Auto Industry News: SEMA Recap, Hertz-Tesla Deal, Rivian IPO, & Infrastructure Update

Another week in the books as we move closer to the new year! SEMA wrapped its annual show in Vegas with a full-capacity crowd and the first one at the Vegas Convention Center since before the pandemic. In the manufacturing world, there’s been more chatter from automakers about how they’ll tap into the EV trend. Rental giant Hertz said they were jumping in on the trend with a new fleet of Tesla cars. Still, Elon Musk responded in a very Elon Musk-ish way with a fickle tweet that didn’t promise anything. Plus, Rivian proves it thinks puhretty highly of itself, with an eyebrow-raising IPO price target. Meanwhile, D.C. moved forward on the infrastructure package and rolled back on steel tariffs.

Buckle up, there’s lot’s to unpack this week!

SEMA 2021 Kicks Off with a Full Capacity Show

The veritable Super Bowl of the aftermarket kicked off last week in Vegas with the 2021 SEMA Show. Organizers were excited to announce that this was the first full-capacity event at the Las Vegas Convention Center since before the pandemic. “The energy and passion on the show floor is tremendous,” said SEMA Vice President of Events Tom Gattuso, noting there was a lot of pent-up demand for people to connect in person again.

Early counts from the show floor saw an estimated 51,000 buyers and 1,300 exhibiting companies. A handful of showcases like SEMA Electrified gave attendees a look into new innovations in EV technology, and an expanded Overland Experience had everything from tents to complete portable kitchen systems. The first day also featured the SEMA Awards, recognizing top trending vehicles in five categories:

• Sport Compact of the Year: Toyota Supra
• Car of the Year: Ford Mustang
• 4×4/SUV of the Year: Ford Bronco
• Full-Size Truck of the Year: Ford F-Series
• Mid-Size Truck of the Year: Toyota Tacoma

There were some high-profile unveilings, as well. The Honda Civic SI made its public debut at the show, as did an electric crate engine by Ford, with a thumbs up from country singer Keith Urban. Toyota brought some serious throwback vibes with its TacoZilla – a Tacoma TRD sport converted into a truck camper with a very 70’s vibe – and GM shared a naturally aspirated engine that boasts more than 1,000 RPM.

Keep It Custom

As with prior years, custom builds were in no short supply. Hoonigan marked its 10th anniversary with a custom-built Donk, rolled out during the first night. (Check it out here.) SEMA’s charity arm, which raises funds to fight pediatric cancer, showcased a variety of cool rides including a Factory Five 65 Coupe, a Factory Five Cobra, and a classic Chevrolet 3100. (Find those here.) 

Of course, it wouldn’t be a classic SEMA show without Battle of the Builders. The 2021 competition brought a solid Top 12 showing. There was everything from Cole Marten’s stealth-looking 1991 Nissan Skyline R32 GTR and Samantha Frazier’s gorgeously vintage 1973 Datsun 240Z, to historical classics like Bryan Thompson’s 1934 Ford Pickup and Mike Fillion’s 1956 Oldsmobile 98. But top honors went to Bob Matranga’s incredibly detailed 1955 Chevy Bel Air, dubbed “Brute Force,” which was featured in the Keystone Automotive Operations, Inc. booth for onlookers to admire all week long.

The show wound down — or up, depending on how you look at it — with SEMA Ignited, the afterparty that marks the end of the event. Attendees got one last chance to take in some exclusive aftermarket debuts and some screaming engine action to wrap up an exciting week.

Stick to us like glue over the next few weeks for additional exciting news coming out of this year’s SEMA!

Let’s Make a Deal

Car rental giant Hertz announced last week that deliveries of Teslas to its fleets were definitely happening. According to Hertz, the delivery is in line with its plan to buy 100,000 Tesla Model 3s as it begins to integrate more EVs into its inventory. By all accounts, Hertz seemed to signal that it was on course to meet its order numbers and was prepared to offer the vehicles by the end of next year.

