I think that you’re about to see two major trend lines in the auto industry over the next few years, now that President Donald Trump is back in office and all but certain to kill the Biden-era fuel economy and emissions rules and maybe the EV tax credits. On one hand, the automakers who invested early into EVs will keep theirs going—possibly at an adjusted rate, if demand cools off without any incentives or deals to be had. On the other hand, the ones that are behind on EVs will use the next few years as cover fire to try and catch up, all while focusing on hybrids, profitable gas engines and operating under the auspices of “consumer choice.”
You do need consumer choices, to be very clear, and more hybrids are certainly a good thing. But think of it this way: everyone in this industry realizes the future will one day be all-electric. If you’re ahead on things like battery development, lowering battery costs, or R&D into new chemistries and electric motors, you won’t be giving that up just because America has a new president. And if you’re behind on all of that, you may now have a few extra years to figure them out.
Case in point: Nissan. We’ll look at Nissan’s maybe, maybe-not EV strategy as we kick off this Monday edition of Critical Materials, our morning roundup of technology and mobility news. Also on deck: Kia is working to make its U.S. dealerships nicer, while America’s car dealership leaders declare war on the direct sales model. Let’s dig in.
30%: Nissan Says U.S. EV Plans Will Be Determined By Tax Credits
Nissan Epoch, Epic, Era, Evo concepts
Nissan, as you may have heard, is going through some stuff right now. Mere months ago, one of its top executives admitted it had maybe a year and change of financial runway left before needing to consider bankruptcy options. Soon after that, it announced a merger plan with traditional rival Honda, which would make it the world’s third-biggest car company by volume. This isn’t being admitted openly, but it’s kind of Honda rescuing Nissan, as the latter has struggled with an aging lineup, declining sales and a total lack of hybrid options in the U.S., Nissan’s most important market.
Basically, Nissan isn’t really in a position to roll out a bunch of new EVs, even though it once promised that several would be made here in the U.S. (including for Infiniti) sometime this year. Those EV plans have since been delayed to 2027 and 2028.
Now Nissan may slow-walk that plan even more, one U.S. executive told Bloomberg. And the reason is the potential loss of the tax credits under Trump:
The start date and production levels for battery-powered cars to be manufactured at a plant in Canton, Mississippi, will depend in large part on whether Trump and the Republican Congress follow through on vows to scrap a $7,500 tax credit and other incentives for buyers and makers of EVs, according to Ponz Pandikuthira, Nissan’s chief planning officer for operations in the Americas.
“If they pull back on the $7,500 credit, we know the rate of adoption is going to slow,” Pandikuthira said in an interview. “We certainly don’t want to be in a position of building models there’s no demand for.”
The Japanese carmaker previously said it plans to produce four all-new EVs at the Mississippi factory starting in 2028, but Pandikuthira said Nissan will be ready for production of those vehicles as soon as 2027. However, it may slow-walk the EV start-up and also limit volumes in favor of boosting output of increasingly popular gas-electric hybrids, including plug-in models, to be built at its other US plant in Smyrna, Tennessee.
I would argue there would be demand for such cars if they existed at all, and were good, but Nissan is in bad need of hybrids possibly even more in the meantime. Nissan may also cut as many as 2,000 jobs in the U.S. this year as it works to regain its footing.
Not mentioned in that story is the Honda merger, which both companies have said they want to complete by 2026. And that could be part of this plan as well. We know that Honda is already well underway with its EV Hub in Ohio, as well as the new 0 Series and Sony-Honda Afeela EVs. It’s entirely possible that Nissan is putting its homegrown EV plans on hold a bit while the merger shapes up, or seeing what it can do to potentially piggyback onto Honda’s own plans.
For a company that was once an early EV pioneer often compared to Tesla, the electric future is very much up in the air.
60%: Kia’s U.S. Dealerships Are Getting A Glow-Up
Photo by: InsideEVs
If you follow our long-term tests at all, you’ll know I’m a big fan of my Kia EV6. But I’ll readily admit that the dealership experience with Kia (as well as its corporate cousin, Hyundai) can leave a lot to be desired.
