not be spent,
which I'm.

Speaker 4 (45:58):
Just saying that it's it's been silver promises they're rewarded.

Speaker 3 (46:04):
I'm not saying they're not going to spend this money.
I'm just saying that they're throwing everything in the kitchen
and to make this number look as big as it
possibly can be. And they're saying over a decade, well
that's what a billion a year?

Speaker 7 (46:21):
I thought it's five years.

Speaker 4 (46:22):
Over five years, that's just the paint part of the plant.

Speaker 3 (46:25):
Yeah, look, you know they were probably going to spend
that amount of money anyway, right, But now you package
it up and you say to the administration, look what
we're doing.

Speaker 6 (46:33):
All right, So let me let me come at it
from a different angle then that you have Toyota opens
a battery plant. We've seen recently general motors offloading battery plants, right,
so not so good for same sort of a situation

(46:56):
that battery plants are not as intriguing to them as
they once were. And I got thirteen billion bucks that
these guys have spent on a brand new battery plant
and they're talking about this ten billion dollars. I mean,
how does this How does this play in Dearborn in Detroit?

Speaker 7 (47:12):
What are these what are these guys that Jack what not?

Speaker 3 (47:14):
Well?

Speaker 7 (47:15):
You know, what are they thinking?

Speaker 3 (47:17):
HQ?

Speaker 4 (47:18):
But I mean, you know, Toyota and some of the
other Japanese manufacturers like Honda, they've got a lot of hybrids.
They're building a lot of hybrid vehicles, so they're using
those batteries. It's not like they're gonna be it's gonna
be stranded capital like like it is with the domestic manufacturers,
where you know, suddenly there's no seventy five hundred dollars incentives.

(47:39):
So you know what Jim Farley said, you know, we're
expecting the market to be maybe half what it is
right now. I mean, that's that's scary talk.

Speaker 3 (47:48):
Right. At least Ford has some hybrids. General Motors has
zero hybrids in this market. Hybrids are the hottest thing
going right now.

Speaker 4 (47:55):
So they're exactly who Horse should be talking to.

Speaker 6 (47:58):
They are so Jack, I mean, you know, the people
there at General Morris when plans were being made that
you know, that the future would be electric.

Speaker 2 (48:10):
You know, there was the what was it, zero zero
zero was no emissions, no accidents, and no something else.

Speaker 3 (48:18):
Yeah, yeah, no congestion or something like that.

Speaker 4 (48:21):
Yeah, they absolutely invested in the future that was electric.
And I think at the time they were struggling with
the emission standards and they looked at electrics and they said,
there are no emission standards basically for electrics, and we
can walk away from all those issues that are associated

(48:42):
with you know, making those engines. And so you know
that they made it. They made a commitment, a big one,
I think that, and I would when I say that,
I'm talking about you know, Mary Barra and Mark Royce,
those are the two decision makers, absolutely.

Speaker 3 (48:56):
Right, and I think part of their thinking was, is
the industry ultimately going to go electric? Yes? Yes, yes, Okay,
so let's not pussy foot around. Let's go headfirst in
and go all the way and we'll do this altium platform,
altium battery. I thought it was a brilliant plan. And
you're a first mover too, and you're a first mover,
but the market, well, yeah, GM was sort of the

(49:20):
legacies sort of, but.

Speaker 4 (49:21):
They're playing fast, they're playing catch up, right, So.

Speaker 6 (49:27):
They thought it was the right idea at the time. So,
so what's going on there now? I mean, as John
pointed out, I mean, I know hybrids, Well, I.

Speaker 4 (49:36):
Think there's a certain amount of panic going on right now.

Speaker 3 (49:39):
Now let me just add they do have hybrids in China.
They do have hybrids in South America. So GM has
got hybrids in its portfolio. They're just not in integrated
and you.

Speaker 4 (49:49):
Have to reconfigure them or ship them, you know, to
the United States to make that happen here. Uh those
are you know, those those are investors that were made
in those particular regions, and right, that's kind of where
that stays.

Speaker 6 (50:03):
So so what does this do in terms of I mean,
you know we've seen recently, you know, factory.

Speaker 1 (50:07):
Zero is.

