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I took a tour through a few 10Q reports this week to get a sense of how EV makers like Rivian and Lucid (or even legacy automakers that also sell EVs) feel about the one-two punch of tariffs and the end of the federal tax credit. Although these documents are loaded with legalese, it’s clear that both economic developments are on the minds of their respective executive teams.
Rivian and Lucid both make specific and multiple mentions of the One Big Beautiful Bill Act (OBBBA) in the risk factors section of their 10Qs. The OBBBA eliminates certain tax credits for EV buyers and essentially devalues the zero-emissions regulatory credit market. Tariffs and trade policy risks also make cameos.
Lucid notes in its 10Q that it is assessing the impact of OBBBA. “If any of the Company’s suppliers, sub-suppliers or partners experience financial distress, insolvency or disruptions in operations, they may be unable to fulfill their obligations or meet the Company’s production and quality requirements.” Meanwhile, Rivian tries to strike a “glass half full” tone by noting that 45X tax credit for domestic battery production remains.
Ford and GM also make mention of the OBBBA, although both spend more time talking about the potential effects of tariffs. GM says it’s unable to estimate the financial impacts of the OBBBA, but notes it “could be material and may adversely affect electric vehicle profitability.”
Here’s the unfortunate upshot (and potential third punch): A new 100% import tariff on semiconductor chips could squeeze automakers even more. Anyone who paid attention during the COVID pandemic remembers how supply constraints on chips hurt automakers. Industry experts estimate that a modern vehicle contains more than 1,000 — and in some cases more than 3,000 — chips. None of these companies want to go through this again.
The question is how they will qualify for exemptions; the Trump administration said it will award them to companies that manufacture the chips domestically. Automakers don’t typically make chips, which means these companies may all turn to domestic suppliers. This is, of course, a TBD scenario since the administration has a history of changing policy, and it has yet to provide details on this 100% tariff and exactly how to secure an exemption.
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The end result is uncertainty, the wet blanket of any enterprise.
A little bird
You would think that a trade war with China and concerns about protecting American technology would discourage Chinese companies from setting up shop in the U.S. But lately, I have heard some chatter from a few birds in the industry that Chinese companies, specifically those working on autonomous vehicle technology or adjacent tech, are repatriating to the United States. Stay tuned as I dig into this one.
Got a tip for us? Email Kirsten Korosec at [email protected] or my Signal at kkorosec.07, Sean O’Kane at [email protected], or Rebecca Bellan at [email protected].
Deals!
Remember Blade, the helicopter ride-share business? The urban air-mobility business, which went public via a merger with a blank-check company, enjoyed its fair share of buzz and controversy since its founding in 2014.
And now it’s owned by electric air-taxi developer Joby Aviation. The deal is worth up to $125 million and includes the Blade brand and its passenger business, which has operations in the United States and Europe. Blade’s medical division isn’t included in the transaction and will remain a separate company.
Blade founder and CEO Rob Wiesenthal will continue to lead the business, which will operate as a wholly owned subsidiary of Joby.
I wasn’t exactly expecting this deal, but it sure does make sense. Blade has sought partnerships with other electric aircraft companies, including Wisk. And Joby will need the infrastructure if it wants to ramp up commercial operations — once its electric aircraft receives the Type Certification from the Federal Aviation Administration.
The deal gives Joby instant access to a network of 12 terminals in key markets like New York City — notably, a dedicated lounge and terminal bases at John F. Kennedy International Airport and Newark Liberty International Airport, as well as in Manhattan’s West Side and East Side and on Wall Street.
Other deals that got my attention this week …
Drone startup Destinus, which supplies weapons to Ukraine, plans to buy Daedalean, a Swiss company developing autopilot systems for aviation. The deal is reportedly for $223 million in cash and stock.
Jeh Aerospace, an Indian aerospace component-manufacturing company with headquarters in Atlanta, raised $11 million in a Series A round led by Elevation Capital, with participation from General Catalyst.
Uzum, the Uzbekistan-based express food delivery and fintech startup, raised $65.5 million in a round co-led by China’s Tencent and the New York- and London-based VR Capital, with participation from U.S.-based FinSight Ventures.
Notable reads and other tidbits
Foxconn has sold a former GM factory (and surrounding land) for $88 million and machinery and equipment from its EV subsidiaries for around $287 million. Reminder: Foxconn never managed to scale production of EVs at the plant after three years of ownership. So what is to come of this factory? The buyer is reportedly SoftBank, and the plan is to turn this factory into an AI data center.
Lyft made a strategic partnership with Baidu to deploy the Chinese tech giant’s Apollo Go autonomous vehicles across several European markets. The companies want to launch robotaxi services in Germany and the United Kingdom in 2026.
Rivian filed a lawsuit to be able to sell its electric vehicles directly to consumers in Ohio. The company claims existing law unfairly benefits Tesla, which received a special exemption.
Read this: A stunning and data-rich report on Uber’s sexual assault problem.
Zoox has received an exemption from federal safety regulators to demonstrate its custom-built robotaxis on public roads. There is some considerable backstory here, so I recommend reading my article. TL;DR: This clears up a long-standing debate over whether Zoox robotaxis complied with federal motor vehicle safety standards. It also puts an end to a related investigation into whether the Amazon-owned company had sidestepped federal regulations.
The Tesla news cycle just won’t quit. And for some, it may feel contradictory. The company’s board of directors approved a new compensation package for CEO Elon Musk worth around $29 billion in shares, with the company citing the “ever-intensifying AI talent war and Tesla’s position at a critical inflection point” as reasons for the payout. Meanwhile, Tesla, which has seen automotive revenues drop, is pushing to turn its AI and autonomy ambitions into moneymakers.
Two developments this week have chipped away at those aspirations. First, Tesla has shuttered its Dojo supercomputer program, ending its bid to develop in-house chips for driverless technology. And separately, a jury found Tesla partly to blame for a fatal 2019 crash and ordered it to pay around $242.5 million in punitive and compensatory damages. It’s a notable case in which plaintiffs successfully argued there is a gap between how Tesla talks about its Autopilot driver-assistance system and its actual capabilities. (The Verge has an interesting interview with the attorney.)
One more thing
The Autonocast, a podcast about the future of transportation that I happen to co-host, had a fun guest recently. Boris Sofman, who led Waymo’s now-shuttered self-driving trucks program and co-founded Anki Robotics, came on the show to discuss his new autonomous vehicle technology startup Bedrock Robotics. Give it a listen!
