😍 Stellantis Charms Dealers, Consumer Confidence Dips, and The Fed Hold Its Breath

The Gist

• 🤖 Tesla FSD Upgrade Drama: Remember when Tesla promised your car had all the hardware it needed? Yeah, turns out it doesn't. Musk admitted that even HW3 isn't enough, and yet another upgrade is needed. Free upgrade? Only if you prepaid for FSD, which now costs as much as a used Camry.

• 🛡️ Stellantis Dealer Charm Offensive: Stellantis is trying to make nice with dealers after last year’s drama. Promising lower-priced Rams, a gas-powered Charger, and fewer corporate restrictions. Will dealers buy in? TBD.

• 🌊 Interest Rates & Tariffs: Fed’s holding steady on rates, but auto loans are climbing. Meanwhile, Trump’s potential 25% tariff on Canadian and Mexican imports could add $6,250 to your next car’s price tag. Fun times!

• 🛠️ Nissan’s Cost-Cutting Spree: Nissan is trimming shifts, offering buyouts, and maybe cutting 1,500 jobs. Oh, and they’re in early talks with Honda for a merger. No one knows what that means yet.

• ♻️ EV Battery Recycling Boom: The second-life EV battery market could hit $4.2B by 2035. But first, we need to solve some minor issues like high costs, logistics headaches, and a lack of standardization.

• 📊 Consumer Confidence Slips: The economy isn’t tanking, but people are getting antsy. High-income earners are feeling the pinch, while middle-tier buyers might use tax refunds to jump on good deals before rates rise further.

• 🇹🇭 Thailand’s EV Price War: Chinese automakers are flooding Thailand with EVs, triggering a brutal price war. It’s great for buyers, not so much for profits. Could the U.S. learn from this? Stay tuned.

✨ Tesla's Hardware Promise Hits a Hard Wall

Elon Musk has finally admitted what many Tesla owners feared—your "Full Self-Driving" car might need more than just a software update. Turns out, Tesla's previous claims about having all the necessary hardware were, well, premature.

• Back in 2016, Tesla promised that every car it built had the necessary hardware for Full Self-Driving (FSD). That promise was quietly deleted.

• Millions of vehicles received Hardware 3 (HW3) upgrades after HW2.5 failed to deliver on autonomous capabilities.

• Now, Musk admits even HW3 isn’t enough, meaning yet another hardware upgrade is necessary for those who paid for FSD.

• The "free upgrade" program Tesla once promised? It only applies to those who pre-purchased FSD, which has ballooned from $2,000 to as high as $15,000.

• Tesla already had to recall HW3-equipped vehicles due to failures, and it’s unclear whether the next retrofit will be free, offered at a cost, or even happen at all.

Musk's honesty about the "absolutely painful and difficult" nature of these upgrades is refreshing. Less refreshing? The uncertainty for Tesla owners who paid a premium for future-proof tech that keeps needing more future-proofing.

🌧️ Stellantis: Friends Again?

After a year of tense dealer relations, Stellantis leadership is on a charm offensive, promising to "remove unnecessary limits" and give dealers more control. Will it work? Let's break it down.

Didn’t Stellantis just have a messy breakup with its dealers?

Yes. US Stellantis dealers were not happy about falling sales in 2024, blaming leadership for steering Dodge, Jeep, Ram, and Chrysler into a ditch. They even wrote a scathing letter to ex-CEO Carlos Tavares. Then he left. Now, new leadership is in damage control mode.

What’s Stellantis offering this time?

• A "comprehensive plan" to reinvigorate sales, including more lower-priced Ram 1500 trims and a combustion-engine Dodge Charger (because America).

• More marketing dollars to support dealers and even gasp some price cuts on certain Jeep models.

• A shift in decision-making power back to regional leadership.

Are dealers buying it?

The Stellantis National Dealer Council says dealers support the new direction. Of course, talk is cheap. We’ll see if this goodwill lasts longer than Tavares’ tenure.

🌋 Interest Rates, Tariffs, and a Whole Lot of Uncertainty

Inflation, interest rates, and looming tariffs on Canadian and Mexican imports are throwing wrenches into the auto market. Here’s what you need to know.

