SAI Weekly 13 - 25: NO Tariffs for YOU!, Slate Auto Uphill Climb, MI Could be in Trouble

This post is mostly about the tariffs – or the pump fake on tariffs from the Trump administration. Trump decided that he’s going to pause them on every country for 90 days, with the exception of one. Guess which one? For China, the going rate has now been increased to 125% on most goods.

Even though many Chinese manufacturers have been working with their US customers, the 125% closes the door on the supplier’s ability to absorb the tax on their end. For the US business owner, it means passing on that tax to buyers likely cratering demand or trying to absorb it themselves which would push their margins into the red. The 125% tariff has all but assured that.

Lot’s going on in my head as I am processing in real-time as I type this. Does this make Trump look weak? Does it make him look indecisive? Was there too much pressure from his financial backers and the business community to go through with the blanket tariffs? Does this make the US look extremely inconsistent and flaky? Are these just negotiating tactics and if so, will they work to get countries to come to the table to buy more US goods? To build in the US?

One thing that seems certain, other countries, specifically our historical allies, are beginning to move towards self-reliance since they can’t count on the US anymore due to all this whipsawing back and forth, and I am not just referring to the last 100 or so days.

Trump Version 1.0 then Biden then Trump Version 2.0 has pushed and pulled US domestic and foreign policy back and forth in what will be going on 12 years when Trump leaves office for the last time (I think?). We are talking about fundamentally different views and consequently, the policies that outline those opposing views. I don’t care which side of the aisle you’re on, it has made reliance on the US a crap shoot for countries around the world. Again, is that by design? The Trump administration would have you believe that.

The other thing that seems certain – costs are going up. Not on everything anymore, but almost everything now – since we have a 90-day reprieve on goods from Vietnam and other countries that also supply a good percentage of the products we (Americans) purchase and consume.

This still leaves us with the trade challenges with our two bordering neighbors, the ones that the state of Michigan shoulders much of the burden for – Mexico, which didn’t retaliate seems to have been spared while Canada countered with their own tariffs on vehicles and parts that do not meet USMCA requirements.

So here we are. Two separate stare downs. One with China, the other with Canada and Mexico at the same time. Let’s specifically talk China. Who will blink first? For China, can factory owners find customers to replace the US ones they’ll likely lose because they can’t reduce their wholesale prices any lower? Furloughing workers and cutting production are just temporary fixes. As we push into summer, if these suppliers can’t find non-US customers to keep their production whole. Pressure builds and builds.

On the US side, business owners that source from China who’ve now seen fallen demand or no supply available for their products get more and more angry. Pressure builds and builds. Can the Trump administration withstand the objections to these tariffs and inflation affecting his supporters as we get further into 2025? From the looks of it, he couldn’t stand the pressure this time, hence the walkback on tariffs today.

Let’s remember that there’s an election in <18 months so if inflation is high and US sentiment is low – those Republicans congressman that supported Trump’s policies who will be up for re-election have increased chances of losing. And losing control of the House or the Senate will cripple the last two years of his presidency. At least towards any GRAND deal with China, etc. More on the staredown with MX and CA below.

BIGGEST NEWS THIS WEEK

Slate Auto emerges. There is a Troy, MI based startup supposedly backed by Jeff Bezos that has until now been in stealth. There seems to be plans to unveil a bite-sized electric pickup targeting the $25K price range later this month..

I am disappointed that I wasn’t more on top of this TBH. When asked a couple weeks ago if I’d heard of them, I said I didn’t, but having checked through old texts, I had heard of them – someone pinged me a while back asking to be connected to someone there about a job that was posted, there was a bit of back and forth about them, then I reached out to another friend to ask about them. They told me nothing really interesting and I kinda forgot about it.

IMHO this isn’t that big of a scoop, although its surprising they’ve been able to raise capital without me knowing too much about it – I’ll be impressed once I see the unveiled product and can sink my teeth into the specs, pricing, design and realistically how it’ll be built. That’s when I’ll have a more informed opinion.

With Bezos and a few other Amazon alums putting their weight (and it looks like cash too) behind the startup – can it succeed where others (outside of China) have failed to even tread? Looking at YOU GM + Ford.

It’s going to take a Bezos sized wallet that’s for sure. With tariffs on China supply chain, credits for EV purchase potentially going away, charging infrastructure still in disarray in the US, I have so many questions that the linked article doesn’t answer.

A big part of me is dismissive – another company that won’t ever get to that $25K price-point, think Ford F150 Lightning starting MSRP at $40K, Cybertruck $40K and on and on, especially with their first vehicle.

On top of that, costs for EVs are headed the wrong way. Demand has slowed. And the Trump administration wants to reverse seemingly ALL the Biden administration policies that supported EV.

Next set of substantial challenges - the form factor, mainly the size is going to be a limiting factor for sales – that’s at least until GM & Ford launch affordable electric pickups. Because it’ll take a combined marketing effort, I am specifically referring to $$$ spent to push folks off their BIG, HUMUNGOUS thirsty trucks and SUVs here in the Midwest and out in Texas and into smaller ones. The OEMs painted themselves in a corner here. They equated bigger to premium, hence charging more. This is one of their biggest challenges, doing a Jedi mindtrick on the US consumer to convince them that small actually may be better.

The other part of me wants to know everything about this company. Actually, let me rephrase that – I want to know everything about the company, dismissive or not. There are others already on prototype #1, #2 and #3 to think about – Telo Trucks for one seems to be the exact type of vehicle that Slate may launch. There’s Alpha Motors. Another startup working out of Newlab – Strut Motors. Just to name three.

