Predictions Galore, Chinese Anxiety, Cybertruck Crash

Paul J Daly: 0:30

We did it first show first live show of 2024. Feels weird to say that but today we're going to talk about what we've been doing the last two weeks. Some predictions that won or didn't win Chinese EVs and a cyber Truck Accident people really want to know who isn't who Id they stopped instead, when they see imagine

‍Kyle Mountsier: 0:48

being repeat harming your first accident just being so egregious just because it is an accident.

Paul J Daly: 0:58

It does. Feels weird, like when when your car gets crunched, your car gets crushed. Man, it has been a heck of an end to 2023 one, you know, we were talking about what it's like in the dealership, you were saying like, hey, like last week is always this throttle, like full energy, full throttle. Go at it. And I was getting text messages from dealers I was getting, you know, like, there were things happening all this motion, all this momentum that could easily be missed. If you don't spend time in the dealership, or you haven't spent time in the dealership. So it's easy for maybe some industry partners to miss that. Because I'll tell you what part of the Yeah, because that's usually a part where

Kyle Mountsier: 1:39

people do you remember back in like, early pandemic, when at the end of every single month you had like, yeah, that was that was a time to happen to remember that. Maybe not like the first three months. But once things started to open up a lot. And it seemed like on the first of every single month, there were 83,000 LinkedIn posts about record sales. I felt that way yesterday. Hey, crazy. I was like, oh, yeah, we we got people out here just breaking records sharing all about it. I was excited. I was like, this is the car industry that gets me excited when people are jumping on LinkedIn jumping on Facebook sharing about record sales, and it was happening all over the country. So that's that's proof to me that you don't all have to be all doom and gloom and all man inventories rise in margin compression, interest rates rise in, you know, inventories, whatever. Like, there are people breaking records out there. What are you doing?

Paul J Daly: 2:36

Brian benstock was texting me like the last two days of the year, like showing me how far they were like in the race. You know, for number one and number two, I don't actually I don't know how it ended. It was like I knew there was like a seven car spread like down to the wire and everyone's kind of holding car service. Wait,

Kyle Mountsier: 2:54

whatever. Everyone's sandbag in there at the end. So I don't know

Paul J Daly: 2:57

if I didn't know because they last or if I didn't know because they were too busy celebrating and we'll have to I'm sure we'll find that out soon enough. And I know. But look, we are really hitting the gas going into 2024 in 10 days from now you and I are going to be in Washington DC at the Washington DC Convention Center with PRI public policy day at the Washington auto dealers. Washington area. Dealer Association, one NADA, WA NADA. That's what I don't know what it is. But the Washington area Dealers Association, they invited us to come out they have a big public policy day where they have legislators and OEMs and all these people talking about the future of policy.

Kyle Mountsier: 3:40

And imagine being a Washington dealer. It's like it was like the epicenter of legal battles. And well it because

Paul J Daly: 3:48

it's the national, the national game. We're about to find that out. So that's our first time there. We're really excited to be there. Also. 30 days from today. NADA starts

Kyle Mountsier: 3:58

Wow, that's nuts. To me. Education

Paul J Daly: 4:01

day starts 30 days from today. Obviously we'll be in town a little bit earlier, but we will be in full stride. With our whole production crew walking the floor talking to dealers, industry partners, producing podcasts, and content. And attending the thing will be at the sphere. can be fun, all types of things to do to feel it feels really really good to be rolling in this year. It doesn't. Although you and I aren't huge Vegas fans. There's something very familiar going back to a place or really Oh, what did he know? And Dallas it was like, what's this

Kyle Mountsier: 4:29

gonna? Do? There's so much to see. There's always great parties. Like it's just even though it is obnoxious. It's also amazing all at the same time.

Paul J Daly: 4:40

That's great. It's great. We're 133 days out from a soda con. It's a Yeah, that's the truth. That's the truth days on the calendar venue is locked and loaded. We're about to start announcing some of the people who are going to be there. So you can get your tickets now early bird for sure. Trust us if you look at last year, you know that we're going to put together a great Ross But we're gonna start releasing that stuff earlier than we did last year. And if you're an industry partner, you want to get in on the action be a part of the event, please reach out crew at us or actually, we'll give you a m j@asotu.com. And I will let you know all the opportunities there. We have into it. Let's we got to, I mean, it's it's hard to get going to the beginning of the or to get going,

Kyle Mountsier: 5:21

but we're patients everybody.

