at protective asset protection our Hands-On approach and insights provide a trusted foundation for growing your dealership's business while enhancing your customers Journey see why dealers say protective is essential to their fnii success want to dive deeper into the topics you hear about on daily Drive we're offering listeners a special offer 20% off a one-year Automotive news digital subscription that gets you access to all of our news information and Analysis made for automotive industry leaders like you go to autonews.com drive promo to redeem welcome to daily drive for Thursday September 5th 2024 I'm Jake Neer in Detroit in for Jamie Butters who's on assignment and I'm Kellen Walker in Los Vegas today on the show President Biden is set to block nipon takeover of us steel Volvo lowers its profit margin Target and workers at the ultium battery plan in Tennessee join the UAW plus Kia America coo Steve Center joins the show to talk about the automaker's steadfast electrification plans and this week's positive sales results for August our sales were up primarily because of the EVS the uh uh internal combustion part of the lineup was pretty steady ady let's run through all the news you need to know to keep up in the Auto industry President Joe Biden is preparing to block nipon Steel's acquisition of us steel a major supplier to the North American Auto industry that's according to a source who spoke with Reuters on Wednesday the move would deal a blow to the proposed deal worth almost $15 billion US steel warned earlier on Wednesday that a failure to merge with nipon steel would put thousands of us union jobs at risk the president has previously expressed concern over nipon steel to buy the 122y old iconic us steel maker nippon's bid was generally seen as more palatable by the US Auto industry that's because domestic supplies of electrical steel would not be monopolized although the company does produce electrical steel overseas companies also saw the bid as a chance for nipon to introduce more technologically advanced steel making in the US we've got more August sales results as of Thursday afternoon Ford joined the hybrid parade during the past month the automaker said its Us sales Rose 133% from August 2023 its largest gain in more than a year it sold 50% more hybrids and 29% more electric vehicles than a year earlier while internal combustion volume improved about 10% Lincoln sales rose 49% on big gains from the Nautilus and Aviator crossovers sales Rose for the 18th straight month at Honda the Japanese automaker got a boost from higher Light Truck volume and record deliveries for electrified models the company reported that sales Rose 28% at the Honda brand but slipped for the eighth straight month at Acura Subaru reported a 12% gain in August sales that's its 25th consecutive increase as of recording time we're still waiting on results from Volvo you can find the most up-to-date sales tallies at autonews.com speaking of Volvo the automaker is lowering its profitability Target for 2026 and is scrapped its sales goal 2026 is when it expects to outgrow the premium car market the group lowered its Target for operating profit margin excluding joint ventures and Associates to 7 to 8% from above 8% and scrapped a sales goal of about 53.5 to 58.4 billion it cited quote increased complexity especially in relation to Global trade and tariffs as you heard yesterday on the show Volvo has also scrapped its stated goal of selling only full electric cars by 2030 and the UIW will represent workers at a General Motors joint venture battery plant in Tennessee the majority of the 1,000 workers at the ultium Sales LLC plant in Spring Hill Tennessee signed cards in favor of joining the union the UAW says the company did not interfere with the organizing Drive ultium Sales LLC is a joint venture between GM and LG Energy Solution producing battery cells for GM's electric vehicles Spring Hill is the second ulum celles site to join the UAW workers at the plant near Lordstown Ohio ratified their first local agreement with ultium cells in June and those are today's headlines coming up Kia America coo Steve Center joins the show that's next on daily Dr [Music] drive for over 60 years we've provided dealers with the most comprehensive fni product suite and robust wealth building programs in the industry our fni Solutions are tailored to fit your business offering dealer wealth building programs that align with your financial goals from the protective doc program to training and fni Technology we're here to elevate your dealership's profitability with fast reliable claims processing and a proven track record protective lets you focus on what you do best build customer loyalty and grow your bottom line join the thousands of dealerships Nationwide that trust protective and see why dealers say protective is essential to their fni success welcome back to daily drive I'm Jake near with Kellen Walker as other automakers make big adjustments to their electrification plans amid slowing growth in demand for Ev Kia is standing firm and seeing significant growth in sales for its battery powered vehicles that being said the Korean automaker didn't make big sweeping declarations about ditching gasoline burning cars and trucks the way many others did in recent years yesterday we got news that Kia's Us sales Rose 4.3% in August its EV sales Rose 27% driven by the new ev9 three row crossover plug-in hybrid volume increased 43% and overall deliveries of all electrified Vehicles Rose 9% on the heels of that news Kia America coo Steve