Jan 22, 2021

Axios Navigate

Happy Friday, and welcome back!

Situational awareness: Judging by the reception Pete Buttigieg got during his Senate confirmation hearing this week, his nomination as transportation secretary should get the green light.

Join me today at 12:30pm ET for a virtual event on the future of electric vehicles with Sen. Debbie Stabenow of Michigan and Robbie Diamond, CEO of Securing America's Future Energy. Register here.

  • Today's Smart Brevity count: 1,451 words, a 5-minute read.
1 big thing: What Biden's EV push could mean for jobs

Illustration: Sarah Grillo/Axios

President Biden's swift effort to re-establish stricter fuel efficiency mandates, along with his broader push toward vehicle electrification, is as much about creating new jobs as it is protecting the environment.

Why it matters: The U.S. lags far behind the rest of the world in electric vehicle adoption. Catching up will require big investments in EV production — including battery cell manufacturing and mining of raw materials — to avoid dependence on imports and foreign supply chains.

  • Biden's goal: 1 million new auto industry jobs in manufacturing, supply chains and infrastructure like EV charging stations.
  • About 757,000 people currently work in the auto and parts sector alone, down from a peak of 1.1 million in 2000, per the U.S. Labor Department.

Driving the news: On his first day in office, Biden moved quickly to unravel many of former President Trump's environmental policies.

  • Among his first actions: directing the EPA and the Transportation Department to re-establish stricter fuel efficiency mandates, which Trump had weakened.
  • Tighter standards for fleet-wide emissions would almost certainly compel automakers to build more EVs.

Biden has made boosting electric vehicles a top priority and pledged to add 500,000 charging stations and make all federal fleets fully electric.

  • He also supports expanded consumer tax credits for EV purchases.
  • It worked in Europe, where Germany and other countries folded EV incentives into their coronavirus stimulus packages last year.
  • EVs jumped from roughly 3.3% of total European sales in 2019 to an estimated 11% in 2020, says Nathan Niese, Boston Consulting Group's associate director for electrification and climate change.
  • In the U.S., plug-in vehicles account for only about 2% of total sales.

Yes, but: It's not just about stimulating demand. The U.S. needs to move quickly to secure the necessary batteries and raw materials that go into them, says Robbie Diamond, CEO of Securing America's Future Energy (SAFE).

  • China is poised to dominate EV production and supply chains if the U.S. does not act quickly to boost its output.
  • Of 142 lithium-ion battery megafactories under construction globally, 107 are set for China, versus nine in the U.S., according to a SAFE research report.
  • All of the top battery manufacturers are based in Asia and most of the lithium, nickel and cobalt used to make them comes from outside the U.S.

If the U.S. goes big on electric vehicles to compete with China — a "minerals-to-markets" approach as laid out in SAFE's roadmap — it would create more than 640,000 jobs, Diamond tells Axios, previewing new research.

  • But labor unions fear the opposite. EVs have 80% fewer parts overall, making them easier to assemble, according to a UAW analysis.
  • However, a BCG study concluded it takes roughly the same labor hours to assemble an electric vehicle as it does a traditional vehicle.
  • It's just that much of the labor shifts upstream, to suppliers that make batteries, electric motors, electronics and thermal systems, which will require retraining.

The bottom line, via SAFE's Diamond: "We're not asking auto workers to become Google programmers. There will be jobs. The question is will we let them happen in Asia — or here?"

2. Lucid's methodical manufacturing plan

Lucid Motors manufacturing plant in Casa Grande, Ariz. Photo: Lucid

The U.S. auto industry is spreading west, with electric vehicle companies opening factories far from Detroit, in places like California, Arizona and Texas.

Why it matters: With hundreds of millions of dollars in fresh capital, along with newly issued public stock symbols, many are unproven newcomers with ambitions to become the next Tesla.

Among them is Lucid Motors, whose CEO is a Tesla alum wary of the "production hell" his former boss, Elon Musk, famously described while trying to launch Model 3.

  • "Why boast about something you've not done very well?" Lucid CEO Peter Rawlinson tells Axios in an interview.
  • "Production hell means you didn't plan very well," adds Lucid's vice president of manufacturing, Peter Hochholdinger, a former Audi manufacturing executive who left Tesla in mid-2019 in the midst of its struggles.

Instead, Rawlinson describes Lucid's manufacturing strategy like a chess game, with lots of moving pieces and one move dependent on the next.

  • The planned factory, on 500 acres in Casa Grande, Arizona, one day will be capable of making 400,000 cars a year.
  • But right now, Lucid has just one electric luxury sedan, the Lucid Air. It plans to produce 7,000 this year, and eventually 34,000 annually.