Speaker 2 (50:10):
Yeah, shows down or yeah, and.

Speaker 6 (50:13):
Making cars time being trucks is I mean, how do
they look at that in terms of its future?

Speaker 4 (50:20):
It's painful, it's painful. They still make an enormous amount
of money on trucks. So I mean, as long as
that's kind of trundling along and working, well, there's there's
profitability there at least enough to sustain them. And now
you know, of course, there was that enormous recall on
the six point two liter V eight that goes in

(50:41):
the very best versions of all those trucks, whether it's
a you know, a GMC or Chevy, and I think
that they took a hit on that too, So I
mean they're bleeding sort of multiple loans. But again, as
long as I think, as long as Truckville is happening,
I think GM is probably going to be okay.

Speaker 3 (51:00):
Yeah. I would point out though, that there are several
other electric cars that are doing relatively well. Chevy Equinox, Yeah,
they've been very well received. Yeah, the Cadillac Optic. I
would argue that, pardon the lyric, the lyric, I would
argue that for all the automakers that got into full

(51:21):
size electric pickups, this represents the biggest product development fiasco
in the history of the industry.

Speaker 4 (51:28):
It's that's stalled.

Speaker 3 (51:29):
And what's so extraordinary is they really know their truck customer,
they know them well, and yet they overlooked the fact
that the truck customer doesn't want electric at all, and
the people who are buying electric pickup trucks are not
coming out of f one fifty Silverado's or rams. There
are people who are like, oh electric, I'm gonna I mean,

(51:51):
they're not truck buyers, they're not traditional Marlborough man.

Speaker 4 (51:54):
Right, it's the guy that's got a leather vest on,
a cowboy hat and he's not really going to work
every day and using a hammer, you know, plumber's wrench.
Those customers are there. There are few between.

Speaker 3 (52:07):
There are segments where evs will do quite well, sure,
and I think GM will uh save that part of
the program where where it makes sense, you know, regionally
segment size.

Speaker 4 (52:23):
I think the bolt's going to do okay, I think
it will do that. It's the right price, it's got
good range, it's got good utility. So I think that's
you know, that's gonna be one of the bright spots,
you know, not not like a you know, one hundred
what BOWLB, but you know it's it's going to be
one of the brighter spots that gentlemen.

Speaker 3 (52:40):
But but Gary here switching subjects here, I got a
question for you which also ties into this. You know,
here's General Motors goes all in on EV's tells the
world it's committed to EV's and tells all its suppliers
get on board. Now we got another corollary comes out
this week. Wall Street Journal broke the story General Motors
has told its suppliers for North America get the hell

(53:02):
out of China. We don't want anything sourced from China
for North American products. So, yes, you know, a decade ago,
GM was telling all of its suppliers, all of them,
show me your China price. Oh, you don't have a
China price. You better get your ass over to China
or you're not. You're going to lose the business. And
now they're telling them get the hell out of China.

Speaker 6 (53:23):
What do you think they're giving some until twenty twenty
seven for them to be have no China content in
their products. Well, I mean, I wonder if this doesn't
go back to what you were saying about making noises
that make the administration think that you're doing the right things. Okay,
it takes a tremendous amount of time to create a

(53:45):
supply chain, I think, I think people it does. Oh,
people really don't even think about that, right I mean?
And so part of the thing is is that, Okay,
why are you sourcing from China, Well, because they have capacity,
and the capacity leads.

Speaker 2 (53:59):
To to a competitive price. And because they have those
two things, you don't create the capacity somewhere else to
do the same thing that would cost you more money.

Speaker 6 (54:08):
Like let's say Germany, right, so you have the plant
in China, you don't have the plant in Germany.

Speaker 2 (54:13):
So you source it from China.

Speaker 6 (54:13):
You don't source from Germany because it is less expensive.
So when all of us by a vehicle, it's less expensive.
If they were to have the parts that were being
made in Germany or Switzerland or you know, fill in
the blank, it would be much more expensive. So you know,
my question is is that Okay, I get the rationalization

(54:36):
of saying, oh gee whiz. You know, there's all this
roiling going on in terms of you know, the geopolitical
machinations between Washington and Beijing. Maybe we need to protect
ourselves from that in some way, shape or form. But seriously,
to tell your supply base like, no, you can't use

(54:59):
a huge section of the world capacity to do your
to make the part for us. I think it's just
gonna If it happened, and it won't happen for decades,
it would make unaffordable vehicles.

