It’s the October Surprise we’ve all been waiting for! Europe will raise tariffs on Chinese automakers causing… oh, wait, that’ll likely do nothing to change anything here in the United States in the short term. It will, however, have huge political ramifications for Europe and European automakers. Looking at how different countries voted is quite revealing.
In yesterday’s Morning Dump, I tried to explain why people think that Renault-Stellantis-BMW might merge. The players involved have all chimed in and, while they’re not explicitly denying it, they do seem to be trying to lower expectations.
What’s more contentious than the EU’s plan to tax imports? Michael Jordan’s lawsuit against NASCAR. It’s nasty. And, finally, something we can all agree on. We need that.
Germany Is Mad, Sweden Is Quiet
I’ve gone into detail about the relationship that China has with Europe here (many times), and what’s interesting is we’re seeing the contrast between countries that make cars for Europe and countries that make cars for everyone else.
The European Union finally approved massive tariffs for Chinese-built EVs, citing unfair government subsidies as a threat to the local automakers. It wasn’t a huge surprise that it passed, in spite of some last-minute lobbying and grumbling, though the fact that Germany voted against it instead of abstaining was a strong sign that Germany really doesn’t want to piss off China.
Why? From Reuters:
“Today’s vote is a fatal signal for the European automotive industry. What is needed now is a quick settlement between the EU Commission and China to prevent a trade conflict from which no one gains,” BMW CEO Oliver Zipse said.
Germany voted against the tariffs in Friday’s meeting, seeking to keep good business relations with China, the world’s biggest car market.
“The fact that Germany voted against the tariffs is an important signal and increases the chances for a negotiated settlement,” Zipse said.
France, which is focused on building cars primarily for Europeans, voted for the bill, along with a mix of other countries. Sweden abstained. Why? Well, Volvo is mostly owned by Chinese-owned Geely. It’s probably also worth mentioning that the two biggest shareholders of Germany’s Mercedes-Benz are Beijing Automotive Group and Li Shufu, who is the chair of Geely.
Where is this all going? If the tariffs stay in place, as is (adding as much as 45% to the cost of a car), that’ll make China’s expansion into the EU countries difficult. But that’s not the biggest issue. China has a lot of trading partners in the EU, and if China starts targeting French Cognac and German industrial equipment then it could shake an already unsteady European economy. I’m not sure it would be “fatal,” but it’s going to hurt German automakers.
I suspect there’s going to be a negotiated settlement wherein automakers agree to price cars to a certain level that makes them less competitive but keeps them priced at a level that allows Chinese automakers to sell in Europe.
Stellantis And Renault Says Rumors Are Rumors
Ok, Fleetwood Mac. I did not say yesterday that I believed the rumors of a Renault-Stellantis-BMW tie-up and, if I had to put my money on the line, I’d be tempted to say it ain’t happening this year.
What are the automakers saying about it? Yesterday, Stellantis CEO Carlos Tavares said they were “pure speculation” and today we’ve got Renault CEO Luca de Meo saying he wouldn’t comment on “rumors.”
Speculation about a Stellantis and Renault tie-up arose early this year, with an Italian media report that the French government was studying plans for a merger between the two groups. The government is Renault’s largest shareholder along with Nissan, and also has a stake in Stellantis.
Tavares and De Meo are both attending the Paris auto show opening on Oct. 14. Asked what he would discuss with Tavares at the event, De Meo replied: “I will greet him, as always.”
Saying something is a rumor isn’t the same thing as saying the rumor is false. There’s a rumor going around the house that I ate a full sleeve of Fudge-Filled Chips Ahoy before anyone else in the house even had a single cookie. That’s a rumor. Also, it’s true.
Michael Jordan Versus NASCAR
What’s NASCAR like in 2024? There’s been a massive push to rewrite the charter agreement between NASCAR and the many teams that compete and, as always, NASCAR and the NASCAR-owning France family have won. The twist is that a team partially owned by Pitbull sided with NASCAR, and a team partially owned by Michael Jordan did not and decided to sue.
The owners raised a fuss for more than two years and complained about the terms of the deal, upset at how NASCAR used a divide-and-conquer strategy instead of dealing with them as a group. But ultimately, [79-year-old chairman and CEO of NASCAR Jim] France held firm and used NASCAR’s weight to strong-arm the teams. When a final deadline was given, almost all of them got in line and signed.
Jordan’s 23XI Racing, along with Front Row Motorsports, suddenly found themselves isolated. The powerhouse team owners like Rick Hendrick and Roger Penske left the holdouts to fend for themselves, and they seemingly had no leverage to do anything about it.
