These 20 electric cars will retain their tax credits until further notice

There are 20 electric vehicles that will qualify for the $7,500 tax credit until the end of the year, the US and Mexico are wrapping up a labor investigation at a Mexican Stellantis plant, and Warren Buffet doesn’t seem to worry about the auto market. All that and more in The morning shift for Wednesday (my boys), August 17, 2022.

1st gear: The 20 qualifiers

President Biden signed the sweeping Tax, Climate and Health Act on Tuesday, and the administration now says that about 20 models will still qualify for the tax credit of up to $7,500 EV through the end of 2022.

That said, the law immediately ends college credits for nearly three quarters of the 72 models that were previously eligible. It is because, to qualify, The EVs must now be assembled in North America.

The number of eligible vehicles is likely to change on 1 January 2023, when new restrictions on battery and mineral sources and price caps come into effect. The Alliance for Automotive Innovation, an industry group, says that would make all or nearly all electric cars ineligible. From Car news:

The automaker group said it will work with the administration “as it issues critical guidance and new regulations — so that the EV tax credit is as accessible and beneficial to consumers as possible.”

Currently eligible vehicles are 2022 model year EV or plug-in hybrid electric versions of the Audi Q5; BMW X5 and 3 Series Plug-in; Ford Mach-E, F-Series, Escape PHEV and Transit Van; Chrysler Pacifica PHEV, Jeep Grand Cherokee PHEV and Wrangler PHEV; Lincoln Aviator PHEV and Corsair Plug-in; clear air; Nissan Leaf; Volvo S60; and Rivian, R1S and R1T. The 2023 Nissan Leaf, BMW 3 Series and Mercedes EQS are also eligible.

Some models are built both in North America and overseas, and consumers should check their vehicle identification numbers to ensure eligibility, the Treasury Department said.

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Buyers can still qualify if they had binding written contracts before Biden’s signing and some automakers had encouraged customers to make part of their deposits non-refundable to qualify.

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Basic all year round

Uniqlo summer sale

Essentials you don’t want to miss
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The law also makes General Motors and Tesla vehicles eligible for e.gax cedits starting January 1st. They had previously lost their credits after hitting the old 200,000 vehicle per manufacturer mark. However, it is not clear whether any of the vehicles they make will qualify under the new restrictions.

2nd gear: US and Mexican labor probe ends

The US and Mexican authorities have resolved a labor dispute with a Mexican Stellantis manufacturing facility.

The agreement at Teksid Hierro de Mexico is the fourth labor investigation to be concluded under the 2020 US-Mexico-Canada Agreement (USMCA). It was one of Mexico’s longest labor disputes.

American workers said workers at the plant, which makes parts for heavy vehicles including Cummins, Volvo and Mack, were previously denied their rights to choose a union and take collective bargaining. From Reuters:

Reuters reported last week that Teksid, which employs about 1,500 people, expected to settle the case without going to a dispute panel after the company recognized an independent union, a move workers attributed to US pressure under the USMCA.

Workers since 2014 had been fighting to establish a union known as The Miners at the Teksid plant in the northern state of Coahuila, accusing the company of working with a powerful rival union to block their efforts.

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The USMCA resolution “will help end eight years of rights violations against Teksid workers,” US Labor Secretary Marty Walsh said in a statement.

As part of the deal, the unit of Italian-French carmaker Stellantis agreed in July to rehire, with back pay, 36 workers who said they had been fired in retaliation for supporting the union, which also represents metalworkers and miners.

Stellantis says that they “cooperate diligently” with government officials during the process. The company says it respects collective bargaining rights and will comply with local laws.

3rd gear: Buffett Ain’t Worried

Warren Buffett doesn’t seem to think the good times are over for car dealers just yet. New filings show that Berkshire Hathaway tripled its stake in Ally Financial, a longtime auto finance company, to $1 billion in the second quarter of 2022.

The world’s most famous investor seems to believe that lending margins will remain strong and default rates will remain low. From Financial Times:

In the two pandemic years, shares in Ally rose by 57 percent. The stock was lifted by consumers pouring in cash to buy used vehicles. Car manufacturers were unable to meet the demand for new cars.

Ally shares have fallen by a quarter so far in 2022. Wall Street is worried about the economy of the American consumer as well as a normalization in the auto market. Ally says those concerns remain overblown, a view that now has the implicit backing of a legendary investor.

Between the end of 2019 and the beginning of 2022, the Manheim Used Vehicle Value Index increased by a staggering 70 percent. Higher used car prices supported larger loans at a time when there were virtually no concerns about immediate credit losses.

Net interest income increased significantly in the current quarter compared to 2021. However, Ally was forced to accrue loss provisions so large that pre-tax income fell 40 percent year-over-year. The company insists that these provisions are simply a natural return to ordinary levels.

The move is a vote of confidence, not only in terms of car loans, but also in consumers’ purchasing power as a whole. If Warren isn’t concerned about our ability to spend money safely, why should we be?

4th gear: BMW’s battery switch up

China’s EVE Energy CO Ltd is to begin supplying BMW with large cylindrical batteries for the company’s electric cars in Europe. BMW is reported to be following in Tesla’s footsteps by adopting the new technology. Vehicles with the new batteries will be on the market in 2025.

Earlier this year, Tesla began producing its new large-format 4680 cylindrical battery. 4680 means 46 millimeters in diameter and 80 millimeters in length. Tesla says it expects the new battery to lower production costs and improve range compared to the current generation of 2170 cylindrical batteries.

EVE’s batteries are expected to be the same size as Teslas. From Reuters:

EVE, a supplier to BMW in China, did not directly address Reuters questions when asked for comment. BMW said it plans to release some battery-related news in early September, but declined further comment.

The shift to BMW, which currently uses prismatic batteries, underlines the growing momentum for larger-format cylindrical batteries. Prismatic batteries, which are rectangular in shape, have become the most common form of car batteries in the last two years, as they can be packed more tightly, saving costs. But advocates of cylindrical batteries argue that the newer larger format cells have become more cost-effective due to improvements in energy density.

China’s CATL (300750.SZ), the world’s largest battery maker, is also to start supplying cylindrical batteries to BMW from 2025.

Expectations are high that these batteries will also be large cells. CATL did not respond to a request for comment on planned dimensions.

Right now, it’s not clear exactly how many batteries BMW plans to get from EVE and CATL.

5th gear: out of power

Toyota has suspended operations at one of its factories in China after local authorities issued an order to conserve electricity. The production facility will be closed until Saturday, according to a spokesperson for the company.

Sichuan province, where the plant is located, is rationing industrial electricity consumption during the worst heat wave in 60 years. It has caused producers of fertiliser, lithium and other metals to halt plant operations or slow down production. From Reuters:

Industrial users in 19 out of 21 cities in the province were ordered to halt production from Aug. 15 to Aug. 20 to prioritize power supply to homes, according to a notice issued Sunday by the Sichuan Department of Economy and Information Technology.

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“We are monitoring the situation every day and following the guidance of the authorities,” a Toyota spokesperson said.

Toyota won’t say how much vehicle power will be affected by the suspension.

Reverse: Up!

This is transportation content if I ever saw it.