Except… there was no comment from Tesla in that press release. Plus, CEO Elon Musk headed to Twitter shortly thereafter to state “no contract has been signed yet” and that the company would only sell cars to Hertz for “the same margin as consumers.”

Musk shared the remarks in a Twitter thread with the Tesla Silicon Valley Club. They were celebrating a jump in the automaker’s stock that day. After Musk’s comments, however, Tesla’s (TSLA) shares dipped as much as 5.2%.

Even with confusion around the potential Tesla deal, Hertz still said it was investing in EV charging infrastructure across its global network. It noted customer reaction has “been beyond our expectations.”

Hertz is probably eager to share some positive press since the company only exited Chapter 11 in June of this year. The company took a significant hit during the peak of the pandemic when drivers were stuck home because of lockdowns or just plain avoiding travel because of health concerns. It filed for bankruptcy back in May 2020 with about $19 billion in debt. It rose from the proverbial ashes with almost $6 billion in equity capital this summer. Whether Musk wants to make it official or not, it sounds like the rental company is eager to tap into EV trends with consumers as part of its rebuild.

Sharing is Caring

Tesla might be playing coy with Hertz, but in the Netherlands, it’s been eager to share a new pilot program.

Early last week, Tesla said it was opening 10 Supercharger charging stations in the Netherlands as part of a new pilot program. The stations, Tesla noted, are open to other brands of EVs.

According to the automaker, Dutch drivers can access the charging stations through the Tesla app. The chargers are open to cars with Combined Charging Systems (CCS), found on EVs from automakers like BMW, Daimler, Ford, and Volkswagen. Non-Tesla drivers pay extra fees to use the stations. Still, the automaker said users can get a better deal with a charging membership.

If the pilot program pans out, it’d be exciting to see the same trend ramp up stateside, since the U.S. is lagging in nationwide EV charging stations.

Rivian Seeks High Valuation

Last week, Rivian announced a targeted valuation of more than $53 billion for its U.S. offering. While that number is significantly lower than its original $80 million target, it still puts the EV maker at almost the same value as Honda.

Rivian’s top client right now is Amazon. Earlier this year, the e-commerce titan agreed to buy 100,000 electric delivery vans for its trademark blue and gray fleets. According to recent findings, Amazon now owns about a 20% stake in the company. Rivian was also backed initially by Ford, who exited the EV maker’s board shortly before the valuation announcement. Ford has invested upwards of $820 million into the startup.

Now, Rivian said it’s looking to raise as much as $8.4 billion in funding, which could mark the third-largest US IPO in the past 10 years!

What’s curious about the company is its continued ability to raise money when it hasn’t churned out much of a product yet. On June 23, Rivian closed a funding round of $2.5 billion. The first Rivian R1T electric pickup truck rolled off the production line in September, and the first 300 vans for Amazon are scheduled to be delivered by the end of this year. Meanwhile, the automaker’s SUV, the R1S, was initially quoted as dropping this fall. However, the official release date has yet to be specified.

Did you know…?

Rivian’s growth in the E.V. market is echoing with other automakers too. Stellantis recently announced it was offering buyouts to pension-eligible salaried U.S. employees who are at least 55 and have worked with the company for 30 years. The manufacturer said the move is part of the transition to building electrified vehicles like the Jeep Wrangler 4xe and the Jeep Grand Cherokee 4xe.

Toyota Takes Aim

Toyota’s been on a tear recently as it sets its sights on the future. In addition to building a new EV battery manufacturing plant in the U.S., the automaker continues to be an outspoken critic of the proposed $4,500 tax incentive for union-built U.S. EVs. In fact, Toyota is taking direct aim at Washington with a new ad campaign.

Toyota placed ads in multiple news outlets, including The New York Times and Wall Street Journal calling out what it deems an unfair proposal for non-union autoworkers. The automaker argues the current incentive hurts both production line workers and buyers. If a person chooses to purchase an EV that’s not made by the Big Three, Toyota estimated those consumers will need to pay “about $100 more per month over a four-year period” because they won’t get the $4,500 incentive.