Basically, Kia in particular has had a world-class glow-up in recent years. Over the past decade and a half, the Korean brand has gone from the budget choice for the “No credit? Bad credit?” crowd to making some truly world-class cars, like the Telluride and EV9. Yet the U.S. dealership network is often stuck operating the first way: less-than-stellar facilities, shady sales tactics, subpar customer service, you name it. Kia dealers have a bit of a… reputation, we’ll say.
But while Kia is still “committed to making vehicles for the masses”—indeed, it’s one of the only left that bothers with affordable subcompacts and sedans—it realizes it’s now poaching customers from luxury brands. So the corporate-mandated dealer beautification project continues, Automotive News reports. Think black accents outside, wood floors and furniture, digital screens everywhere and more service capacity:
The most obvious change in the look is the display of the logo, which Kia changed in 2021. “I think we underestimated how impactful it would be,” [Eric Watson, Kia America’s vice president of sales operations] said. “It really allowed people to shed the old image of the Kia brand.”
It prompted dealers to get on board with Kia’s new identity as a maker of sporty cars and rugged SUVs. And now the brand is at the forefront of a developing EV market. “We’ve had very strong adoption,” Watson said. “Our dealers have confidence and are making the investment into the brand, and what the future holds for the brand.”
Watson also said the image change is attracting younger buyers. “The younger generation people in their 20s to mid-40s are gravitating towards Kia, which sets us up well for the future.” These buyers’ socioeconomic status is different from other mass-market brands.
“We’re seeing Kia shift in terms of their customers’ wealth and income,” Fitzpatrick said, noting that many of his group’s Lexus and BMW clients are cross-shopping at Kia.
I also hope that comes with training for the salespeople and helping them to get excited about Kia’s electrified options. Because right now, the Kia dealer experience does not match up with the Kia car experience, and that’s going to catch up to them sooner or later.
90%: Dealers Vow To Fight Direct Sales
Photo by: Scout Motors
Scout Traveler Electric SUV
And speaking of dealers, they just had their big annual conference in New Orleans. And while travel to that event was shellacked by bad weather, their newly installed leadership didn’t miss an opportunity to target the direct-sales model in 2025 and beyond.
See, it was one thing for America’s dealers to have to contend with direct sales from newcomers like Tesla, Rivian and Lucid. But now, it’s coming from longtime, established automaker partners like Honda and Volkswagen’s Scout Motors brand. And the new chair of the National Automobile Dealers Association, Tom Castriota, made one thing clear: This aggression will not stand, man. And Castriota has help in the Senate from a key ally.
From Automotive News:
Castriota asked dealers to carry an NADA challenge coin, which they were given on their way into the hall for his address, to symbolize their common cause. Challenge coins are a military tradition, given by commanding officers in recognition of allegiance, appreciation and respect.
As Castriota leads NADA this year as chairman, he’ll have a new advocate for dealers on Capitol Hill in Sen. Bernie Moreno, who said he’s the first auto retailer elected to the Senate. Moreno is a former car dealer from Ohio.
“The franchise model has been the most effective retail distribution network ever in the history of sales,” Moreno said. “It is something we should honor and respect. I look at moves recently by Volkswagen and Honda to have cars that compete with their own dealers, and I think that’s absolutely disgraceful for them to do that. I’ve asked them both — Volkswagen and Honda — to reconsider and allow those cars to go through their normal franchise networks.”
The NADA’s outgoing president also said the organization will push Congress to help end California’s ability to set its own emissions rules, which are followed by about a dozen other states and, in his words, “will ban gas cars.”
The car dealers are very much in a fight for their own survival from 2025 onward.
100%: Will Dealers Win Out, Or Will Direct Sales Prevail?
Photo by: Honda UK
Sony-Honda Afeela 1 CES 2025
The dominance of car dealers over new car sales in the U.S. is a bit baffling to our international readers. After all, most countries use some combination of manufacturer-owned stores and independent franchised dealers, and their societies have not collapsed into total anarchy. (At least, not because of that.)
So what does the sales model look like in the future? Do you foresee continued dealer dominance, or a combination of direct sales from established automakers, or more online buying options like the Hyundai program at Amazon? Let us know what you think in the comments.
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