Houston, We Have A Big Gas Problem

Ford, GM, Stellantis, and Toyota want EV tax credit caps lifted, Volkswagen resumes full EV production in Zwickau, holy shit look at those gas prices. All this and more on today’s issue of The Morning Dump.

Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.

Big Gas Prices Have Eclipsed Five Dollars Per Gallon

Well, here we are. According to AAA, the average price of a gallon of regular gas in America has crested the five dollar mark. Specifically, AAA clocked it at $5.014 per gallon on Monday and $5.016 per gallon on Tuesday. While we’re still a few cents off from the most Americans have ever paid for regular gas, those really big numbers mean we might not be that far away. Let’s break it down.

According to the U.S. Energy Information Administration, the average price for a gallon of regular gas hit $4.114 on July 7, 2008. When corrected for inflation, that works out to $5.58 per gallon in today’s money. A neat fact that absolutely doesn’t help the situation in any way, shape, or form. Don’t worry, things could get worse as they often do. It might not take long for gas prices to reach that adjusted 2008 peak. The EIA reported last week that America had 18,021,000 barrels of finished gasoline in reserve and ready to be run in engines, a good bit short of pre-pandemic levels of around 24,000,000 million barrels. You know, right in time for the summer driving season.

According to Reuters, OPEC+ fell 2.6 million barrels short of oil production targets last month, so it looks like the global supply side won’t be massively easing anytime soon. The only variable we seem to have some modicum of control over is demand, which sucks because easing demand means that people like you and I are requested to curb often-necessary travel that can’t be done on public transit because intercity rail largely sucks in North America.

Four Automakers Want EV Tax Credit To Apply To More Than Just Their First 200,000 EV Customers

While EV tax credit caps are a firm check for government spending, they do have a weird side effect of punishing automakers that adopted plug-in tech early. Toyota’s been selling a ton of plug-in hybrids, GM’s been cranking out plug-in vehicles since the Volt in 2011, and Ford’s offered plug-in hybrids and electric cars for the better part of a decade. While Stellantis doesn’t have a huge history of electrification outside of recent plug-in hybrids and a few compliance-spec Fiat 500e EVs, CEO Carlos Tavares has been quite bearish on EV adoption targets. Finding common ground, these four automakers drafted up a simple joint letter to Congress asking for a removal of tax credit caps. From the letter:

“The current program only provides the tax benefit to the first 200,000 customers for each automaker. To provide greater consumer choice, we ask that the per-OEM cap be removed, with a sunset date set for a time when the EV market is more mature.”

Honestly, the brief letter makes some very good points. We’re in a shortage-of-everything crisis, and raw material costs for long-range EVs are on the rise. Vehicles that are more expensive to build cost more to buy, which could keep long-range EVs out of reach for the average American consumer. Tax credits are a way of subsidizing these costs, and the promises of both lower transportation costs and lower transportation emissions seem like they could be in the interests of citizens. Now, will a simple lifting of tax credit caps actually happen? It feels unlikely, but we’ll see what happens. Tax credits for EVs definitely aren’t sustainable in the long run, and it really feels like widespread EV adoption is a long game. However, that doesn’t mean that some form of revamped tax credit system is out of the question. Let’s wait and see how this one plays out.

Stellantis Aims For Level 3 Autonomy Come 2024

While Stellantis may seem to be moving slowly on autonomy, the massive auto group seems to be working behind the scenes. In a recent press release, French automotive supplier Valeo has revealed that Stellantis will use Valeo’s third-generation Scala LiDAR system to achieve Level 3 autonomy in 2024.

Honestly, Valeo sounds like a pretty solid partner. The company’s second-generation LiDAR system has found a home in the optional Level 3 assist suites on the Mercedes-Benz S-Class and EQS, and further LiDAR development will only improve imaging capability. While we can’t say for sure where LiDAR will first appear in the Stellantis range, Automotive News Europe said that Level 3 autonomy will be offered in multiple models across Stellantis’ massive array of brands. Honestly, it’ll be interesting to see how Stellantis implements Level 3 autonomy. After all, Level 3 autonomy is conditional, so we could continue to see it locked to controlled-access highways at low speeds, or we could see significant variance from current implementations. Either way, it should pave the way for future Level 4 or even Level 5 capability, although both of those are likely years out at the minimum.

Volkswagen Returns To Normal EV Production

Hey, how’s this for good news – Volkswagen’s going back to three scheduled shifts in its Zwickau-Mosul EV plant that builds the ID.4 crossover, ID.5 crossover, ID.3 hatchback, Audi Q4 e-Tron crossover, Audi Q4 Sportback e-Tron coupe crossover, and Cupra Born hatchback.

In an era where automobile production is so fragile, it seems like Volkswagen’s successfully vaulted the latest set of supply chain barriers. According to Automobilwoche, Volkswagen’s targeting production of 1,300 vehicles per day, a solid figure that should help alleviate some backlog and temper a small corner of the car market’s current frenzy. Hey, a niche is a niche. Mind you, Zwickau-Mosul isn’t the only place where Volkswagen builds the in-demand ID.4. Volkswagen’s Emden plant in Germany also builds this electric crossover, while North American production in Chattanooga, T.N. is expected to come online this year. I know that a return to regular production for a few niche models won’t put much of a dent in new car supply, but it feels like a sign of hope. With everything so up in the air right now, it’s nice to see even small signs of normalcy.

The Flush

Whelp, time to drop the lid on today’s edition of The Morning Dump. It’s safe to say that Monday was a bit of a shitshow in the financial markets. Lots of talk about yield curves and bear markets and fears of a recession. With that in mind, let’s play a car shopping game. Let’s say that a recession hits and you need to ditch a car payment and pick up a cheap, reliable daily driver that costs pennies to run. What’s your money on in this bizarrely inflated car market? I’m probably going with a Toyota Echo as they’re positively plentiful in the land of poutine, but I’m curious to see what you pick. Is your pragmatic side drawn toward the indestructibility of a 3800 V6-powered W-body? Are you sitting on a secret hoard of Saab parts to keep a turbocharged Swedish bubble-wrap suit on the road? I’d love to hear your thoughts.

Lead photo credit: Upupa4me, licensed under CC-BY SA 2.0