Being more mindful of the rate at which cars are coming off the road presents opportunities both for policymakers and industry participants.

By Andrew Grant

Around the same time each year, I find myself contemplating retirement.

I don’t mean palm trees, sandy beaches and taking up new hobbies. Rather, I’m working on BloombergNEF’s annual outlook for light-duty vehicles, and mulling over the pace at which vehicles reach the end of their useful life and get taken off the road. The relationship between new sales and the rate at which vehicles retire ultimately determines how the vehicle fleet changes over time.

Across the automotive industry, there’s a tendency to focus on sales. After all, many of the companies in the sector generate revenue when ownership of vehicles or components changes hands. However, the total vehicles on the road — referred to either as the fleet, or the parc — is an important metric for where the world is on the journey to a zero emissions-capable fleet, and a variety of other industry-defining trends.

BNEF’s outlook sees global annual sales returning to 2019 levels in 2025 and to 2017 levels in 2026, with sales surpassing 100 million briefly in the late 2030s. Total passenger vehicle sales hit their highest point in 2037 in this edition of the outlook, one year later than our modeling indicated in the previous iteration of the report.

Around 3 percent of the global passenger-vehicle fleet leaves the road in a typical year. But with a global pandemic, semiconductor shortages, Russia’s invasion of Ukraine and inflation sweeping the globe, the last few years have been anything but typical.

Consumers have responded by holding onto their vehicles for longer, leading to a growing fleet even as sales have lagged pre-pandemic levels. In our modeling, plug-in hybrid and battery-electric vehicles reach 75 percent of global passenger-vehicle sales by 2040. At this same point, less than half the fleet is comprised of these electric drivetrains.

Turning over the fleet quicker is possible, but would require policies focused on scrapping emission-intensive vehicles, rather than — or in addition to — the upfront purchase incentives for new cars that have been popular in the early stages of the shift to electric vehicles.

With the vehicle fleet continuing to rise steadily in the face of tumultuous sales and complaints about the profitability of EVs littering the earnings calls of incumbent automakers, look for the industry to lean more toward subscription-based offerings.

Subscription-based services can range from digital-only features — voice recognition and infotainment, for example — to the ability to access physical features in the vehicle, such as heated seats and even air conditioning. Thanks to built-in and aftermarket vehicle connectivity devices, the target market for these subscription offerings effectively is the entire active fleet of vehicles an automaker has sold.

General Motors already booked around $2 billion in subscription-related earnings in 2022 and wants to grow this to $25 billion annually by 2030. Rivals Ford and Stellantis expect in-vehicle subscriptions to grow into businesses worth approximately $20 billion to each automaker by 2030.

Whether you’re measuring emissions from the tailpipe or the earning potential of automakers, paying attention to what vehicles are actually in use is crucial. As major auto markets pass the inflection point on the sales of electric vehicles, it could be more important to focus on what vehicles are leaving roads, rather than what vehicles are leaving showrooms.

After a state regulatory board ruling, San Francisco will have 24/7 robotaxis on its streets. A Washington Post analysis shows how it’s a pivotal moment for the industry.

By Trisha Thadani and Jeremy Merrill

SAN FRANCISCO — California regulators voted Thursday to allow self-driving car companies Waymo and Cruise to offer 24/7 paid taxi service in San Francisco, a major win for the industry that could pave the way for more widespread adoption of the technology.

Alphabet’s Waymo and General Motors’ Cruise are struggling to win over San Francisco residents and officials, a major hurdle in their nationwide expansion

By Meghan Bobrowsky and Miles Kruppa

SAN FRANCISCO—This city’s inhabitants embraced computers, the Internet and cellphones before the rest of the world caught on. They are not so sure about self-driving cars. 

Cruise Chief Executive Kyle Vogt said in an interview that officials would cause more people to be harmed if they slowed the rollout of self-driving cars, citing company data that linked their increased presence to reduced collisions. Cruise has quintupled the number of cars it has on San Francisco roads since the beginning of the year, Vogt said. Most of its almost 400 vehicles nationwide are in the tech hub. 

