Tesla's cheapest Model 3 is the first victim of Chinese tariffs

Good morning! It's Thursday October 3, 2024 and this is The Morning Shift, your daily roundup of the world's biggest automotive headlines in one place. Here are the important stories you need to know.

1st gear: Tesla kills its cheapest car

As announced, this was an important week for Tesla its sales for the third quarter of 2024. Luckily the sales were above at the electric car manufacturerbut not in the way experts had predicted, and that meant the company's stock still wasn't doing particularly well. While all of this was going on, the automaker made another move will certainly irritate investors and buyersit has displaced its cheapest model.

As of this week, Tesla I took the Model 3 Standard Range Rear wheel drive model removed from its website, reports Reuters. The car, with a range of up to 272 miles, started at $38,990 and was the company's cheapest model:

Priced at $38,990, the Model 3 Standard Range Rear-Wheel Drive uses lithium iron phosphate (LFP) battery cells from China.

The US recently announced higher tariffs on Chinese imports, including a 100% tariff on electric vehicles and 25% on electric vehicle batteries and key minerals.

Additionally, vehicles containing Chinese-made components such as LFP battery cells are not eligible for the $7,500 federal tax credit provided by the government.

Tesla's Model 3 Long Range Rear-Wheel Drive is currently the cheapest offering in the United States, priced at $42,490.

The fact that the standard range Edition of the Model 3 was ineligible for federal tax credits established under the Inflation Reduction Act means that the impending Chinese tariffs were likely just the final nail in its coffin. Tesla boss Elon Musk has remained silent about these tariffs since they were introduced The CEO even went so far as to reject such measuresI wonder why?

But the demise of the budget-friendly Model 3 just shows what a far-reaching impact tariffs could have on the American auto industry, as many companies are suppliers cheaper components from China fit in their cars. That's why experts recently warned that the looming tariffs could make it more difficult to buy new cars in the USA and more expensive.

2nd Gear: Toyota delays US electric vehicle production

While Tesla has discontinued its affordable electric models, Japanese automaker Toyota has done so curb some of its electrical ambitions. The Corolla maker announced today that it is postponing its plans Electric vehicles manufactured in the USA by 2026reported Bloomberg.

Toyota originally planned to offer American-made electric vehicles starting in 2025. Reports Bloomberg. However, the automaker will not bring its fleet of US electric models onto the market until 2026 at the earliest, when it plans to offer seven electric cars for sale in the land of the free:

The Japanese automaker had originally planned to begin production of a three-row, battery-powered SUV at an assembly plant in Georgetown, Kentucky, late next year, but a company spokesman said Wednesday that that has been pushed back a few months to the following year.

Toyota still aims to produce the as-yet-unnamed SUV in Kentucky starting in early 2026 and to produce another unspecified all-electric SUV at a factory in Princeton, Indiana, later this year, he said.

Toyota's planned expansion of its electric vehicle lineup in the U.S. from the current two to up to seven vehicles comes at a time when demand for battery-powered vehicles has slowed. The U.S. launch is part of a broader goal to sell 1.5 million electric vehicles worldwide by 2026. To achieve this goal, Toyota is building a lithium-ion battery plant in North Carolina that is expected to be operational in 2025.

The delay in Toyota's American electric vehicles comes as the brand's expectations for its electric ambitions have been tempered. Last month, The automaker lowered its electric vehicle production targets by about a third. The company now aims to produce about a million electric vehicles by 2026, up from its original target of 1.5 million by the end of the year.

Toyota has repeatedly expressed its reluctance to embrace electrification, opting for it instead is expanding its range of hybrid models such as the Corolla and Prius. That strategy appeared to pay off for the automaker earlier this year recorded increasing sales and profits as a result of increasing attention to hybrid cars.

3rd Gear: Hurricane Helene closes mines critical to microchips

The trail of Devastation caused by Hurricane Helene After sweeping across the U.S., it is just now becoming fully realized, with flooded homes, torn up roads, and electric vehicles burst into flames from all that salt water that flooded some states. Now it turns out that The storm can have devastating consequences on the auto industry after it closed a factory that makes elements essential to microchips.

When the massive storm hit North Carolina last week, it destroyed facilities in the region run by two companies that mine for vital minerals for microchip production. Reports Automotive News. Due to the damage, the plants are now closed, which could impact the production of chips important to the American auto industry:

Sibelco Group and The Quartz Corp. suspended operations Sept. 26 in Spruce Pine, North Carolina, about 50 miles northeast of Asheville, as the hurricane devastated parts of the Southeast with severe flooding. According to author Ed Conway, who wrote “Material World: The Six Raw Materials That Shape Modern Civilization,” the city is one of the few locations in the world that contains high-purity quartz, which is critical to the production of semiconductors.

If it continues, the disruption could impact global supply chains that rely on semiconductors for use in vehicles, phones, solar panels and other technologies.

“We are hearing concerned voices on this issue,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, which monitors the impact of semiconductor availability on the automotive industry. “It is still far too early to sound the alarm bells, but ensuring that supply chains are adequately secured is definitely on everyone’s lips at the moment.”

It is It is still too early to know what impact this will have The shutdown could have been it, but the last time American automakers faced a microchip shortage, it wasn't good. A computer chip shortage caused by the impact of the Covid-19 pandemic has resulted in all types of cars being delayed or delivered with missing features.

Just three years ago that meant the semiconductor shortage Ford had to cut production and temporarily close some plants, Cadillac has removed features from some Escalade models while it searched for parts and the Ford Bronco had Functions initially shortened.

4th gear: Hybrids even win at BYD

Hybrids are so hot right now, with Toyota is banking on their popularity, General Motors promises to bring more hybrid vehicles to market Offers and automakers around the world are withdrawing their EV targets in favor of hybrid power. Now it turns out that hybrid options for one of them are even selling like hot cakes World's largest manufacturer of electric vehicles: BYD.

The Chinese company announced this week that it sold 1.6 million hybrid models between January and September 2024. reports Reuters. In contrast, the automaker delivered 1.2 million electric vehicles during the same period. Last year, electric vehicles accounted for more than half of BYD sales:

Hybrids are moving into pole position at BYD. The $122 billion car and battery maker is on track to sell more models powered by both a battery and an old-school motor than pure electric vehicles this year. Exports could accelerate the trend, but competition, climate targets and protectionism are complicating efforts to drive a global hybrid boom.

From January to September, BYD sold 1.6 million hybrid and 1.2 million purely battery-powered cars; a year earlier, more than half of sales came from the latter category. China is driving change, but the next growth spurt is coming from overseas. Although BYD exported a negligible number of these products last year, they accounted for about 40% of shipments in the first half of the year, CLSA estimates.

This is part of something bigger. According to the International Trade Center, exports of Chinese-made hybrids have roughly doubled every year since 2020, rising to over 200,000 last year. China's total exports of all-electric powertrains were around 1.5 million in 2023.

Because of Fears of Chinese EVs here in the USYou cannot buy a BYD vehicle here, whether battery-powered or hybrid-powered. However, the automaker has expanded its global presence in recent years and its affordable electric vehicles have taken Europe and Australia by storm.

Since there are also hybrid vehicles on offer and the popularity of these cars is currently increasing, Could BYD continue its meteoric rise? gain popularity and become a real threat to the superiority of traditional car manufacturers such as Ford and Toyota? Only time will tell.

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