TechCrunch Mobility: The Three Challenges Confronting Automakers

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This week, I delved into a number of 10Q reports to comprehend the viewpoints of EV manufacturers such as Rivian and Lucid, alongside traditional automakers moving into the EV sector, concerning the dual difficulties presented by tariffs and the end of the federal tax credit. Although these documents are filled with legal jargon, it is evident that these economic factors are a significant worry for their leadership teams.

Both Rivian and Lucid specifically reference the One Big Beautiful Bill Act (OBBBA) several times in their risk factors. The OBBBA eliminates various tax incentives for EV buyers and has a profound impact on the zero-emissions credit marketplace. They also identify risks regarding tariffs and trade policies.

Lucid notes in its 10Q that it is assessing the implications of the OBBBA, cautioning that “If any of the Company’s suppliers, sub-suppliers, or partners encounter financial difficulties, insolvency, or operational disruptions, they may fail to meet the Company’s production and quality requirements.” In contrast, Rivian takes a more positive view, emphasizing the ongoing availability of the 45X tax incentive for domestic battery production.

Ford and GM also recognize the OBBBA, although both emphasize the ramifications of tariffs more. GM states that it cannot quantify the financial impact of the OBBBA but warns it “could substantially affect the profitability of electric vehicles.”

This raises an unfortunate possible outcome: a new 100% import tariff on semiconductor chips, which could put further pressure on vehicle manufacturers. Anyone keeping an eye on the COVID pandemic knows how chip supply issues hurt car producers. Experts estimate that modern vehicles rely on over 1,000, sometimes up to 3,000, chips. These companies are apprehensive about facing such hurdles again.

The current concern is how they might qualify for exceptions; the Trump administration mentioned that these would be granted to firms producing chips domestically. Given that car manufacturers typically don’t produce chips, they may have to depend on domestic suppliers. However, this situation remains unclear, as the administration has a track record of policy shifts and has yet to provide specifics on the 100% tariff or the exemption protocol.

Ultimately, this situation leaves us with uncertainty, a constant partner in any business endeavor.

A little bird

Interestingly, the trade war with China and the focus on safeguarding American technology have not deterred Chinese companies from launching operations in the U.S. Recently, I’ve picked up some murmurs from industry insiders indicating that Chinese firms, particularly in the autonomous vehicle tech arena, are moving back to the States. Stay tuned for more updates on this!

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Deals!

Do you remember Blade, the helicopter ride-sharing company? Since its launch in 2014, this urban air mobility venture has garnered significant attention and controversy after going public via a merger with a SPAC.

Now, it’s become part of electric air-taxi innovator Joby Aviation. The agreement, valued at up to $125 million, includes the Blade brand and its passenger operations in the U.S. and Europe, although the medical division will remain independent.

Blade’s founder and CEO, Rob Wiesenthal, will continue to lead the new subsidiary under Joby.

This acquisition was unexpected but makes perfect sense. Blade has actively sought partnerships with other electric aircraft manufacturers, including Wisk. Joby will require this infrastructure to fast-track commercial operations when its electric aircraft receives Type Certification from the FAA.

The purchase gives Joby immediate access to a network of 12 essential terminals, featuring dedicated areas at John F. Kennedy International Airport and Newark Liberty International Airport, as well as in downtown Manhattan.

Other significant deals this week …

Drone startup Destinus, which is providing weapons to Ukraine, intends to acquire Daedalean, a Swiss company specializing in aviation autopilot systems. This deal is reportedly valued at $223 million in cash and stock.

Jeh Aerospace, located in India with a manufacturing facility in Atlanta, secured $11 million in a Series A funding round led by Elevation Capital, with contributions from General Catalyst.

Uzum, an express food delivery and fintech startup from Uzbekistan, raised $65.5 million in a round co-led by Tencent from China and the New York- and London-based VR Capital, along with U.S.-based FinSight Ventures.

Notable reads and other tidbits

Foxconn recently sold a former GM factory and surrounding land for $88 million, along with equipment and machinery from its EV subsidiaries for about $287 million. It should be noted that Foxconn faced challenges in scaling up EV production at this site during its three-year ownership. Reports suggest the buyer is SoftBank, which aims to transform it into an AI data center.

Lyft has entered into a strategic partnership with Baidu to launch Apollo Go autonomous vehicles in several European markets, aiming to introduce robotaxi services in Germany and the U.K. by 2026.

Rivian has filed a lawsuit seeking permission to sell its electric vehicles directly to consumers in Ohio, arguing that current regulations preferentially benefit Tesla, which has received a specific exemption.

Don’t miss this: a well-researched and insightful report addressing Uber’s sexual assault issues.

Zoox has obtained an exemption from federal safety regulators to display its custom-designed robotaxis on public roads. This development resolves a long-standing debate over compliance with federal safety standards and brings an end to an investigation into whether the Amazon-owned company had circumnavigated regulations.

Tesla’s news cycle remains relentless. Recently, the board of directors greenlit a new compensation package for CEO Elon Musk valued at approximately $29 billion in shares, citing the “escalating AI talent competition and Tesla’s crucial position.” Meanwhile, as automotive revenues have declined, Tesla is working to monetize its AI and autonomous initiatives.

This week saw two notable setbacks. First, Tesla has halted its Dojo supercomputer project, stopping efforts to develop in-house chips for driverless technology. Secondly, a jury found Tesla partially liable for a fatal 2019 accident, ordering the company to pay around $242.5 million in damages. This case highlights a disconnect between Tesla’s marketing of its Autopilot system and its actual performance capabilities. (The Verge includes an interesting interview with the attorney.)

One more thing

The Autonocast, a podcast I co-host that discusses the future of transportation, recently featured an exceptional guest. Boris Sofman, formerly leading Waymo’s self-driving truck initiative and co-founding Anki Robotics, shared insights about his new venture, Bedrock Robotics. Be sure to give it a listen!