Speaker 4 (55:14):
I mean, you certain need to prognosticate, you know, what
administration is going to be in. I mean, is continue
to be Trump and the Republicans or are the Democrats?
You know, they had that recent you know, bright bright
spot with the recent elections. I mean, is it going
to change? And if it does change, are they going

(55:34):
to be a little more measured in the way they
approach emissions and and evs or are they going to
just you know.

Speaker 3 (55:42):
Depends which wings of the party takes power.

Speaker 4 (55:45):
You're right, John, You're right, And so's the super progressives
or the folks that are a little more measured.

Speaker 3 (55:51):
Here's another thing, and this almost gets conspiratorial, but maybe
not really. You know, there's growing time between the US
and China centered largely on Taiwan. There was a US
naval admiral who just a couple of years ago in
a Senate hearing blurreted out that the war is coming

(56:12):
in twenty twenty seven, that that's when China is going
to go into Taiwan, to Taiwan. I think it's also
important to point out that two of GM's board members
have deep ties to the military. One of them is
the former CEO and Chairman of NORTHP Grumman. The other
is a retired admiral from the US Navy.

Speaker 4 (56:35):
And I could be wrong, but I think Royce also
has some Marke connections.

Speaker 3 (56:40):
Yes, oh okay, but I'm just saying board members, you know,
so when they're sitting around setting strategy for the so.

Speaker 2 (56:47):
You're saying that there's going to be a war in
twenty twenty seven.

Speaker 3 (56:50):
And I'm not saying that.

Speaker 6 (56:51):
I'm saying, okay, and they have insider information, or you're
implying that this may happen.

Speaker 3 (56:57):
What I'm saying is, look, this has been discussed openly
in Washington and the military circles that many twenty seven
is the year when China's going to go in. And
I just find it very interesting that GM's saying, gets
your ass out of China by twenty twenty seven.

Speaker 6 (57:12):
Well, it's only for some suppliers, not for all of
their suppliers twenty twenty seven.

Speaker 3 (57:17):
Well, for anybody supplying North American vehicles.

Speaker 2 (57:20):
No, it's it's no, it's not.

Speaker 6 (57:22):
I mean, you know, all of them at some point,
a few of them for twenty twenty seven.

Speaker 2 (57:29):
Okay, okay, got it?

Speaker 3 (57:31):
Okay.

Speaker 7 (57:31):
So but it's probably.

Speaker 6 (57:32):
I mean, I mean, let's face it, if there's a
if there's a major war, I don't know that a
whole lot of people are going to say I got
to get a new car. They might hold off, Yeah,
they might, right, those things seem to have an effect
on sales. Yeah, what about the I mean, you know,

(57:57):
I mentioned affordability. I mean the u KBB number came
out and now it's below fifty grand.

Speaker 7 (58:03):
It's now like back to not.

Speaker 4 (58:04):
Because the electrics got pulled down.

Speaker 6 (58:06):
I think that is well, but the electric prices actually
went up, so I I you know, I thought that
that was you know, yeah, So.

Speaker 7 (58:17):
I mean, Jack, you know, you were saying you think
the ball's going to do well.

Speaker 6 (58:20):
But that's because they're talking about it being a sub
thirty thousand dollars.

Speaker 4 (58:24):
It's affordable, right, right, and it's got a cheaper battery.

Speaker 6 (58:27):
Okay, So what about if somebody you know, brought back
the Cavalier that had an internal combustion engine, maybe worse,
and it was like sub twenty five thousand dollars, it.

Speaker 3 (58:41):
Would sell well. It would have look affordability.

Speaker 4 (58:44):
But only if you can meet emission standards, you can
only sell it if it meets.

Speaker 6 (58:48):
Okay, but our mission standards basically being you know, like oh,
you know, you just look somewhere else that the standards
are there, We're not going to enforce them.