“Anything new, especially a technology that comes across as borderline magic, is going to have a lot of questions and create a lot of attention,” Vogt said. “Attention draws controversy.”

Waymo asked riders to write letters to state officials last month. The company might not be able to continue operating in San Francisco, it said, if the state voted “no.”

Cruise took out full-page ads in several newspapers stating, “Humans are terrible drivers,” citing nearly 43,000 crash fatalities from car accidents in the U.S. last year.

For now, Cruise is offering paid rides at night in San Francisco. Waymo doesn’t have the state’s permission to offer paid rides yet, but people can ride in its cars free of charge. Both have waiting lists to get on the apps.

The group behind the traffic cones, Safe Street Rebel, coordinated the stunt as a weeklong protest of Cruise and Waymo’s expansion ahead of the state commission vote. Members trolled the streets wearing gloves and facial coverings, searching for cars in areas where they are frequently spotted such as the streets around the Panhandle park. The cones confused the cars sensors, some of which are placed on their roofs, stopping them in place.

After the state commission moved back its vote, the activists claimed partial credit for the delay and applauded state officials for applying more scrutiny to the expansion plans.

Cruise and Waymo have burned through billions of dollars in their attempts to build on-demand taxi services, which they hope will eventually produce greater profits without the need for human drivers. So far, their businesses have produced minimal revenue.

GM reported $102 million of sales and $3.3 billion of costs and expenses related to Cruise last year. Chief Executive Mary Barra said in June the company was at the very early stages of a shift to autonomous vehicles, and executives have said the company is targeting as much as $50 billion in annual revenue by the end of the decade.

Waymo has raised more than $5.7 billion in announced funding from Alphabet and outside investors since 2020. Alphabet, which has come under shareholder pressure to reduce spending on Waymo and other speculative ventures, doesn’t separately report on its financial performance.

Amazon.com’s Zoox has also tested its self-driving technology on the streets of San Francisco and is developing a custom, boxy vehicle specially designed for taxi services. The company declined to say when it would begin deploying the cars in the city.

Cruise and Waymo executives condemned the Safe Street Rebel activists who put cones on their cars and uploaded the videos to TikTok. Waymo said it was a form of vandalism. The group later removed the videos.

“This is a moving, multi-ton vehicle. It is not a toy,” Tekedra Mawakana, Waymo’s co-chief executive, said in an interview. The company plans to engage the authorities for help when its cars are vandalized, she added. 

Vogt said he didn’t think it was the time to be “playing silly games.”

Safe Street Rebel said the group wasn’t damaging property with the protest. The activists view the cars as a threat to other ways of getting around the city such as walking, biking and public transit, it said.

Beyond San Francisco, there are hundreds of self-driving cars in Phoenix, with more being deployed for testing in Los Angeles, Miami, Dallas, Austin, Texas and Nashville, Tenn. Three years ago, there were only test vehicles in a handful of cities. 

Cruise applied in March for permission from the California Department of Motor Vehicles to expand statewide and operate its cars at speeds of up to 55 miles an hour. 

Since then, Cruise has sent emails to officials in at least 14 California cities and counties as small as 12,200-person Newman in the remote San Joaquin Valley, informing them of the company’s plans to expand there, according to documents filed with the state’s motor vehicles department. The company said it would begin with five vehicles in each of these new markets, according to one of the emails.

A Cruise spokesman said it notified the officials as part of its statewide application and ultimately wants to operate everywhere in California, but plans to roll out its vehicles in major cities first.

Waymo began offering driverless rides in Los Angeles in February, and this week it announced plans to offer the ride-hailing service in Austin.

In May, San Francisco city officials sent a letter to the state expressing concerns about the proposed expansion in the city. They listed incidents in which a Waymo drove into a construction site, nearly rolling into an open trench, and a firefighter needed to break a Cruise’s window to stop it from driving into an active fire scene.