By in large, the automaker contends that fighting climate change should be the priority when it comes to EV manufacturing. Therefore, D.C. should “put what is best for the American worker, consumer and environment ahead of politics.”

Toyota wouldn’t be the only automaker to lose out on EV tax credits with the current proposal. Brands like Rivian and Tesla also employ non-union autoworkers.

Legislative Happenings Home and Abroad

While a handful of local and state elections wrapped up early last week, the legislative train kept rolling in D.C. Talks to move ahead on the infrastructure bill focused around the $1 trillion-plus Senate-passed physical infrastructure bill and a roughly $2 trillion budget for a social infrastructure package.

What’s been the hold-up?

The discussion has dragged on because of pushback from some senators as well as the complicated nature of the bill. Provisions address everything from rebuilding old bridges and roads to erosion mitigation and improved access to clean water. At the core of the back-and-forth around the bill is also an age-old argument in Washington. Republicans like Rep. Kevin McCarthy have expressed concern that the spending would leave Americans with the check and contribute to inflation. Meanwhile, others like Democrat Senator Bernie Sanders voiced concern that if issues like climate change and child care aren’t addressed, they post an “existential threat” to the country’s future.

One of the more pressing issues connected to the bill that affects the aftermarket, automakers, and just about every other industry on the planet is the supply chain issue. A report by Transport Topics last week pointed out that the national supply chain headache is a ticking clock for the administration, especially with the holidays just around the corner. Late last month, the U.S. Dept. of Transportation and the state of California announced a partnership to try and tackle the ongoing issue. With some of the biggest trade corridors to the U.S. from Asia, California’s ports have been at the center of many backups and fiascos related to shortages stateside.

Forward Momentum

Late on Friday, the House came to some semblance of agreement, passing the biggest U.S. infrastructure package in decades. However, a last-minute standoff between moderates and progressives means the larger $1.75 trillion Build Back Better Act will sit in limbo for a little while longer. (This includes the aforementioned, controversial union-built EV tax credit that Toyota is fighting against.)

From Automotive News: “The House instead approved a procedural measure teeing up a vote after lawmakers return from next week’s break and the Congressional Budget Office delivers a cost analysis. That was a last-minute concession to a small group of moderates who refused to vote for the spending package without the CBO score. Progressives also made a concession by supporting the infrastructure legislation before a vote on the larger spending package.”

Rollbacks Too

While the infrastructure bill awaits its final fate, the president addressed some international trade issues at the G20 summit in Rome. Specifically, Biden rolled back E.U. tariffs on steel. There have been rising material costs for automakers who use imported steel in their manufacturing, which has also been reportedly causing price increases for end-buyers. While it looks like an attempt to patch things up with European leaders over the rift the tariffs caused, Biden’s move also had designs on keeping U.S. steel makers happy.

The agreement reportedly keeps protections in place for American steel and aluminum makers by changing the currently 25% tariff on European steel and 10% on aluminum into a tariff rate quota. Through this setup, higher levels of imports are met with higher duties.

Commerce Secretary Gina Raimondo told the N.Y. Times the administration believed the agreement would ease some of the headaches in the supply chain and drive down costs.

It’s worth noting that right now, Chinese-manufactured steel is not covered under this new agreement. U.S. Trade Representative Katherine Tai said the deal showed the administration’s intention to push China to adhere to international trade rules. China has previously rerouted its steel through European markets and sold it to the U.S. at super-low prices. This practice puts a strain on American manufacturers who can’t match that price point. To get around China’s rerouting, the new deal says only steel poured and melted inside the E.U. receives the tariff breaks.

The Engine Block is your one-stop source for any and all auto industry news. Keep an eye on our weekly round-up of enthusiast coverage, product reviews, vehicle spotlights, auto show/expo features, and more. Be sure to tune in Friday for the next installment in our Resourceful Traveler series — and catch up on previous articles here.