"We don't want to spend $1 billion on a factory for 400,000 units and have all that capital tied up," says Rawlinson.

  • So Lucid is building its factory in phases, as needed, similar to "just-in-time" supply chains.
  • Its next model, an SUV called Project Gravity, is coming in 2023, with expected production of 85,000-90,000 units, says Rawlinson. By then, phase two of the factory will be complete.
  • By the end of the decade, all four phases will be completed, he says.

The complexity of it all is huge, and not without significant risk, Rawlinson admits.

  • "We have a new plant, a new vehicle platform, a new powertrain, new people and now, tragically, we have a pandemic."
3. What we know about Apple's car plans

Illustration: Eniola Odetunde/Axios

Despite fits and starts, Apple still has big self-driving car ambitions and is moving forward both with its own efforts and potential partnerships with automakers, Axios' Ina Fried writes.

Why it matters: Apple has great businesses in phones and computers, but its long-term value will depend on conquering an entirely new market like autonomous vehicles.

  • But that doesn't necessarily mean proprietary iCars will be rolling down the streets.
  • "The only thing we do actually know with certainty is that they have been developing and testing automated driving systems," says Sam Abuelsamid, principal analyst at Guidehouse Insights.

The intrigue: Apple might well not want to make the whole car, but instead run an autonomous car service, for several reasons, Abuelsamid said.

  • Selling cars doesn't produce the 35%+ profit margins Apple typically likes, while a service might.
  • Apple could pick and choose where to offer the service, focusing on big cities that are well-suited to self-driving cars and have a large base of affluent customers. Think L.A., New York, San Francisco, Chicago, Miami and so on.
  • Apple has been making a big push on services.

Be smart: Apple usually likes to put a better interface on technology that's emerging but not brand new, rather than being the absolute first to market.

  • The iPod wasn't the first digital music player, the iPhone wasn't the first smartphone and the Apple Watch wasn't the first smartwatch. Apple typically enters a market when it sees an opportunity to do something better.

Apple in the past has confirmed its general interest in the category but declined to comment for this story.

The bottom line: Whatever Apple is doing will take time. Given how much work still needs to be done on automated driving, Abuelsamid said that probably puts an Apple car, or even a service, "likely in the second half of the 2020s."

4. Driving the conversation

Biden signs order requiring masks on planes, buses, trains and at airports (Michael Laris and William Wan — Washington Post)

  • Why it matters: The federal mandate is intended to help curb the spread of the virus and provides some legal backup to flight attendants confronting passengers who refuse to abide by airline mask policies.

Microsoft, GM add $2 billion to Cruise for robotaxi rollout (Joann Muller — Axios)

  • Why it matters: Self-driving cars devour mountains of data to operate safely. The tech giant's Azure cloud computing platform will help Cruise commercialize its robo-taxi plans.

Charging company EVgo is going public via SPAC merger (Sean O'Kane — The Verge)

  • Why it matters: It might be hard to pick the winners among the numerous electric vehicle startups, but all EV manufacturers, including legacy brands, will need charging stations.
5. What I'm driving

2021 Mazda6 Carbon Edition. Photo: Mazda

This week I'm driving the 2021 Mazda6 Carbon edition, the most fun I've had in a mid-size sedan in a while.

The big picture: Sedans are passé these days, as most buyers are gravitating toward SUVs and crossovers. Even so, Mazda is by far the most fun-to-drive car in its segment — engaging and athletic yet also quiet and refined.

  • The Carbon Edition is a new appearance package, featuring an exclusive Polymetal Gray paint job, coupled with a striking red leather interior, that makes a great-looking car even better.

One knock against the Mazda6: Unlike most mid-size sedans, it doesn't offer a hybrid option.

  • Instead there are two engine choices: the 187-horsepower standard four-cylinder, or a turbocharged option for up to 250 horsepower.
  • The base engine gets an EPA-rated 26 mpg in the city and 35 mpg on the highway, while the turbo gets 23 mpg city/31 mpg highway.

Inside, the Mazda6 feels upscale, especially in the $33,745 Carbon Edition I drove.

  • Every Mazda 6 now has Apple CarPlay and Android Auto, with wireless connectivity in the more expensive versions.
  • Still, I'm not a fan of the controls in Mazda's entertainment system, or the layers of commands to merely change radio stations.
  • It's been my ongoing gripe about Mazdas, which I otherwise love.

Standard driver assistance features include forward-collision warning, automated emergency braking, blind-spot monitoring and rear-cross-traffic alert.

  • Lane-departure warning and lane-keeping assist are optional, while rear braking assistance and a driver-attention monitor are only available on the $37,000 Signature model.