City officials said the number of reported incidents involving Cruise and Waymo vehicles has tripled in recent months. Tumlin, the transportation director, said officials need more publicly available data from the self-driving car companies to draw conclusions about their safety, and the city is making progress toward that goal. 

Cruise and Waymo both said their cars haven’t caused any traffic fatalities. In their first million miles driven, Waymo said its self-driving vehicles in fully autonomous mode didn’t cause any collisions with human drivers. 

A Cruise spokesman said it just takes one ride to convert a skeptic to a believer. About 90% of people who have taken a ride are willing to ride in one a second time, he said, citing internal data.

Sebastian Thrun, who previously led the Google Self-Driving Car Project that is now known as Waymo, said people would start to see the benefits if the cars were allowed to operate more widely. When he ran the project, all it took was seven to eight minutes in the car for people to relax and become more comfortable with the technology, he said.

Janie Richardson, a retired deputy city attorney, was crossing the street in the early evening in June with her two dogs in the Pacific Heights neighborhood of San Francisco when she said a self-driving Cruise vehicle entered the intersection and hit one of her black labs, Delilah.

A Cruise technician arrived on the scene about 10 minutes later, she said, and handed her a piece of paper titled “Handout for Others Involved in an Incident with Cruise.” Among other details, it listed insurance information for the car, according to a copy of the letter reviewed by The Wall Street Journal.

Delilah wasn’t injured, but Richardson, who said she previously hadn’t given the self-driving cars much thought, now wants them out of San Francisco. A Cruise spokesman declined to comment on the specific case.

Vogt criticized the city for promoting what he called misleading data. Cruise has spoken with city officials more than 50 times over the past year to hear their concerns and has made changes to the service based on the feedback, he said.

Waymo-Co-CEO Mawakana pushed back on the idea that residents are opposed to the vehicles, citing the 100,000-plus people who have signed up for the waiting list to access Waymo’s taxi service.

“I have people pinging, emailing and complaining every day about how long they’ve been waiting to get into the service,” Mawakana said.

Maya Waldman, who works in education, signed up to be an unpaid test rider for Waymo during an earlier stage in San Francisco and has ridden more than 5,000 miles in the cars. 

Waldman, who said she didn’t know much about self-driving cars before the program, now feels safer in them than in traditional ride-hailing services. Among other things, she’s not at the mercy of a random assortment of human drivers.

“Every time I hail a Waymo, it’s the same driver,” she said. “When I get into a Lyft or Uber, which I do still use sometimes, I never know what I’m going to get.”

• New-car deals and rising rates sap used-vehicle demand

• Cox Automotive chief economist doesn’t see near-term recession

By Keith Naughton – Bloomberg

Used-car prices in the United States fell 4.2% in June, their biggest monthly drop since the early days of the pandemic, as a key measure of inflation eases.

Rising interest rates and bigger discounts on new cars are sapping demand for used vehicles, which is lowering the prices they fetch at auctions dealers use to buy and sell previously owned vehicles. Pricing also is taking a hit because dealers have almost fully replenished inventory on used-car lots that were depleted by shutdowns and supply shortages during the pandemic.

“Buyers at auction look to have taken an early summer break,” Chris Frey, senior manager of economic and industry insights for Cox Automotive, owner of Manheim, the largest auto auction. “While used retail inventory has been improving over the last several weeks, we are expecting less volatility in wholesale price movements through year-end.”

Used-car prices have been a key driver of core inflation, which strips out food and energy prices. Core inflation has been especially sticky this year, even as the headline inflation rate has fallen. Overall, consumer spending on vehicles — new, used and car parts — is up 10% from a year ago, Cox said. The Bureau of Labor Statistics will release its next monthly report on consumer prices on July 12.

“We are not tipping into a recession,” Jonathan Smoke, Cox chief economist, said in a briefing with the media Monday. “The consumer is hanging in there.”

Smoke said the risk of recession remains elevated but it’s more likely to occur in the first three quarters of next year, depending on how much tightening the Federal Reserve pursues by pushing up interest rates.