• The Federal Reserve held interest rates steady, but that doesn't mean auto loan rates aren't moving. New auto loan interest rates jumped from 8.64% in December to 9.25% in January, while used car rates climbed to 13.88%.

• Market analysts warn that potential inflation from President Trump’s policies could drive rates even higher.

• Bond yields are fluctuating, and auto loan rates could still drop if lenders see strong demand and less risk.

• With tax refund season kicking in, dealerships might see a temporary boost in sales as consumers look to lock in financing before rates creep up further.

Long story short: Uncertainty is the name of the game. If rates drop in the next few months, it could be the best deal buyers get all year.

🚗 Nissan's Cost-Cutting Spree

Nissan is slashing shifts and offering buyouts at three U.S. plants in an effort to trim $2.6 billion in costs. Here’s what’s happening:

• Nissan will cut one of two shifts at its Smyrna, TN, and Canton, MS, plants, impacting production of the Rogue and Altima.

• The automaker is offering voluntary buyouts, but the actual number of jobs lost remains unclear. Estimates suggest up to 1,500 positions could be cut.

• The move follows Nissan's broader struggles, including a declining U.S. sales market and a recent global cost-cutting strategy.

• Meanwhile, Nissan and Honda are in early merger talks, but no details on what that means for U.S. operations yet.

Dealers should prepare for potential supply disruptions, especially for these models. And if the Honda merger moves forward, Nissan's North American strategy could shift dramatically.

🌿 The EV Battery’s Second Life

Recycling and repurposing EV batteries could be a $4.2 billion industry by 2035, but hurdles remain.

• EV batteries are expensive and full of valuable materials like nickel and cobalt, making second-life applications a logical next step.

• A growing market for repurposed EV batteries could reduce the need for raw material mining and lower costs for energy storage solutions.

• Challenges include high logistics costs, the need for manual intervention in repurposing, and a lack of standardization in battery design.

• Europe already requires a certain percentage of recycled materials in new EV batteries by 2031—something the U.S. may need to consider to keep up.

For dealers, this could mean future opportunities in battery refurbishing, resale, and aftermarket applications.

📈 Consumer Confidence Takes a Hit

Americans are feeling a little less confident about the economy, but not in full panic mode—yet.

• The Consumer Confidence Index dropped 5.4 points in January to 104.1.

• The biggest drop came from consumers under 55, while those over 55 actually saw a slight increase in confidence.

• Households earning over $125K reported the sharpest decline in confidence, while lower-income groups saw modest gains.

• Despite the dip, expectations for personal finances remain positive, and most consumers still have faith in the stock market.

For auto dealers, this could mean a shift in consumer behavior. Higher-income buyers may hold off on big purchases, while mid-tier buyers may take advantage of tax refunds and early-year incentives.

🌎 Tariff Drama: What’s at Stake for Auto Sales

President Trump’s proposed 25% tariff on Canadian and Mexican imports has automakers sweating. If enacted, here’s what could happen:

• Virtually every major automaker in the U.S. would be impacted, as supply chains are deeply integrated across North America.

• Volkswagen (43% of U.S. sales), Nissan (27%), and Stellantis (23%) are the most exposed to Mexico-based manufacturing.

• A 25% tariff could add $6,250 to the cost of a $25,000 vehicle from Canada or Mexico, forcing automakers to either absorb costs or pass them on to consumers.

• Wells Fargo estimates Detroit’s Big Three would take a collective $56 billion hit from the tariffs.

Dealers should brace for potential pricing volatility and shifts in supply chain logistics as automakers scramble for contingency plans.

🌎 Thailand’s EV Boom Brings a Price War

Thailand is set to become Southeast Asia’s EV battleground as Chinese automakers flood the market with locally produced electric vehicles.

• EV sales in Thailand are projected to jump 40% in 2025, thanks to generous government incentives.

• Companies like BYD and GAC AION have slashed prices to stay competitive, triggering a brutal price war.

• Local production quotas mean Chinese automakers must build EVs in Thailand to qualify for tax breaks, adding even more supply to an already competitive market.

• Some analysts worry that an oversaturated market will hurt profitability, but others see it as a sign of a rapidly maturing EV industry in the region.

For U.S. dealers, this trend signals how aggressive pricing and government incentives can drive EV adoption—something to watch as North American policies evolve.

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