Nov 1, 2019

Axios Navigate

By Joann Muller
Joann Muller


Welcome to November! Hope your Halloween wasn't a washout. Please share this newsletter and tell your friends they can subscribe here. If you have tips or feedback, just reply to this email.

Coming up on “Axios on HBO”: We dig into the GOP’s looming Texas-sized problem with Reps. Will Hurd and Dan Crenshaw.

  • Plus, former Pastor Joshua Harris, who inspired a generation of evangelicals, discusses — for the first time — why he’s renouncing his faith. Watch 6pm Sunday.

Smart brevity count: 1,474 words, < 6 minutes.

1 big thing: The war over emissions

Illustration: Sarah Grillo/Axios

Automakers are choosing sides in the increasingly heated political debate over vehicle emissions and fuel economy standards in an attempt to protect the investments they've made in a clean energy economy.

The big picture: President Trump is at war with California on multiple fronts, and carmakers are caught in the crossfire.

  • Despite their differences, the carmakers are united on this: Only one emissions rule should apply across the country.

Driving the news: GM, Toyota, Fiat Chrysler, Hyundai, Nissan and others this week announced they are joining the Trump administration's side in litigation to block California from setting its own emissions rules.

  • Critics pounced, accusing the companies of hypocrisy for promising to deliver cleaner cars while siding with Trump, who wants to roll back strict Obama-era federal standards.
  • Four other big automakers — Ford, VW, Honda and BMW — had already made a deal with the California Air Resources Board (CARB) to cut emissions about 3.7% a year between 2020 and 2026 (vs. roughly 5% under the Obama rules).

Between the lines: Automakers are reluctant to talk openly about the politically sensitive topic. Privately, though, nearly a dozen companies on both sides claim their approach is the quickest way to settle the regulatory uncertainty that is hampering future product development.

  • "This is a once-in-a-lifetime chance, with this administration, for a federal program —and with a Supreme Court that just might side with him," a vice president at one automaker tells Axios.
  • Others look at stricter regulations in China and Europe and say California's more aggressive stance will help achieve global harmonization on emissions rules.
  • Toyota North America CEO Jim Lentz warns of unintended consequences: If tougher rules put new technologies out of reach for already-stretched consumers, they'll hold onto their polluting cars even longer, defeating the goal of fighting climate change.

Yes, but: The issues are complex, and each company's position is not as black-and-white as it seems.

The latest: Where they line up depends mostly on their sunk investments in future powertrains and how they think consumer demand will evolve. To date, most consumers don't want hybrids or EVs; they want trucks and SUVs.

  • Toyota, which sells more hybrids than all other carmakers combined, says it's supporting Trump to gain leverage for a regulatory compromise.
  • Worth noting, however: Under California's rule, Toyota stood to lose 71.4 million federal greenhouse gas credits it had stockpiled from selling all those Prius hybrids, potentially worth billions of dollars.
  • GM, meanwhile, touts its commitment to zero emissions, but sided with Trump, too. Insiders say one reason is GM's belief that the California plan favors hybrids — which it doesn't plan to sell — over electric vehicles. (CARB officials dispute that assertion but until the rule is finalized, it's hard to say.)
  • Volkswagen, like GM, plans a slew of EVs but it sided with CARB partly because it's still in the doghouse for cheating on diesel emissions standards several years ago.
  • Foreign carmakers, in particular, are worried about angering Trump, who is still weighing big tariffs on auto imports that could wreak havoc on their business.

What to watch: The Trump administration may be willing to bend.

  • The Wall Street Journal reported Thursday night that the White House is backing away from a plan to freeze tailpipe-emissions targets at current levels and is now considering requiring a 1.5% annual reduction instead.
  • California says that's not enough, the Sacramento Bee reports.

Go deeper: Trump's war with California leaves automakers with nowhere to hide

2. The auto industry's next giant

PSA Groupe CEO Carlos Tavares. Photo: Julien de Rosa/IP3/Getty Images

Carlos Tavares, a weekend racer with a gutsy instinct on and off the track, will soon be in charge of the world's fourth-largest automaker.

Why it matters: Since last year's death of Fiat Chrysler's Sergio Marchionne and arrest of Renault-Nissan's Carlos Ghosn, the global auto industry has been looking for its next Lee Iacocca or Bob Lutz. Here comes Tavares.

Driving the news: The Portugal-born boss of France's PSA Groupe is slated to become CEO in a 50-50 merger between the Peugeot parent and Fiat Chrysler Automobiles.

As I reported in Forbes in 2017, Tavares is a dynamic, thoughtful leader who keeps his eyes on what's ahead.

  • Once a top lieutenant to Ghosn, he got canned after telling a reporter he wanted to be CEO. A few months later, he got his wish at the nearly bankrupt PSA.
  • He has a reputation for efficiency, turning loss-producing businesses into moneymakers, but his challenge now will be navigating the disruptive technology changes roiling the industry.
  • He's prepared to adapt. "We are dinosaurs," he told me in 2017. "And if we don't want to disappear like dinosaurs, we have to operate in a different way."

