Auto Industry News: Tangled in Red Tape—U.S. Tariffs, Tesla Lawsuits, and Yo-Yoing Emissions Regulations

It’s been a busy week for the boys in the back rooms, as politicians and legislators casually throw global economics into upheaval, leaving the auto industry’s head spinning. China has clapped back at new U.S. tariffs levied by the Trump administration, raising more questions—and eyebrows. Sticklers at the SEC have incited new Tesla lawsuits, piling just a few more headaches onto the plate of the seemingly unflappable Elon Musk. And while the EPA picks a fight with California over a proposed federal rollback of emissions regulations, the EU pokes a few thorns in the sides of European automakers with a new—and stricter—emissions test. So, let’s jump right in to this raging economic dumpster fire, shall we?

New U.S. Tariffs Rankle China

In response to the latest round of U.S. tariffs levied against Chinese imports, the Chinese Ministry of Commerce has retaliated with a 25 percent charge on $16 billion worth of U.S.-made goods. The list of 333 items includes about $10 billion worth of automobiles and motorcycles slated for Chinese markets.

This passive-aggressive trade war leaves automakers in a precarious spot as they try to adjust their production numbers without slashing American jobs. CNBC reports that Ford could see its Mustang (which already faces high tariffs upon reaching Chinese ports) priced out of the market. And BMW is left biting its nails as it just forged ahead with plans for a $1 billion expansion project at its South Carolina plant. “Last year, Chinese motorists bought 52,407 X5s, making it the single most popular American-made vehicle sold in that country,” explains CNBC.

Regardless of how these U.S. tariffs play out in the long run, things are certain to get interesting in the short term. Journalists, fellow Republicans, and those in the automotive professions have cautioned that a tit-for-tat trade war often only hurts those it attempts to help. “SEMA welcomes efforts by the U.S. government to protect American companies and their customers from unfair trading practices,” said SEMA President and CEO Christopher J. Kersting. “We urge the president and Congress to pursue trade infringements in a fashion that does not inflict unintended economic harm … The current tariffs are a tax on American companies and consumers,” he stated.

Tesla Lawsuits Keep Things Interesting

Speaking of unfair trading practices, our boy Elon Musk is back in the news—and some hot water. Two new lawsuits have been filed against the billionaire accusing him of making false statements on Twitter to boost Tesla stock prices—in violation of federal securities law. The Tesla lawsuits claim that Musk’s announcement that he had secured funding to take the EV company private immediately increased his stock prices. But those prices soon sunk when it was reported that the Securities and Exchange Commission was investigating those claims. (Bad timing, bro.)

CNN reports that shareholder Kalman Isaacs stated in his complaint that “it is clear that Defendant Musk Tweeted materially false and misleading information regarding the Going Private Transaction to exact personal revenge and ‘squeeze-out’ the short-sellers who had purportedly been badgering him for months.” We say, maybe you shouldn’t have poked the bear. Proving that Musk had tweeted-with-intent will be nearly impossible. So, it looks like more points on the board for Tesla and its seemingly bulletproof creator.

Dizzying Emissions Regulations Continue to Confuse

Trump’s EPA pushed to lower federal emissions regulations, enraging California and leaving automakers with a logistical nightmare if the state refuses to compromise on its strict standards. Federal officials claim that this rollback will take pressure off the automakers, allowing them to save money and funnel those profits into more safety advancements. California, and its supporting states, say that’s baloney and plan to fight back under the authority of the Clean Air Act. And auto industry lobby groups are desperately trying to stay out of the mess, issuing noncommittal tweets about just wanting everyone to stop yelling and decide on ONE national program or they’re turning this hybrid fuel cell car right around and we’re all going home!

Meanwhile, our friends in Europe are facing a similar-but-different problem as the EU tries to save face and crack down on recent fuel economy scandals. By imposing stricter emissions regulations in the form of a lengthy and independent emission test, they hope to alleviate some of the cheating. Volkswagen has complained that these new tests pose a bigger threat than the trade war. Industry groups echo those concerns, stating that the examinations are causing detrimental production delays and possible stock injury.

Yet, Financial Times reports that while emissions regulations have gotten stricter, one big glaring loophole still exists, even with the new test. Since the new standards don’t take place until 2020, “an unscrupulous manufacturer” could still game the system by inflating their current emissions so that the baseline is set low. “Brussels acknowledges that it inadvertently created this loophole when it wrote the WLTP regulations,” says Financial Times. “It tried to prevent carmakers from tricking the system to lower their emissions — it had never thought they might try to make their cars look dirtier than they are.”

And Finally, Some Good News

There’s a good chance a racecar will break some records at the end of this month, just not in the traditional way. The most valuable car ever auctioned will go on sale at RM Sotheby’s in Monterey, California. The 1962 Ferrari 250 GTO is one of only 36 ever made—all of which are still running! It boasts over 15 racing victories from 1962 to 1965, including the 1962 Italian GT Championship, and has been driven by F1 legend, Phil Hill and racer-turned-jewelry-titan Gianni Bulgari.

The car is estimated to be worth between $45 million and $60 million, and CNN reports that if the sale price even comes close to this, “it will set the record for any car ever sold at auction.”

While none of us will likely ever bid on a multi-million-dollar vehicle, maybe someday these budding entrepreneurs can. Two young teens, Evan Hagen and Neko Moran, started an auto-detailing business in their parents’ driveway to earn some extra cash. With a little help from Mom and Dad and the knowledge they gathered at a business camp in their hometown of Moorhead, Minnesota, these two stepbrothers didn’t let a little thing like not being old enough to drive hold them back from their automotive dreams. The Detail Bros. have launched a lucrative little summer gig for themselves, and even donate a portion of their earnings to charity. Maybe they can teach our squabbling politicians and lobbyists a thing or two.

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