Paul J Daly: 5:24

We're gonna start off by talking about predictions. You haven't seen predictions everywhere now for like the last six, seven days, people that's just what it is. It's great. I love it. I

Kyle Mountsier: 5:34

just lean into it. You know,

Paul J Daly: 5:36

I do. I love it actually the boldest make the more more predictions Steve Greenfield one of the boldest in the prediction game. Just released his scorecard this morning on his 2023 predictions, we'll cover the 20 fours and then some of the things in a future time but 2023 predictions by the one and only Steve Greenfield. We're gonna go down the list and I'll just read them off. We'll commentate and we'll move on to the next story. So here are his top 10 And how he grades himself Reynolds and Reynolds he thought could be acquired that's a fail techie on he thought might be acquired by salesforce.com Fail Carvana may be acquired by Amazon fail all the acquisition predictions I bet they're I bet they're fewer those next year's list these I'm gonna stop predicting acquisitions auto tech valuations reset that's a huge pass dealer valuations dropping, he says Matt kind of in the middle everybody can do is going to happen dealers focus on cost reduction, also rated at a math M eh. A see artificial intelligence goes mainstream, huge paths. Next next wave of auto tech and Process Automation happening. He said that's kind of in the middle too. He did say consolidation of mobility companies didn't really happen. Private equity, acquiring public companies. He's like, middle of the road. And the year the Evie he says pass gave himself an overall score of a B. Yeah, well,

Kyle Mountsier: 6:57

I'm gonna give him an overall score of a C plus, just because I feel like there were a few like dramatic fails in there. But if you're not making predictions and failing them, what are you doing out here? You got to make some bold stuff hopefully make some wins. The interesting ones to me is that auto tech valuations did reset so we're seeing the multiples back similar to what they were 2019 2020 Especially for early stage companies, which is great for innovation in our in our industry, and then the dealership valuations dropping, the fact that it was a mess is good, because we're seeing still strong valuations and dealerships faces, especially when you look at the Asbury acquisition of coons that was completed there in December. You know, the money's still good for dealerships. And I'm predicting that that's going to stay good, especially for small to mid size groups, they're going to stay good because they're most likely profitable. And these largely they are groups are acquiring profit as as opposed to acquiring poor performance. So there's my there's my hot takes on the

Paul J Daly: 7:55

evaluations of the hot takes a thank you so much, Steve, for being so transparent and helping us think through it, we're gonna cover the 24 predictions which have a totally different flavor than 23 as they should look, as we're going to New Year Steve Greenfield, Jonathan smoke, all these predictions are coming out. But one of the topics of conversation is this massive question. A lot of it is part of a lot of predictions. There have been a lot of chatter on social media from people who are talking about things and it's Chinese EVs entering the US market and potentially disrupting the market. It's very hard conversation. So progress environmental concerns national security, all central discussion points, as there's a complex dilemma on how do we balance domestic Evie supply chain with protection against global competitiveness so China continues to bolster their domestic Evie market so like the Chinese market with ridiculous subsidies so I say ridiculous, meaning high subsidies to keep the cars flowing to keep the production happening. So recent changes to the UV us Evie tax credit rules, including Chinese battery production percentages. So how much of a battery can be produced from a Chinese company have just gone into effect really limiting incentives on popular models like the Tesla Model three, the Ford Mustang Mach II, I still have a hard time calling that car Mustang by the way. And it is key. So So France and the European Union are also paying a lot of attention to this. And here's what I didn't realize until I read this article is that there's already a 27.5% tariff on Chinese Evie components or Wow, are EVs in place? They're considering raising that so that's the question some people saying Chinese EVs are going to come and destroy the US market. Some people think here's the thing.

Kyle Mountsier: 9:45

They're already so much cheaper like you look at a BYD or a vinfast They're already so much cheaper that even if you drop the tariffs on there and remove the opportunity for the tax credits, they are still way below what the average cost of a domestic Evie or a domestic Eevee with Chinese batteries production. And so I still see this like there would have to be a massive change in the ruling on on what those vehicles can or can't do in the US to to impact their potential bit of deliverability. Here's the most interesting thing is these manufacturers even they are actually winning the game in China and the European Union with plug in hybrids, not just pure EVs. And so I think that's, that's another we've talked about this for a while, like the hybrid game and the plug in hybrid game is going to be the thing that accelerates evey adoption quicker in the US. And if US manufacturers were paying attention to what's happening overseas, that's what they'd be driving their production goals toward. Yeah, I

Paul J Daly: 10:50

mean, obviously, we see a major shift. And people starting to pay attention to that Toyota obviously has been beating that drum for a long time, you know, I'm remembering back to, I don't remember how many NADA, or NADA shows ago, it was there's probably four or five, when there was a Chinese manufacturer that was the first time at the show. And there's all this buzz, and all this chatter, and then it literally went away. Last hoof, and no one was talking about it again. And I think it's really important that you know, whether you agree or not about free market, about, you know, what's good for the consumer. It's very hard, I think, to underestimate or over, it's very hard to underestimate how the links that the government and policymakers will go to protect US interests. And this isn't just about commerce. It's also an issue of national security, when it comes to battery access, and things like that. So it's just not it's not a linear playing field, not cut and dry. And so we'll see what happens. Without a doubt, though, you know, we see you know, like Vietnamese maker vinfast Leveraging dealer network, it'll be interesting to see if some Chinese manufacturers try to leverage a dealer network, which obviously we're all for, but doing that right gives you a whole other level of protections and positive sentiment than you would if you try to go it alone. So I don't know this is gonna this is gonna be one to watch. It's

Kyle Mountsier: 12:08

this is gonna be a big year for it. Last year was the year of the Eevee. I don't know what to call this but it's gonna be the year of talking more about

Paul J Daly: 12:17

that is speaking of talking of EVs.