Speaker 3 (58:56):
Yeah, we're not going to enforce the fines if you
miss it. So but to your point, Jack, that's with
this administration, right, And what if And this is how
automakers have got a plan. What if in twenty twenty eight,
the Democrats pull off the perfect trifecta, take the House,
the Senate, the White House and uh and go, okay,

(59:19):
we're we're going right back to where we were. And
with the Biden administration, you could very easily as an
automaker find yourself with stranded ice assets versus.

Speaker 4 (59:30):
The stranded Again, this is what makes horse so attractive.

Speaker 3 (59:35):
Absolutely right.

Speaker 7 (59:36):
Well, I mean I think that.

Speaker 6 (59:41):
Starting with the pandemic, when we saw the issues supply
chain and we saw the inability for us to be
able to have things that we needed, that industrial policy
became something that is accepted from both sides of the aisle,
both sides of the aisle.

Speaker 9 (59:56):
Novel in flexible policy, Well, no, you an industrial po
industrial policy, there's a under there's an understanding there's an
acceptance that we need it, that we need to make
stuff right, okay, And and I think that you know,
you could have you know, Trump or AOC would both agree.

Speaker 3 (01:00:15):
Yes, I know, I'm with you on that. I think
you're right.

Speaker 6 (01:00:18):
And so I think, regardless of what happens in twenty
twenty eight, that will still be part of what makes
policy going forward. So if it were to be a situation,
and I think we're seeing this play out in Europe
right now where the auto companies are basically saying to
the you know, the people in Brussels like.

Speaker 2 (01:00:36):
Hey, hey, wait a minute.

Speaker 6 (01:00:37):
With this banning of internal bustion engines by twenty thirty five,
you know it's going to destroy us. And you know
that would play here and I don't think you'd have
those strandings.

Speaker 3 (01:00:50):
No, no, And what's making it all the more real in
Europe is what the German auto industry is on track
to lose one hundred thousand jobs by the end of
the decade. We're already seeing tens of thousands getting and
laid off. And that's where Brussels is going to have
to sit up and pay attention, because you know, yes,
we need to reduce CO two emissions, and I'm all

(01:01:12):
on board with that. But if that means throwing thousands,
tens of thousands, one hundred thousand people onto the street
with no means of earning a living, you're gonna have
riots on your hands.

Speaker 4 (01:01:23):
I mean, you've got to be pragmatic about this, you
know the situation, and I think, you know, when you
look at a strategy like, you know, we're going to
provide engines and you're not gonna you know, you're not
gonna you're not gonna be spending any capital to get them,
and engines and transmissions that plug into existing architectures that
you're working on. You know, the styling's done, you know,

(01:01:44):
we're you know, three months from production. I mean there
has to be a certain amount of flexibility by the
administration because I you know, I think one of the
things that got you know, the current or not the current,
but the former administration in trouble was maybe a little
too eager to get to you know, clean air. But

(01:02:05):
but you know, it's like what is what is actually
doable versus you know, you know, shooting at shooting at
a target and not really it really doesn't matter whether
you get there or not.

Speaker 2 (01:02:17):
Because no one cares about the target.

Speaker 4 (01:02:19):
But I mean your opponent, your your political opponents can
make hay with the fact that you don't get to
where you need to go. So maybe pragmatism is the
word going forward.

Speaker 3 (01:02:30):
Pragmatism should be the word, at least the way I
see it. But hey, look, we're gonna have to wrap
this up. Okay, Jacket's been great having the show, Gary,
this has been terrific. Now we all have to go
out and figure out how do we buy stock and
horror because I think we all agree this company's going
places does have a hybrid. Ah the e ray Oh yeah, yeah, yeah,

(01:02:56):
so that went on off cameras and uh there's two
Corvette hybrids, so they do have a hybrid. Yes, I
stand corrected, but those are performance hybrids.

Speaker 4 (01:03:09):
You know what they were. They were talking about bringing
in some of the stuff from Latin America to the
United States where they where they do have hybrids.

Speaker 3 (01:03:15):
Correct, But you made the great point. You got to
build it here. You can't just import it.

Speaker 4 (01:03:20):
It costs too much.

Speaker 3 (01:03:20):
Yeah. Anyway, I want to thank all of you for
having tuned in.

Speaker 1 (01:03:25):
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