Downwards with No Speed Limit

Eurointelligence has an interesting article on the state of Germany’s auto industry. The warning applies to the US as well.

Please consider Downwards with No Speed Limit

The German car industry had a really bad year. The chip shortage problem is the latest crisis, and the industry is absolutely dependent on this issue being resolved. At least, there is now a mechanism in place that could resolve the issue as we write in our lead story.

But the bigger long-term problem are not related to this. VW downgraded its forecasts three times this year. We have seen problems popping in all areas of the Germany car industry – at Mercedes and Porsche in particular. BMW is the best of the bunch.

The Nexperia chip shortages give the industry an excuse for finger-pointing, but this does not deflect from the underlying trend – that they are all struggling with electro-mobility. They were late in the game – and massively underestimated the transition. The watering-down of the 2035 deadline for the fuel-driven car will provide some relief, but no solution. This would be like producing typewriters in the 21st century.

We hear a lot of comments lately that it is regulation that killed the car industry. We disagree. It is mostly poor decisions by companies. In Europe, the car industry has been a virtual co-regulator. The industry supported the 2035 target. The long-term success of the German car industry depended critically on its ability to set regulatory standards for the entire industry, globally through the EU. This is also what gave the EU the confidence to do the same in the area of tech regulation. They found, very much to their surprise, that this success did not translate to new sectors, and especially not to sectors where the EU is not a leading producer. The big problem for the German car industry is that they cannot set the standards for the next generation of cars. They are in the business of trying to catch up. They are in the process of losing their regulatory monopoly.

There is already pressure coming from the US to accept mutual recognition of standards for vehicles. Ursula von der Leyen agreed to this in her trade deal with Trump. We will see similar issues coming up in the EU’s trade relations with China.

We still see some hope for the Germans in the luxury end of the market. But a mid-range self-driving car is ultimately more luxurious than a high-end German limousine, unless you have a chauffeur. The business model of the German car industry is that it innovates at the top end of the range, letting the technological benefits trickle down the ranges over time, eventually reaching the smallest cars. This is not how it works in China.

The car industry will not die. But we are struggling to see a healthy ecosystem for mass-market cars in the future.

Germany’s Lack of Innovation

Volkswagen lags in more ways than one. For decades it do little innovation on anything but diesel.

Then when diesel could make no more advances, VW rigged diesel tests to show emissions were lower.

US Innovation

Elon Musk’s Tesla was a master class in innovation, for a while. But Musk has been very distracted by other things like robots and Mars.

The Cybertruck was a huge flop.

Tesla makes a lot of money on tax credits which it should not receive at all. But Trump finally ended most of them.

Now, Trump is doing everything he can to roll back the clock to preserve big gas-guzzling trucks.

Don’t get me wrong. I am no big fan of electric, for me. It just is not Mish ready, and I am not ready for it. I do go offroad, and I have to worry about gas. But I don’t have to worry about finding a charger.

And I understand the issues with metals availability and allegedly clean energy that really isn’t.

But like it or not, EVs have fewer moving parts, can be built faster, and require less maintenance. For those who do nearly all their driving in cities, EVs would work, if the cost comes down.

Small EVs should be inexpensive but they aren’t. Trump has walled off the US with tariffs.

GM and Ford union costs are massive. Both Ford and GM lost huge amounts of money on EVs.

First, Biden tried to force then issue. Now, Trump wants to roll back time.

Neither approach will work. The result is the high-priced cars and no incentive to innovate with unions fighting innovation every step of the way.

BYD Overtakes Tesla in Europe for the First Time, Sales Jump 169 Percent

On May 24, 2025, I noted BYD Overtakes Tesla in Europe for the First Time, Sales Jump 169 Percent

BYD sold 7,231 battery electric vehicles in April versus 7,165 by Tesla, according to data from Jato Dynamics.

Trump’s Tariffs

Trump’s high tariffs and regulation restrictions are so high there is no US BYD market.

Tariffs protect the weak and the inefficient.

Also America has a love affair with big cars.

Is that a Boomer thing?

I suspect but cannot prove Zoomers would love a $15,000 middle of the road BYD but Trump says no.

I love my Toyota 4-Runner and would not consider an EV. But for tens of millions of city drivers who seldom escape the city, a cheap BYD with safer battery technology would be the ticket.

Ford CEO: China’s EV Costs, Tech, and Quality “Far Superior” to the West

On June 30, 2025 Ford’s CEO said China’s EV Costs, Tech, and Quality “Far Superior” to the West

“Drivers get in the car and their phone pairs automatically, and an AI companion equivalent to ChatGPT handles everything from navigation to entertainment. The vehicles also have facial recognition that knows which seat someone is in and adjusts media preferences.“

The Western manufacturers do not have that at any price.

In China, BYD offers a range of electric vehicles (EVs) at various price points, with some models starting under $10,000. For example, the BYD Seagull EV has a starting price of 69,800 yuan (approximately $9,555) and can be found with discounts down to 55,800 yuan (about $7,780). The company also offers more premium models like the Han EV, which starts at around $32,800.

Five months ago Elon Musk said I don’t follow BYD or think about competitors, I focus on making perfect products.

That’s more than a bit foolish and arrogant both. The irony is Musk has promised Full Self Driving for decades without coming close to perfection.

I doubt it Tesla FSD will ever work as good as Waymo unless Musk relents and adds Lidar. For discussion, please see Waymo Surges to 10 Million Paid Rides, Tesla Has Zero

Hello Elon Musk, you are now 10 million rides behind Waymo.

Without Lidar, Musk can build a car cheaper but not safer than Waymo. Meanwhile the cost of Lidar is coming down.

Musk’s FSD will not work as well as Waymo in adverse conditions. It’s ridiculous to believe otherwise.

BYD Reveal Cheap Kei Car – The Brands Cheapest EV EVER

Two days ago the Electric Viking reported “BYD has unveiled its most affordable electric vehicle yet — a compact Kei car designed for urban driving and priced to undercut all previous models. This tiny EV marks BYD’s bold entry into the ultra-low-cost segment, targeting Japan and other city-focused markets.”

BYDs would sell in the US too were it not for 100 percent tariffs.

Pay More – Get Less

That is Trump’s unofficial motto as well as the UAW and Teamsters.

These BYD models would be hot seller in the US at $15,000 or even $20,000.

Trump finds it easy to get the economically clueless on his side with chants of “They are stealing out jobs; they are ripping us off; and it’s unfair trade”.

Trump never asks, would you like a $15,000 EV Toyota.

Finally, Musk seems to have lost his desire to compete on either price or technology. He is more interested in robots and trips to mars and the fool’s mission of perfecting FSD without Lidar.

Would You Pay $15,000 for this Nice-Looking EV Toyota?

On May 4, 2025, I asked Would You Pay $15,000 for this Nice-Looking EV Toyota? Zoomers?

I am sure many would say yes, but there’s a catch.

But the Toyota bZ3X is real, and it is actually on sale starting at that price. There is a catch: To buy one, you have to be in China.

Now there is a second very inexpensive BYD model. It will have safety features suitable for Japan. You will not have to be in China to buy it.

Hello GM and Ford, I have a question. How do you ever expect to compete on price? And if you can’t, who will buy your cars outside the US?

Trump’s only answer is more tariffs to force those in the US to buy overpriced cars. Ronald Reagan knew best.

For discussion, please see Are Trump’s Hurt Feelings Over Tariffs Now a National Emergency?

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