Kyle Mountsier: 12:20

I'm out of practice out of practice. It's okay. It's alright we're in the New Year hit it. And then

Paul J Daly: 12:26

the first reported accident involving a Tesla's cybertruck and a Toyota Corolla, only minor injuries were recorded providing a first look into the highly scrutinized vehicle safety design in real world, right the cybertruck It's just the beast. So the 23 cybertruck involved hit, actually a 2009 Corolla hit the cyber truck in Palo Alto, California. The only injury reported was a minor injury to the cyber truck driver, there's the surprise I'm willing to bet on that. So the accent was confirmed by a California Highway Patrol Corolla basically crossing the cyber trucks lane and hit the driver's side rear like where the bed meets the back door. Conditions were cloudy and wet. And if you know anything about California when it rains it can be a rare thing sometimes so people right out of drive the roads are slippery you know this despite the Corolla looking like the whole front end was destroyed that sort

Unknown: 13:21

of thing. I'm like golly this thing just got ran over by a tank Cybertrust

Paul J Daly: 13:26

got like a little dent in the side little wheel damage little pushed in panel so they verified there was you know, the Honda was driving was not used they say in a Tesla engineer was driving the truck it doesn't didn't have any of the foundation badging on it. So we're like, was this a consumer V like, we don't know. But there you go. The first one happened. Well,

Kyle Mountsier: 13:46

I do I said this at the beginning of show it's so interesting that you get one wreck from a vehicle and it makes like not every

Paul J Daly: 13:55

channel Reuter just name of unbelievable.

Kyle Mountsier: 14:00

The thing that shocking to me and this is what I don't understand why more people aren't talking about granted it from everything that I'm reading is it was the Corolla is fault on the lane crossing, like the Corolla

Paul J Daly: 14:13

was I have no blistering laugh about it, because everybody's fine, right? Everyone's fine but obliterated, like the high front end of that vehicle

Kyle Mountsier: 14:23

is guys 8000 pound tank, rolling through streets, other cars running into it. And it's just like,

Paul J Daly: 14:33

it was like literally every crumple zone to that front Toyota Corolla got activated. The passenger side airbags did deploy in the cyber truck. And here's my thinking, that sucker isn't going to be repaired to like 36 months from now. They can't even get one off the line. They can't like line. Where are you getting? Number one? Where are you getting parts? Number two, where are you getting anyone that knows how to fix that?

Kyle Mountsier: 14:55

No, I mean, you have to go to you have to go to Tesla. Now Tesla is probably going to do a pretty good job of preparing this one because it is making national news. The next one definitely going to be Oh, this

Paul J Daly: 15:05

one's already back at the factory, right? It's already ready a hell of a hell a pad lifted this sucker. You know, I did over last Thursday, I did go to Georgia. Hey, you saw it in person. And yeah, and I was I wasn't planning on seeing it. I just went, you know, I visited a dealer went to this little shopping center on my way home, I was going to, like, grab something for my wife. And the place was packed out and think about this, right? All right, everyone's like shopping now. But the Tesla store I drove by and I saw the cybertruck in there. I was like, Oh my gosh, now I know what I'm doing right now. I had to put my name in. I had to register before I could even go in to look at it. It definitely feels different in person than it does in any of the pictures that I've seen. Some things seem it seems like a little bigger and a little smaller all at the same time. The wheels are gigantic. Yep, they are. They are way bigger than I expected. But but one thing is for sure everyone in that place looking at it was smiling. That was the trick that was the weirdest thing notes.

Kyle Mountsier: 15:57

It's so interesting. It's just kind of this curiosity that

Paul J Daly: 16:01

I didn't get to like put hands on it. Like I wanted to, like push on the panels and see everything look good. But without a doubt. Like Like you said out there on every page in the newspaper because they got in an accident.

Kyle Mountsier: 16:13

You just got to know about it. You just got to

Paul J Daly: 16:15

know I know. Well, there you go. We're getting into the new year. This is going to be a year when this community ignites on fire. let other people know what's going over here on the asoto corner and we'll be sure to let everybody know what you're doing.