Manheim now expects a 1.1% decline in its used-vehicle price index in December, down from a previous forecast of a 4.2% year-over-year decline.

Lingering questions about battery EVs signal that having a backup technology isn’t as crazy as it might sound

By Stephen Wilmot

The old debate about whether electric cars should be powered by batteries, Tesla-style, or with hydrogen fuel cells, such as the Toyota Mirai, appears to have been won hands-down by batteries in recent years. So why are companies still investing in hydrogen cars?

The hydrogen-powered Grenadier is just a proof of concept: Ineos is years away from committing to mass-producing a fuel cell EV. Still, why is a startup such as Ineos Automotive, which was founded in 2017, bothering with hydrogen at all when sales of EVs driven by batteries are so much stronger?

Ineos hopes to launch a battery EV in 2026 that it envisages being used in urban and everyday settings. But it also wants a low-carbon way to deliver the same kind of extreme off-road capability and long range its customers might expect from its gas-guzzling Grenadier. This is where hydrogen excels.

“I don’t think one technology is superior to the other. I think they’ve got different uses. And I think we need a mix of technologies in the future,” says Lynn Calder, chief executive officer of Ineos Automotive. 

This is a variant of what has become a consensus view: That fuel cell EVs, which are more energy-dense, are needed for long-distance trucking, buses and the odd niche light-vehicle application, while battery EVs, which are more energy-efficient, are the better solution for decarbonizing your typical family car.

Even companies that have spent decades working on fuel cell cars stress the technology’s heavier-duty applications these days. At a technology briefing last month, Toyota said it had 100,000 potential fuel-cell orders from third parties, most of them for commercial vehicles. Honda and Hyundai, the other champions of hydrogen cars historically, talk of selling their systems to manufacturers of trains, ships and construction machinery, among others.

But behind the consensus linger questions, too, about battery technology—notably how fast it can realistically take over the family-car market. One well-documented worry focuses on limited supplies of battery metals such as lithium, and another concerns the impact of battery EV charging on the power grid. Hydrogen EVs, with their completely different supply chain, could ease these scalability problems, which have a sharp geopolitical edge given China’s dominance of battery supplies.

BMW is currently touring the world with a fleet of hydrogen-adapted iX5 sport-utility vehicles to make the case for the technology, despite having little if any involvement in commercial vehicles. One of its arguments is that building roadside infrastructure for both battery EVs and hydrogen ones will end up being less expensive for countries than just building an EV infrastructure, which will require huge upgrades to the power grid.

BMW’s fuel cell iX5s are a political calling card: It is easier to galvanize the attention of policy makers if you can show them a car. The same might be said even of the Japanese and Korean fuel-cell EVs you can actually buy: Companies need them to show commitment and raise interest among politicians who often find it easier to focus single-mindedly on battery EVs.

Politics matter because hydrogen has for years been caught in a chicken-and-egg conundrum where investments in vehicles only made sense if there was refueling infrastructure, and vice versa. Now more infrastructure is planned, particularly in the European Union and China, which is one reason companies along the vehicle supply chain are increasing their investments. Automotive parts giant Bosch this week said it would spend an additional $1.1 billion on hydrogen projects, starting with a fuel-cell stack it is supplying to U.S. trucking startup Nikola.

A virtuous cycle might finally be under way in heavy trucks. In time, this could in turn bring down the cost of fuel cells and hydrogen to the point that the technology becomes competitive with battery EVs in the car market, too—though this is still an outside bet given the potential of battery innovations.

Above all, the surprising persistence of the hydrogen-car dream speaks to the uncertainties and complexities of the transition to lower-carbon rides. The curious alliance between Tesla and China has put battery EVs far in the lead for now. But tinkering away in the garage at a backup technology, particularly one that can be sold into other markets, isn’t a crazy thing for carmakers to do. 

In an era of rapid technological change, neither manufacturers nor investors can be too confident about seeing around the many corners ahead.

By Medora Lee | USA TODAY 

More cars are finally available and prices are leveling off, but buyers now face borrowing challenges that could keep them from getting a new ride.