Center spoke with our own Jamie Butters Steve Center welcome to daily drive thank you I'm glad to be here August sales results just came out as a record August for Kia aided by an extra sales day pretty similar selling Pace as last year but with a different mix uh gains among the mediumsized and larger crossovers as well as EVS what's your view of the market is it kind of you know Steady As She Goes right now it's definitely normalized when you consider where we were even last year um we're we're back to um the usual tricks and games uh in terms of incentives but uh in our case we have some new models that we didn't have the year before and we have some transitioning models so we have ev9 uh which is uh hitting its stride and it's showing that there's demand for uh three row genuine three row EV SUVs and that's encouraging to hear and we're also transitioning we have a a midcycle big Refresh on K5 which is just hitting the market so our sales are up primarily because of the EVS the uh internal combustion part of the lineup was pretty steady Edy yeah so I mean the ev9 was really a big lift uh for Kia in August and if I remember right July as well those at this point are all still imported right when do you start making them at the factory in West Point Georgia we've actually started we're we're past the a pilot phase uh with this and we proved an interesting point that we can build a fullon EV uh on a completely different platform in the same Factory as our internal combustion lines so that really opens up a world of possibilities when it comes to balancing uh inventory and Supply uh in the spring uh we'll go into full production for ev9 and we'll have us batteries as well does that mean the the first ev9 to come out of West Point might only get a partial Ira inflation reduction Act tax credit and then in the spring they'll get they'll move to the full credit yeah we're not quite sure where all of this lies because it the the whole battery thing is very complicated so we're not building a whole lot um there's also a transition uh later in the next 12 months to the uh new charging standard all right that's another thing to work through so there are a whole lot of moving parts so we don't want to get too far ahead on what we're building with things that are going to change out I'll leave it at that but we're very excited about the spring uh you can still lease the cars and you get full credit what what share of your EVS are are sold as leases these days very high percent because of that uh discount that's available and uh you know consumers tend to want to lease new technologies I don't blame them I think that makes the perfect sense uh with this because the the EVS are improving so fast like you said the charging network is changing before our eyes absolutely so uh it's a situation where uh you don't want to overcommit to anything but keep moving forward well yeah uh So speaking of overcommit or under decommitting you know there's been a lot of corporate strategy tweaks some of them more than tweaks uh full-on rites but I mean just recently you know Volvo today as we're recording this um you know is acknowledged what we reported in Late July that you know they are not going to be 100% EV in 2030 and I'm not asking you to come in on Volvo but a lot of companies are making adjustments Kia seems like it's been you know you're not backing away from your EV plans but of course you'd hadn't set an overly ambitious you know all EV by uh nearby date uh plan you kind of come out with a more of a m multi-power train strategy absolutely well I wouldn't comment on any competitors but I I learned a long time ago you never speak in extremes that's where you get in trouble because the reality is the market is going to drive demand The Regulators can tell us what to make but they can't tell people what to buy and and and that's the challenge in our case we have a a uh very strong commitment to becoming all electric at the point when the market is there uh we use the regulations as The Guiding points um but in the end it's it's the market so we have a full line of EVS we've got the ev9 the ev6 we have the Nero EV all in the market now we're going to have another smaller EV uh sometime next year and at the same time we're still committed to our full line of ice cars and hybrids and we'll be introducing uh refresh models of those and and all new versions in the coming year as well so you could put it this way we've got our money on red black odd and even cover all the bets that's it doesn't come up double double zero right ABS absolutely and we're very excited about the market because the the thing to remember is you know the government and uh big decision makers you tend to roll everything up at a national level but the the reality is and I think it was a president that said all politics are local so all sales are local and you're going to have states that adopt uh and go to 100% EV someday a lot earlier than others so we've got to be mindful of that well you know that's an excellent point different markets different cities or regions are behave differently but of course you have to produce kind kind of you know for the whole Market as as a whole I'm curious you know how quickly you can adjust your plans if consumers get really hot for EVS can you ramp up EVs and how quickly and if they look like they are but then they pull back and want more hybrids can you adjust in a month like how how long is the lead time to change those kinds of things well I would say generally it takes a few months to make adjustments for