The Galapagos Effect

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The Donald has repeatedly argued that the affordability issue in the US is an epic “scam” conjured up by Democrats. “It’s a con job. I think affordability is the greatest con job,” he said on Tuesday.

Who is conning whom is unclear.

When it comes to new US cars, the average transaction price reached its highest level ever, now over $50,000, according to Kelley Blue Book.

And in response to the “con”, The Donald plans to roll back federal fuel-economy rules for passenger vehicles.

Under the changes, the US would require an average of 34½ miles per gallon for vehicles by model year 2031, down from the previous 50.4-mile-per-gallon standard.

“This rule will actually allow you to bring back the 1970s station wagon, maybe a little wood panelling on the side,” said Transportation Secretary Sean Duffy. (see Dumb and Dumber for more on Duffy)

The Donald is also terminating a program that had allowed carmakers to pay rival OEMs with better fuel efficiency, for credits that would bring them into compliance with the rules, a policy that the administration said had “artificially propped up the EV industry”.

These deregulatory moves are intended to reduce compliance costs and lower vehicle sticker prices for consumers.

While the US domestic automotive industry may see short-term relief in profitability and product planning flexibility, this policy creates substantial long-term strategic risks.

The primary danger is the bifurcation of the automotive production, with US automakers deviating from vehicle preferences in other markets.

Global sales of fully electric and plug-in hybrid vehicles rose 23% in October to 1.9 million units, driven by strong demand across major markets, according to Rho Motion.

By aligning US standards to a lower bar than the rest of the world, the US risks becoming a technological “Galapagos”, a unique market isolated from global trends, turning the US into an ICE island.

The administration argues that this move will save consumers approximately $1,000 on the purchase price of a new vehicle by removing the cost of expensive “fuel-saving technologies” (such as turbochargers, lightweight materials, or hybridization).

In practice, automakers may not pass 100% of these savings to consumers.

Instead, they often use the margin to improve vehicle features (larger screens, luxury trims) or retain it as profit.

Kathy Harris, director of clean vehicles at the Natural Resources Defence Council, said the new plan would only benefit the oil industry. “Gutting fuel economy under the pretense of safety and affordability is a cruel joke for American drivers,” she said.

The original fuel-efficiency rules would have reduced American gasoline consumption by almost 70 billion gallons, eliminated approximately 710 million metric tons of climate pollution, and saved consumers an average of $600 (or more) at the pump.

Add in The Donald’s tariff costs to the price of any new vehicle, and US consumers could still expect to pay $3,000 to $5,000 more for any new set of wheels on top of those historically high prices.

Lynk & Co announced that the first batch of orders for its newly launched Lynk & Co 03+ TCR racing model has sold out ahead of production. carnewschina.com

China floods the world with gasoline cars it can’t sell at home. reuters.com

Chery adds new Tiggo 5 Pro compact SUV to its gasoline-powered vehicle lineup. carnewschina.com

Nio power signs new deal for swap station construction. cnevpost.com

Toyota’s $15,000 electric SUV is a hit in China. electrek.co

“The Chinese will not pause”: Volvo and Polestar executives urge EU to hold on to their plan to ban gas cars by 2035. theguardian.com

Marques Brownlee fawns over Xiaomi’s SU7 Max EV. youtube.com

Elon and The Donald’s administration criticized the EU after its executive branch imposed a $140 million fine on his social media platform, X. foxbusiness.com

Elon predicts that after the end of The Donald’s second term in 2028, it will be followed by two consecutive terms under President JD Vance. politico.com

Elon Musk says Tesla drivers can text while driving, but they shouldn’t. theverge.com

Tesla launches low-cost Model 3 variant in Europe. reuters.com

Tesla’s China-made EV sales rise 9.9% in November. reuters.com

SpaceX is kicking off a secondary share sale that would value the rocket maker at $800 billion, surpassing OpenAI to make it the most valuable US private company. wsj.com

Wing and Walmart launch Metro Atlanta’s first drone delivery service. theverge.com, wing.com

The Pentagon is deploying a new crude, low-cost unmanned kamikaze drone that a defence contractor reverse-engineered from Iran’s Shahed-136 drone. wsj.com

Unjammable drones controlled over fibre-optic cables are leaving wires everywhere, forcing Ukrainian troops to move with caution. businessinsider.com

At a technology showcase in New York, GM CEO Mary Barra described a future in which vehicles double as intelligent personal assistants. autonews.com

Tesla’s Optimus robot masters human-like smooth running. interestingengineering.com

MIT engineers design an aerial microrobot that can fly as fast as a bumblebee. news.mit.edu

Digital artist Mike Winkelmann, aka Beeple, has brought NFTs back on the scene at Art Basel with a pack of robot quadrupeds that snap photos of visitors and poop printed artworks that double as crypto collectibles. Each four-legged robot carries a sculpted silicone head based on figures from the worlds of art and tech, including Elon Musk, Mark Zuckerberg, Jeff Bezos, Pablo Picasso, Andy Warhol, and Beeple himself. youtube.com, wsj.com

The G7 and the EU are in talks to replace a price cap on Russian oil exports with a full maritime services ban in a bid to reduce the oil revenue that helps finance Russia's war in Ukraine. reuters.com

Oil prices edged up nearly 1% to a two-week high on Friday on increasing expectations that the US Federal Reserve will cut interest rates next week. reuters.com

CATL begins large-scale shipments of next-gen battery cells for energy storage. cnevpost.com

In addition to changing US fuel-economy rules, The Donald also wants to sell you a Japanese Kei-Car. He expressed delight with the tiny vehicles, deeming them “really cute” and “really beautiful” in the Oval Office this week. I suspect that no one told him that they are very fuel-efficient, often electric, and that average US consumers don’t want them. bloomberg.com, caranddriver.com

Trump’s South Korea tariff cuts are a major boost for Hyundai and GM. cnbc.com

Jaguar axes design chief responsible for controversial ‘00’ rebrand. autocarindia.com

The recently unveiled all-electric Lexus LFA Concept is joining the growing roster of performance EVs with fake engine noise. autoblog.com

To halt their decline, VW and others are turning Chinese. economist.com

Volkswagen Group plans to invest 160 billion euros ($186 billion) through 2030, its CEO Oliver Blume said, reflecting belt-tightening as Europe’s top automaker faces a significant crisis in its two key markets, China and the US. reuters.com

Nissan is working with partners to explore ways to offset the effects of tariffs further amid extra capacity at its US plant. cnbc.com

Industry Minister Mélanie Joly said Canada is serving Stellantis a notice of default after the automaker shifted some of its production to the US. cbc.ca

Stellantis began serial production of the Dodge Charger Scat Pack, bringing back the gasoline-powered version of the muscle car while setting the stage for the return of the third shift at the Windsor Assembly Plant. autonews.com

Ford has a liftgate hinge cover problem. reuters.com

Automotive Parts Manufacturers’ Association President Flavio Volpe is preparing to make the case to keep the United States-Mexico-Canada Agreement intact. autonews.com

Auto loan defaults are climbing as high prices and interest rates weigh on Canadians’ wallets. financialpost.com

Canada’s automotive market posted an 8.6 per cent decline in November, with estimated sales of 142,000 units, according to DesRosiers Automotive Consultants (DAC). canadianautodealer.ca

The National Highway Traffic Safety Administration opened a probe in October after an incident in Georgia in which a Waymo car did not remain stationary as it approached a school bus with its red lights flashing and stop arm deployed. reuters.com, theverge.com

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