Jordan’s team stood to be the biggest losers after making the most noise, all while looking silly in the process of accomplishing nothing.
I’m not sure how long it’ll take for people to figure this out, but you probably don’t want to mess with Michael Jordan. This is the first major disruption for the sport since the 1969 Talladega driver strike and it could have some incredible consequences. NASCAR teams always pretend to be poor and uncompetitive, but will never show you their books. NASCAR doesn’t pretend to be anything, it simply does not share how it works with anyone.
An anti-trust lawsuit, as filed by Jordan and Front Row Motorsports, could force open the accounting practices of everyone and fundamentally alter the sport. In fact, I’d go so far as to say just the lawsuit itself has likely already changed the sport.
You can bet against Jordan, and you might win, but the bet that NASCAR made was that Jordan wouldn’t gamble at all which, historically, is a terrible wager.
I Agree With David Zipper On This One
Pro-transit pundit David Zipper isn’t the kind of person you’ll always see on a car site. He’s not full-on r/fuckcars but he definitely does not believe that people should just be able to drive whatever they want. Not everyone here would agree with that.
I think that pro-transit and pro-car people probably have more in common than we’re often led to believe, and I think the antipathy of the r/fuckcars world only makes that worse. As a car enthusiast, I want people to have a lot of choice in what they buy, but as a human being and a dad, I don’t love that we’ve got a tax code that encourages people to buy heavier trucks than they need, or EPA regulations and NHTSA rules that lead to so many cars being pedestrian-unfriendly.
One thing I’m sure we can agree on is that the National Highway Traffic Safety Administration is actually reducing choice by making it harder to sell small cars here, as he writes in Bloomberg:
The National Highway Traffic Safety Administration, a division of the Department of Transportation, requires new cars sold in the US to adhere to the exhaustive Federal Motor Vehicle Safety Standards, which cover everything from windshields to seat belts. Unlike Europe, NHTSA has established only one category for smaller four-wheeled cars that can’t meet those safety standards: Low-Speed Vehicles (LSV), which are capped at just 25 mph. At the state level, departments of motor vehicles generally require vehicles to be classified as either an automobile or LSV to receive the registration that permits them to be legally operated on public roads. (In 2016 the federal government did create an exception for “autocycles,” three-wheeled machines that are generally treated as motorcycles.)
The rigidity of NHTSA categorizations for four-wheeled vehicles — car, LSV, or nothing — leaves little space for many minicars that are popular abroad. Outside the US, most minicars can exceed the 25-mph LSV maximum, and they typically lack the airbags and other costly safety equipment required to meet federal crash standards. (A rare exception, the Smart ForTwo, left the US market in 2019.) In 2008, NHTSA rejected a petition to create a new category of “medium speed vehicles” traveling at up to 35 mph, which would have accommodated many of the quadricycles popular in Europe.
There’s this idea that what environmentalists want is less choice, but I’d agree with Zipper that the government has made choices for everyone that actually restrict what people can buy and that it’s to the detriment of everyone.
What I’m Listening To While Writing TMD
This is Dinosaur Jr. and Del tha Funkee Homosapien performing “Missing Link” on The Arsenio Hall Show back in the early ’90s. It’s blurry, but that is indeed Mike Watts on base and Mike D. of The Beastie Boys on drums. It’s like Gorillaz before Gorillaz.
The Big Question
Which small car from Europe would you like to see sold here?
Mixing up Stellantis with Renault and BMW would just spread infection to otherwise good manufacturers. Again, Stellantis is not a car company, it’s a holding company that happens to manage car companies- badly.
You can bet against Jordan, and you might win, but the bet that NASCAR made was that Jordan wouldn’t gamble at all which, historically, is a terrible wager.
This is just a fantastic line. Well done Matt.
I would love to see the supermini category being more represented on the US market such as the Suzuki Swift, Renault Clio, Peugeot 208 and similar cars. And it would be great if the Fit or the Yaris came back.
Maybe even a couple of A-segment/kei size cars, but we already had the Fiat 500 which wasn’t a huge success.
Not really the microcars though like Aixam, they are really only meant for low-speed inner city traffic, sort of like a 4-wheeled moped.
NASCAR is a powerful organization in the sports world, but they ain’t Michael Jordan.
“There’s a rumor going around the house that I ate a full sleeve of Fudge-Filled Chips Ahoy before anyone else in the house even had a single cookie. That’s a rumor. Also, it’s true.”
It’s called the Dad Tax, and it’s Law around these parts!