U.S. needs a new EV game plan in the next year, says Capital Alpha's James Lucier

You know all of this is coming up because of these massive tariffs being put on Chinese EVs and these questions about how even if that protects the US auto industry in the short run, will they have to be much more competitive in the long run to stay relevant? How can the administration most help this obviously much favored and and much very important economic sector? Well, it's really a tough spot for the industry and I want to make clear that they have done everything they can to meet these targets from the Biden administration. But right now what we're facing is a global surge in exports of all kinds of stuff, but especially EV batteries, EV's themselves, solar photovoltaics, all coming from China as it tries to escape its current housing crisis, as it tries to stimulate the economy. And that means we're getting Chinese goods of all signs, not just direct from China but everywhere in the world. And that is a challenge, a challenge to the US auto industry. And yet at the same time we've got to reset the Biden EV rules. I think they were way too aggressive to start with. Everyone sees that. More importantly, I think that single state EV mandates, the so-called California waiver is going to run into a buzz saw at the Supreme Court. So not only plan not working, but we may need to come up with a new plan within the next year or two. And again that makes it hard. It's interesting what you said that that. So I assume we're all referring to the Inflation reduction Act where the President initially put in out all of these requirements or Congress did that in order to produce EVs in this country, you have to have material source from US suppliers and the whole effort was really meant to kind of Marshall AUS industrial sector around this change. But are you saying that it's almost having the opposite effect? Or that there's no way that our our automakers can stay competitive with Chinese TV's unless they can access the global supply chain and not just the American or North American one? Well, we made a big bet. The bet was that if we provided tax credits to support the build out of an EV industry and the EV supply chain, then that would provide the big lift that we needed. But the tax credits alone are not the whole story. There are also the EV, the EPA regulations, the EV mandates. The Biden administration has projected that its EPA tailpipe emissions could help make as many as 60% of all new cars sold in A America to be EVs by 2032. And while that's a great goal, and while the industry again did the best they could, nobody anticipates that 60% of all new cars will be EVs by 2032. That rule is way too aggressive. That means it needs to be adjusted somehow. But also though more importantly, I think it's going to have trouble at the Supreme Court, which means that the plan itself is going to be very much in doubt as we go into this election cycle. Yeah, I wonder how this will all play out. You know, back in the 80s, obviously the US Big Three was very reluctant to kind of see the change the Japanese automakers were imposing at the time, but ultimately had to keep up and are better off for it. Now, is this analogous to the situation we're facing with the Chinese and for an administration that also wants the US to be driving more electric cars but yet is erecting these barriers to make the cost of imported Chinese ones twice as expensive as they otherwise would be? Well, it is analogous. This is an industry. This is a time when the auto industry needs to make big changes. But as I said, they've really gone above and beyond to show that they learned their lesson from last time and they are ready to go. Also, you got to realize that the US auto industry, the Japanese economy, the Japanese industry like the US and Japan, we've got a strong confluence of interest in a global marketplace that works for everyone. The US and Japan have very similar views of industrial development, industrial policy, free trade now and also frankly democracy. This situation where China dominates key supply chains for electric vehicles is very, very different because China is not an ally or even an ally that's competitor. China can be a strategic adversary. And what's going to happen over the next couple of months, even years, is that you'll see Congress continue with the Biden administration has already done to try to force China out of the supply chain, which makes sense strategically. But you're also pulling the rug out from under the industry at the same time that they made such a great effort to do what Biden told them to do. Alright. Absolutely, James. We'll leave it there for now. We appreciate your time today. Thank you so much. Thank you. James Lucier with Capital Alpha Partners.