The Federal Reserve said the rejection rate for auto loans in June rose to 14.2 percent from 9.1 percent in February, the last time the survey was taken. That was the highest level since this data was first collected in 2013 and for the first time, exceeded the application rate.    

Lenders are pulling back, leery of borrowers who have struggled with high inflation and a surge in interest rates the last couple of years, and have piled on debt to make ends meet. As consumers’ credit balances grow, there’s a higher chance of default, especially in the market for auto financing, where the number of Americans paying at least $1,000 a month on new loans reached a record high of just over 17 percent in the three months ended June, according to Edmunds, the online car resource and information company. 

With giant payments like that, it’s not surprising auto loan performance has been deteriorating. A severe delinquency rate in May was the worst since at least 2006 when data was first collected, while the default rate rose to nearly what it was in 2019, according to Cox Automotive, which provides tools for car buyers, sellers and owners. Severely delinquent loans are more than 60 days past due and defaults are more than 90 days past due. 

“Consumers who are paying large amounts of finance charges could be in jeopardy of falling into a negative equity trap,” said Ivan Drury, Edmunds’ director of insights. Negative equity is when the amount owed on a vehicle exceeds the value of the vehicle. 

Will it get worse for consumers? 

Many lenders, including Fifth Third Bancorp, Citizens Financial, U.S. Bank and Capital One Financial, have already either cut out or scaled back auto lending. 

“Consumers are already under pressure, and they’re even worse off because banks are reducing their lending,” said Alex Liegl, chief executive at electric vehicle financing company Tenet. “If there are fewer options, interest rates are going to further increase for customers. Typically, sometimes, they won’t even qualify for financing, so they’re shut out from getting the car they want.” 

The Fed said the average reported probability that an auto loan application will be rejected increased sharply to 30.7 percent, the highest level since the Fed started collecting this data in 2013. 

What can consumers do? 

If you’re looking for an EV that qualifies for a tax credit, Tenet offers financing that will allow you to maximize your credit from the day you purchase instead of waiting to claim it on your tax form. 

If your EV costs $50,000 and qualifies for a $7,500 tax credit, your loan amount would be reduced by $7,500 to $42,500, which would cut your monthly loan payment. When you receive your tax credit in 12 months, you can pay back the $7,500 without interest on it or pay it as part of your loan. 

“It gives people more flexibility to leverage tax credit,” Liegl said. Sixty-five percent of Tenet’s customers do this to reduce their principal on day one, and 12 months later pay it off, he said. 

As a more general tip, “it’s critical to come to the table with a comprehensive budget and a feel for the financing elements of a car purchase beyond the monthly payment, including the APR,” Drury said. 

Though many people will extend the term of the loan to lower their monthly payments, experts advise against that because the longer the duration of payments, the more you end up paying in interest. It’s better to make a larger downpayment or buy a less fancy car, Drury said. 

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday.

A shortage of parts and technicians, more complex auto technology, and older cars on the road are creating a perfect storm; Ford and GM are concerned

By Nora Eckert

Ronnie Clendenin has been working in the auto-repair business for three decades. He’s never been so frazzled.

The parking lot at Clendenin’s Tire and Auto Service in Guy, Ark., a town about an hour north of Little Rock, was recently packed with 62 vehicles, double the typical workload from a few years ago. Without the workers or car parts he needs to keep up, Clendenin says, he regularly turns away loyal customers.

“It’s hard to do. People aren’t used to it,” he says. “They’re used to just dropping it off and getting it taken care of.”

Across the U.S., a shortage of car parts in the past few years has collided with a continuing dearth of service technicians. The result: more frustrated customers, who are waiting longer to get their cars back, and paying more for service.

The backlog risks becoming a drag on the U.S. economy as higher repair costs prompt consumers to cut back spending elsewhere, or simply not having a working car curtails their mobility and productivity. A swath of service industries are facing labor shortages, from home construction to restaurants, appliance repair to trucking.