What to watch: The industry is taking note of Tavares' ambition. "Number 4 is not his goal," one exec told me. "If I’m Toyota, GM or VW, I’m shaking in my boots."

3. Just say "rider-only"

Waymo is testing more cars with riders only. Photo courtesy of Waymo

Amid mass confusion over automated driving technologies, Waymo CEO John Krafcik is proposing more precise terminology to describe self-driving cars, saying: Let's call them "rider-only" vehicles.

Why it matters: Driver-assistance systems have too many confusing names, a AAA study found. Tesla has further muddied the waters by using terms like "full self-driving" to describe cars that still require human supervision.

What's happening: Krafcik told a group of reporters this week that "we've failed as an industry to define fully driverless cars."

  • "Rider-only" is an unambiguous way to define them, he suggested.
  • An important distinction is whether there is a human safety driver behind the wheel.
  • If a child or someone who is blind can ride alone in the car, then it qualifies as a Level 4 vehicle under SAE guidelines, the Waymo chief said.
  • “If you need a driver’s license, you can’t call it self-driving.” 

Context: Krafcik's comments came days after Tesla CEO Elon Musk befogged investors' questions about what he means by a "full self-driving" system that is "feature-complete."

  • Musk described a system that is “autonomous but requiring supervision and intervention at times.”

What to watch: Waymo is continuing to ramp up its “rider-only” service for several hundred customers enrolled in its early rider pilot program in suburban Phoenix.

  • Meanwhile, its commercial Waymo One service, with more than 1,000 paying customers, still has backup safety drivers.
4. Cruise CEO won't say when AVs will arrive

Cruise's self-driving test vehicle in San Francisco. Photo courtesy of Cruise

My colleague Kim Hart interviewed Cruise CEO Dan Ammann on stage this week at a CityLab event but couldn't get him to commit when autonomous vehicles will arrive.

  • His answer: "As soon as humanly possible" (while hinting he had an estimate in mind).
  • "If we're going to have a large-scale impact over a long period of time, the most important thing you can do is do it right from the beginning and build trust with everyone we're interacting with," he said, repeatedly emphasizing safety.
  • In the meantime, testing continues with backup drivers behind the wheel.

Why it matters: Cruise said earlier this year it was delaying commercial deployment of cars past its 2019 target for more testing.

  • Reuters has reported that the GM-backed self-driving car company has run into unexpected technical glitches, like difficulty for cars to tell if objects are in motion.

The bottom line: Despite the early hype, Ammann remains optimistic about AVs.

  • "I think we're in the classic situation where people have been over-estimating the arrival and hugely underestimating the impact that self-driving cars are going to have."

Sign up for Kim's Cities newsletter here.

5. Driving the conversation

Backup: LAX apologizes for "unacceptable" long waits for Uber and Lyft pickups (Laura J. Nelson — Los Angeles Times)

  • Why it matters: As anyone could have predicted, the LA airport's new shuttle bus system to ease ride-sharing congestion ran into some glitches. Curb management is an under-appreciated crisis facing cities.

Hearings: Boeing’s CEO says its culture will fix its problems. Experts say it may be to blame (Dan Catchpole — Fortune)

  • Why it matters: Dennis Muilenburg's testimony before two Congressional committees this week only increased the anger against Boeing after two deadly 737 Max plane crashes.
  • “If we knew everything back then that we know now we would have made a different decision,” he said.

Tea leaves: GM appoints former AV, EV head to lead product development (Kalea Hall — Detroit News)

  • The big picture: Doug Parks' appointment to head up all global product development is a sign that GM is seriously moving toward an electric future.
6. What I'm driving

2020 Toyota Supra. Photo courtesy of Toyota

What a fun weekend I had zipping around southeastern Michigan in the highly anticipated 2020 Toyota Supra.

The big picture: This is the fifth generation of the Supra but the first sold in the U.S. since 1998. Enthusiasts pleaded for Toyota to bring it back and now it has finally arrived.

Yes, but: There's been a lot of whining among Supra loyalists that the reborn 2020 model wouldn't be any good because it shares its underpinnings with BMW's Z4 convertible and it would only have an automatic transmission.

My thought bubble: Get over it; the new Supra is a true sports car. Yes, it's got a lot of BMW inside, but that's not a bad thing.

Details: It's equipped with a BMW turbocharged 3.0-liter inline-six-cylinder engine that produces 335 horsepower and 365 foot-pounds of torque.

  • Other auto journalists will assess its track handling; all I know is driving it on ordinary roads made me smile.
  • Kids on bikes stopped in my driveway to ogle it, and one guy nearly fell out the passenger window of a car trying to snap a photo at 65 mph.

Pricing: The base Supra 3.0 starts at $50,920; my Supra 3.0 Premium had a sticker price of $56,140.

  • It included a $1,195 driver assist package, which adds adaptive cruise control, blind spot monitors and parking sensors.
  • But don't let the robot drive this one.
Joann Muller