Automakers Have Just A Month To Move Manufacturing To The U.S.

Good morning! It's Thursday, March 6, 2025, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. This is where you'll find the most important stories that are shaping the way Americans drive and get around.

In this morning's edition, find out how the pause on some of President Donald Trump's tariffs could force automakers' hands on manufacturing. Plus, Congress can't appeal California's ban on gas-powered car sales, ex-Canoo CEO Anthony Aquila is buying up the company's assets and dealers are once again begging VW to let them sell Scout trucks.

It's shaping up to be another busy day in the automotive world.

The "will they, won't they" of president Donald Trump's tariffs on imports from Canada and Mexico continues this week, and it's getting more and more ridiculous by the day. Tariffs finally came into force on Tuesday, adding 25 percent to the cost of many goods that cross the border, and Canada responded with taxes of its own on American imports.

The move forced Trump's hand, and he softened some of the measures after just a day, and then announced a one-month pause on taxes that will hit American automakers. In that time, the "Home Alone 2" actor is hoping that more American automakers bring production into the U.S. in order to avoid the full force of the tariffs should they return, reports Bloomberg.

There's just one problem there, it takes automakers much, much longer than a month to completely reorganize their production pipeline. Sure, automakers like Honda and Stellantis have already pledged to move some production to America, but that's a process that will take years to execute:

"Building out capacity and staffing a plant would take 3+ years," analysts John Murphy and John P. Babcock said in the report. "For most auto parts it is not viable as it would be even more expensive to produce in the US than paying the 25% tariff."

The moves will have to come across the automotive supply chain as well, which is already worrying parts manufacturers on both sides of the border. In fact, a survey of automotive suppliers found that 82 percent predict that Trump's measures will have a negative impact on their businesses should they come back into force next month.

As a result, some producers have gone so far as to warn that the impact of Trump's tariffs could echo the pinch they felt during the Covid-19 pandemic, adds the Detroit Free Press. Should the tariffs run for six months, nearly half of suppliers polled said they would be forced to cut jobs to remain profitable.

Clearly, it's going to be a rocky road for America's automakers and companies up and down the supply chain in the coming months.

Failed electric vehicle startups are ten a penny these days, after Nikola and Fisker both crumbled over the past year. Cutesy electric van maker Canoo joined that exclusive list this year, and now its CEO made a dash to buy up the remnants of the company.

Ex-Canoo CEO Anthony Aquila offered to buy "substantially all" of the company's remaining assets for $4 million in cash, reports Tech Crunch. The move comes just six weeks after Canoo filed for bankruptcy and stopped trading:

Canoo has told the court that as of February 24 it had around $145 million in assets and $175 million in liabilities, and around $12 million in cash and equivalents. Other interested parties can submit "higher and better offers" for the company's assets before a deadline of March 28, according to a filing.

The sale of Canoo's assets to Aquila was branded "the best option" by experts overseeing the bankruptcy case as a result of the "glut" of failed EV makers that are currently selling off assets. Under the sale, Aquila would acquire Canoo's manufacturing equipment, completed vehicles, intellectual property, contracts, and other inventory and assets.

It's not clear what Aquila could do with Canoo's assets, whether he would use them to launch a new electric vehicle maker or simply offer support for the handful of vehicles Canoo did manage to build. The latter seems more likely, as Tech Crunch adds that the CEO hopes to "honor [Canoo's] commitment to provide service and support for certain government programs."

Canoo previously sold its cutesy electric vans and pickup trucks to government agencies like NASA and the Department for Defense. Those agencies are now strapped for cash as Elon Musk's Department for Government Efficiency sweeps through, so it's unclear if they'll be open to spending more money to keep a handful of non-Tesla EVs up and running.

Since Trump took office, he's made it his mission to dismantle almost every bit of clean infrastructure brought in under the previous administration. This included cancelling funding for new electric vehicle purchases, ripping up charging ports at Federal buildings and canceling tax breaks for anyone looking to buy an EV. There's one bit of clean legislation that he can't cancel, however, and that's California's move to ban the sale of new gas-powered cars.

The Golden State was the first in America to announce a phasing out of gas-powered cars, with a ban on sales of new models set to come into force in 2035. Despite Trump's campaign promise of ending such regulations, Congress was told it can't appeal the move, reports Reuters:

The Government Accountability Office said on Thursday the Biden administration's approval of California's landmark plan to end the sale of gasoline-only vehicles by 2035 is not subject to review and potential repeal by Congress.

Last month, the U.S. Environmental Protection Agency under President Donald Trump sent the approval to Congress saying it was properly considered a rule under the Congressional Review Act. The GAO said the decision should be considered an order and is not reviewable.

The California rule required 35 percent of new cars sold in 2026 to be zero-emission models, rising to 68 percent by 2030 ahead of a full move to clean power by 2035. After California adopted the timeline, it was also picked up by states such as New York and Massachusetts.

The current administration hopes to rescind these moves, and says it will now start "considering next steps" to further screw over America's commitment to going green.

The return of Scout Motors to America is a hotly anticipated launch. The storied brand is being revived by Volkswagen with a pair of hybrid and all-electric models including a pickup truck and rugged SUV. When the new models finally hit the market, they'll be offered for sale directly to consumers, which is a move that seriously pissed off America's dealerships.

The National Automobile Dealers Association is now fighting the decision and "sent a strongly worded letter" to VW in an attempt to make it reverse course on the decision, reports Automotive News. The letter argues that offering the new models D2C, would mount "strain on the relationship" that VW has with its dealer network:

"The decision by you and your board of management to directly distribute Scout in the United States and compete with your dedicated dealer body is misguided, violates well-established state franchise laws and is one that I strongly encourage you to revisit," [NADA CEO Mike Stanton] wrote.

Stanton noted that he sent a letter to Blume in July 2023 but received no reply. In the March letter, Stanton requested a meeting with him "to discuss alternatives to this direct sales approach."

The letter was reportedly sent to Volkswagen Group CEO Oliver Blume, VW Group of America CEO Kjell Gruner and Scout CEO Scott Keogh, as well as other senior VW representatives.

The argument between VW and dealers has raged since the brand launched its new Scout lineup. At the launch, VW said it would bypass U.S. dealers and sell the trucks directly to consumers via online sales and the launch of "experience centers" in key markets. The movie irked dealerships as it meant they wouldn't be able to pile markups onto the trucks, which will no doubt be in high demand.

Big day for birthdays today, with everyone from actress Jenna Fischer to tennis ace Ivan Lendl all turning another year older on March 7. It's also the birthday of the telephone, which was patented by Alexander Graham Bell on this day in 1867, explains History.com:

Bell became very interested in the possibility of transmitting speech over wires. Samuel F.B. Morse's invention of the telegraph in 1843 had made nearly instantaneous communication possible between two distant points. The drawback of the telegraph, however, was that it still required hand-delivery of messages between telegraph stations and recipients, and only one message could be transmitted at a time. Bell wanted to improve on this by creating a "harmonic telegraph," a device that combined aspects of the telegraph and record player to allow individuals to speak to each other from a distance.

Just imagine what Bell would think to all the garbage we do with our phones these days. Thanks, I guess.