anything because you have deeper Supply chains so even changing a engine type because you've got to gear up the production you've got to when you go from uh pure internal combustion to hybrid engines you've got to gear up for the batteries and the hybrid motor it's still going to take months to turn the rudder a bit on this and EVS are pure EVS are a bigger stretch because you may have finite capacities for assembly lines and batteries so I think six months is a pretty comfortable Range four months is possible you know the longer you go out the more changes you can make but because we're able to build them in the same Factory that really makes a big deal because you're managing your uh Workforce that way and in many cases the suppliers are the same and the proximity of the suppliers matters you've mentioned a couple times the role of government in EV adoption uh or the role or lack thereof but I'm curious if you're seeing much impact from you know politics and the presidential election dealers are telling us that you know the political tension is keeping Shoppers on the sideline I'm wondering does that track for you yeah I don't know about that I think there are a lot of political tensions and the country is divided on opinion on a lot of things but here's the the fallacy you have this Zev mandate which indicates states where you have to have a higher percentage of EV sales but the reality is some of those States you don't have the demand and then there are other states like Texas and Florida which are not part of the Zev group and politically are red States where there's enormous EV demand so I'm trying to answer two questions that the same time and that is that uh consumers want the cars they want them in different places we want to sell them where the demand is and not over complicate it because if you're eliminating CO2 in Texas it counts for New York that that's the reality so to answer your first question about the politics that affects more of a business Investments not consumer Investments people people want what they want and and that's but maybe dealers are wary of installing EV Chargers and I think some of the some of the corporate uh strategy adjustments we've seen are hedging their best and what will impact consumer demand is when you have a very strong policy reversal so right now you have these uh credits for consumers some at the state level and some at the federal level where it's a lot of money and it's a big leveling field in terms of the price of the cars so if the administ ation changed and the $7500 uh tax credits were eliminated that would impact a lot of middle class and Below buyers there's also another fallacy and that is that those credits phase out with income so the reality is on the purchase side most people that are shopping for EVS aren't going to get that credit unless they lease the car in which you get it regardless so maybe politics don't matter that much here but if the uh lease incentive went away as well that would make a big impact right and that's a regulation that's actually very fragile because that's an IRS interpretation and they can probably reinterpret things so then the the price of the EV goes up and you slide down the demand curve and the volume goes down um at the same time we're all rushing the scale and we're trying to bring the cost down so even at Cost power and let's take all these fake incentives out of it you still have an infrastructure Challenge and that that's everywhere and it's going to be quite a while until that's resolved we've done things as an industry where we've uh all pitched in and formed the company called Iona which is meant to increase the availability of DC fast charging on a on a large scale and and that will help as well but it's going to take a lot lot longer than the most optimistic people think how long do you think it we should be thinking about it's like a two years five years 10 years yeah in my mind and I mean for petroleum parody decades y to be honest and the legislators think they've done something when they appropriate money the reality is the jobs got to get done and then you've got to tie the utilities to the local permitting and the construction and that takes even longer the utilities have their own priorities so it's the challenge that we all have with this and the battery Technology's improved a lot so that's becoming less of a of an issue you've got good range you've got good durability yeah so many challenges such a complicated puzzle Steve Center we appreciate you coming in and uh helping illuminate what all the things you're grappling with Steve is the COO of Kia America thanks so much for joining us today you're very welcome thanks for having us that's daily drive for today I'm jakeer in for Jamie Butters and I'm Kellen Walker thanks to Automotive news journalists David Phillips and Lindsey van hully for their reporting for today's podcast you can get the latest news on electrification the latest August sales results and everything happening in the Auto industry at autonews.com come back tomorrow for a conversation about how high interest rates and sticker prices are affecting one dealership in the Cleveland area that has definitely been the hardest thing to overcome is just it's an affordability issue across the board we'd love to hear from you let us know what you think of the show and the topics we covered today send us an email at Daily drive autonews.com or leave us a voicemail at 31344 2774 and if you enjoy the podcast remember to like leave a review and subscribe so you never miss an episode