What’s needed to build an affordable and (potentially) profitable car that’s sub--$40K? Scale. Battery pricing at <$50 / kWh. Range of minimum 275 miles.

One of the most important qualifiers? Software that works. No, seriously software is key. Nothing flashy, just functional. $25K shouldn’t get you flashy. Another VERY important qualifier. Safety. The size of a $25K truck that’s likely an order of magnitude (or two) smaller than an F150 / Silverado / Sierra / Tahoe / Yukon / Expedition / Navigator / Escalade. How safe can that it be?

I’d LOVE a small $25K electric vehicle that gave me 275 miles of range. What I wouldn’t like is putting my family inside it while driving on I75 being able to read the words on the tires of cars that are in the lanes both to my immediate right and left because the other vehicles on the road are generally much taller and heavier than mine.

That price point is key – the battery pack will currently not allow ANY company that has a startup priced at $25K to be profitable. Not until at least Job #500K rolls off the line. That’s my WAG. I’m too lazy to project a real volume, but maybe I’ll come up with something by next week’s newsletter.

Other thoughts – Is this Jeff’s revenge re: Elon’s Tesla? This seems like a cash pissing contest between two of the richest people in the world. Next, with Trump in office – is this product DOA? Again, who is working the software? Harley Davidson execs running the show - Really?

Can they be the frontier company that launches the first affordable, yet still cool pickup that meets most requirements of a truck? I like both the Alpha Motors AND Telo Truck products.

I bet those founders will also tell you how tough it is to get to $25K with a path to profitability in the foreseeable future. Is there a path to it? I believe so, but no one has found it yet. I applaud Slate for trying to be the first. But I have my doubts.

SOMETHING THAT MAY ONLY INTEREST ME

Michigan is going to pay the price for tariffs, literally and figuratively.

If the USMCA is getting blown up for good, then what? Billions will have been wasted. Billions in spending that Trump actually blessed <5 years ago! Again, certainty here is prices going up for passenger vehicles. Do the jobs added to the US economy likely make up for the ramp up in costs for just about everything? Highly unlikely. Who blinks first. Canada has actually doubled down. Mexico wants to play ball, but we don’t know what the Trump administration’s ideal state looks like.

The automotive industry, according to this article by the WSJ, is ~20% of Michigan’s economy. That number seems small, TBH. But the auto industry also defines who we are as a state. That’s good and that’s bad. We get defensive when we should be open-minded. As someone who moved back to be part of the solution, it’s a bit like some people here would rather ignore the current substantial challenges facing the state, believing they will just go away.

That was how I felt when I first started talking to more and more people about the China factor in automotive when I first moved back. More people are coming around to seeing China EV Inc as a serious threat. But these tariffs are still very raw. Many Michiganders voted for Trump and feel betrayed.

In the article, they quote a woman that points to buying on Amazon to get things cheaper – does she know where most Amazon products come from? And that a good portion of them ship directly from China? Seriously?

These things are real. They are going to be crippling to the industry. If we don’t do something about it. And do it quickly. That’s why it’s a bit frustrating to see state as well as some automotive leadership not really playing that much offense to try to get out in front of what was known about China AND the Trump administration Version 2.0. His policies have never been secret. And our history doesn’t define our future. I want to broaden what Detroit will be good at. Cars should be a small part of our future. We talk about manufacturing. You know what creates jobs? Successful companies. Ones in growing sectors. That are difference makers in those sectors.

That means we should be standing up the people who are dreaming of what’s next. That $25B that GM spent to buyback share the last few years? We should’ve pushed them to invest in MI and in MI innovation.

We need to embrace dreaming big. Embrace taking more (calculated) risk. Embrace failure. Embrace working even harder. Not giving up. Because I know how hard folks in Silicon Valley and China are working. I used to be them.

We can build a wide funnel so that people with ideas, both inside and outside MI can incubate them right here. Funding can be thrown at them. Allow them to thrive or fail. Stand up those founders that are out there getting it done. Create more sizzle. Charismatic founders building amazing products will do that. Everyone has to do more. We aren’t there yet. It’s frustrating. And worrying.

BY THE NUMBERS

- 42%. That’s how much Porsche sales fell in the China market in Q1’25. The US market gained 37% which softened the blow, but that’s a massive number going the wrong way for one of the most prestigious automotive brands in the world. Remember, vehicle sales shrank 2022 = -3%, 2023 = -15%, 2024 = -28%.

Three years plus so far and still no bottom. Porsche team scrambling to find alternate markets to shore up the losses in China – but that’ll be hard to come by and stuffing more into the US market will only increase downward pricing pressure.

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CHINA EVs & MORE

Last week’s episode below:

Episode #205 - Tariffs, Tariffs, Tariffs, March Sales, eVTOL Takes Off in China

Please join us and message me directly with any questions you may have. Otherwise, find the recorded episode as an audio podcast or as video on the China EVs & More YouTube channel.

We are live on these platforms: YouTube, Linkedin and X. See you there!

For those that can’t join us live - you can find recorded episodes on:

YouTube: https://www.youtube.com/@ChinaEVsandMore

Audio Podcast:

https://chinaevsandmore.buzzsprout.com

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This weekly newsletter is a collection of articles we feel best reflect the happenings of the week or important trends that have effects on the global automotive and mobility sectors. We also provide a point of view that we hope educates and sparks debate.

The Sino Auto Insights team