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Lawmakers Try to Delay EV Tax Credit Requirements

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Top of the Captiol building in Washington, DC

Photo: Win McNamee (Getty Images)

Congress wants to delay all those stipulations on the EV tax credit, Volvo thinks EVs will get cheaper quickly, and Carvana just can’t catch a break. All that and more in The Morning Shift for Friday, November 11, 2022.

1st Gear: Those EV Tax Credit Stipulations May Not Hit Just Yet

Earlier this year, lawmakers voted to make the electric vehicle tax credit much less effective and more convoluted, all because Joe Manchin is Big Oil’s special little boy. A recent Senate bill proposed a phase-in period for all of the Inflation Reduction Act’s stipulations, and now it’s been joined by a similar bill in the House. From Automotive News:

Three House lawmakers have joined a push in the Senate to delay certain sourcing and manufacturing requirements in the Inflation Reduction Act’s tax credit for consumers buying new electric vehicles.

Sen. Raphael Warnock, D-Ga., introduced a bill — known as the Affordable Electric Vehicles for America Act — in September that would create a longer phase-in for the tax credit’s North American final assembly requirement as well as its critical mineral and battery component provisions.

U.S. Reps. Terri Sewell of Alabama, Emanuel Cleaver of Missouri and Eric Swalwell of California — all Democrats who won midterm reelections in their states — introduced a companion bill this month.

As of the Inflation Reduction Act’s enactment in mid-August, eligible EVs must be assembled in North America. Restrictions on sticker price, buyer income and battery component and critical mineral sourcing take effect Jan. 1, disqualifying automakers such as Hyundai that do not yet make EVs in the U.S.

Under the newly introduced legislation, only EVs sold after Dec. 31, 2025, would have to be built in North America. Restrictions on critical minerals sourcing and the domestic manufacturing of battery components also would be delayed.

This seems good! More people can get more EVs for less money. I’ll count that as a win.

2nd Gear: Volvo’s CEO Thinks EVs Will Drop To ICE Pricing By 2025

Of course, those tax credits are only necessary because EVs still cost more than ICE cars to build. But Volvo’s CEO, Jim Rowan, sees a light at the end of that high-cost tunnel — and it’s a light that’s coming soon. From Automotive News:

Volvo Cars’ CEO Jim Rowan sees electric vehicles reaching price parity with their fossil fuel-burning counterparts a lot sooner than many.

How soon? Roughly two to three years from today.

Furthermore, Rowan said: “There’s no way that any company should be relying on government subsidy to be successful.”

“We think we get [to price parity] … around 2025, where there’ll be enough technology that’s driving down cost on the battery,” Rowan told Automotive News Europe on the sidelines of a media event in Stockholm, Sweden. “Technology will drive range up. Less batteries, but more range, at less cost — we’ll get there.”

Smaller models will also help Volvo lower EV prices.

Rowan isn’t the only one who thinks 2025 will be The Moment for EV pricing. McKinsey has been looking towards “the early to mid-2020s” for years now. Hopefully “smaller models” doesn’t just mean more compact SUVs — give us an electric C30.

3rd Gear: More Carvana Locations Suspended From Issuing Titles And Registrations

Carvana just can’t catch a break, huh? The company’s stock is spiraling, it can’t seem to get paperwork to buyers, and now it’s gotten so bad that stores are being forced to close up shop. Now, even more stores are joining that list. From Automotive News:

Pennsylvania regulators have suspended two Carvana Co. locations in the state from performing motor vehicle titling and registration actions.

The online used-vehicle retailer’s locations in Philadelphia and Bridgeville, a Pittsburgh suburb, have been placed on the Pennsylvania Department of Transportation’s list of suspended issuing agents, meaning the Carvana outlets are temporarily blocked from handling titling and registration matters, though they can continue to sell vehicles. The department cited Carvana for administrative contract violations, according to a spokesman for the regulatory agency.

“Suspensions imposed on agents are the result of violation(s) found during routine audits or from an investigation into complaints regarding an agent,” department spokesman Diego Sandino said in an email.

If only someone had told Carvana, back in its early days the secret trick to surviving as a dealership: literally just do your paperwork in time. That’s it. That’s the secret. Do the thing you are being paid to do, within the time allotted by the law.

4th Gear: Polestar Loses Less Money, Which Is A Step In The Right Direction

Polestar isn’t exactly the most profitable automaker out there. It may be the most profitable race team turned engineering partner turned trim level turned automaker, just by default, but it could still stand to rake in a bit more cash. Last quarter, it tried, with some success. From Reuters:

Polestar on Friday posted a smaller third-quarter operating loss as revenue more than doubled and the company cut spending, but the electric vehicle (EV) maker warned that higher raw material costs would start to hurt later in the year.

The Swedish carmaker, founded by China’s Geely (0175.HK) and Volvo Cars (VOLCARb.ST), posted an operating loss of $196.4 million, down from $292.9 million a year ago, while revenue rose to $435.4 million from $212.9 million.

Polestar, which listed on the Nasdaq exchange in June via a merger with a special-purpose acquisition company (SPAC), said rising costs for raw materials used to make its batteries had not yet fully hit because of set contracts.

Losing nearly $200 million is bad, but the company lost almost $300 million last year. So, y’know. Progress.

5th Gear: Self-Driving Startup TuSimple Fires Most Of Its Leaders

TuSimple is a self-driving startup focused on tractor-trailers, working to make long-haul trucking a little more hands-off. It’s also working to make its board of directors a little more hands-off, by firing most of the hands. And the people they’re attached to. From Bloomberg:

TuSimple Holdings, a self-driving vehicle startup that recently went through a US national security review, ousted its interim chief executive officer and most of its board.

Investors constituting a majority of the voting stock removed independent directors Brad Buss, Karen Francis, Michelle Sterling and Reed Werner, according to a filing Thursday. Interim CEO Ersin Yumer was replaced by Cheng Lu, who led the company until quitting in March.

The moves consolidate control under co-founders Mo Chen and Xiaodi Hou, the sole continuing board member. Chen was named chairman, according to the filing, while Lu was added to the board.

Long-haul trucking is one of the more sensical implementations of semi-autonomous driving. Still, all these internal machinations could largely be avoided with one weird trick: trains.

Reverse: Gave It His All

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