For the big automakers, this is the latest sign that the industry is still struggling to adapt to the shifts from the last few years. Nearly everything about shopping for and owning a car is different since the Covid-19 pandemic: Americans wait to get the car they want instead of driving it off the lot, they have fewer choices, and discounts or cheap leases are a thing of a past, prepandemic life.

The average auto repair took more than 17 days to complete last year, up around 65% from 10.3 days in 2019, according to a study from CCC Intelligent Solutions, a technology and AI provider for insurance and automotive clients.

When Oliver Swan got a flat tire on his BMW iX xDrive50 EV after driving over a razor blade, he tried BMW dealers from Arizona to New Jersey. He was told his replacement tire would take at least a month to arrive. In the meantime, he drove a loaner car from the dealer. When the dealer pushed that one-month date back, Swan decided to contact the company and tire supplier himself. 

“Something as simple as a stupid tire wasn’t really in stock,” said Mr. Swan, a 43-year-old real estate investor in Tucson, Ariz. He wrote emails to executives at the tire supplier and to BMW, and eventually received a replacement about a month after he got his flat.  

A BMW spokesman said almost all parts ordered by BMW dealers are able to be delivered overnight. The company isn’t aware of any delays in tire availability for the BMW iX, he said. 

Another factor driving demand for car repair: Owners are clinging to their aging vehicles longer, in part due to the sharp rise in prices for new and used vehicles since the pandemic, dealers and analysts say. The average age of a vehicle on the road in the U.S. hit a record 12.5 years in January, a trend that has stoked greater demand for repair work, according to a report released in May by S&P Global Mobility.

That has customers willing to spend more on repairs than they have in the past, shop owners say. The average cost of a repair increased 19.7 percent over the last year, while maintenance and service was up 9.9%, according to May data from the Bureau of Labor Statistics’ consumer price index for urban consumers.   

Dealers and independent mechanics describe a frustrating situation: Demand is booming, but many shops are missing out on business because they lack the staff to keep up.

The situation has even prompted car companies to try to help their independent dealers solve the problem. Ford Motor and General Motors are among automakers funneling money into tech-training programs and scholarship funds.

A lack of qualified workers has been a problem across the industry for more than a decade. There is a need for 258,000 new automotive technicians annually, but just 48,000 people graduate from tech-training programs each year in the U.S., according to TechForce Foundation, a workforce-development group.

Dealers, repair shop owners and auto executives point to several causes. Some say the proliferation of computer-based jobs over the last two decades has sapped enthusiasm for skilled trades. Others say technicians haven’t been paid enough over the years to stick around, and that the often back-breaking work has become less enticing for younger people.

Repair workers also n

The average weekly wage for U.S. automotive repair and maintenance workers increased 24.3% to $1,003, in the fourth quarter of 2022, from the same period in 2018, according to data from the Bureau of Labor Statistics. That outpaced the increase in median weekly pay for all U.S. workers during the same timeframe, which rose 21% to $1,084.

Kyle Teuscher, a 24-year-old technician at a dealership in Michigan, wanted to work on cars ever since he was little, when he spent late nights repairing old Jeeps with his grandfather and dad. He knew the career would be physically demanding, but saw it as a lucrative line of work to jump into after high school.

Already, though, the job has gotten tougher. There aren’t enough techs in his service department, so Teuscher and his co-workers have to shoulder more of the work.

eed to undergo frequent training because vehicles have increasingly sophisticated electrical and computer architecture, presenting problems that can sometimes flummox even experienced technicians.

“I’m definitely more worn out at the end of the day,” Teuscher said. 

Customers have also come in with more time-intensive jobs recently, he said. That’s partly because the cars are trending older, but Teuscher also grapples more with finicky technology on newer cars that can be difficult to diagnose, such as glitchy multimedia touchscreens. 

For the technician, who makes the bulk of his pay on a per-job basis rather than an hourly wage, this can translate into making less money at the end of the day. 

To retain techs like Teuscher, some dealerships and repair centers have offered more flexible work schedules, sweetened benefits and significantly higher pay. 

Some service managers say the competition for good service techs is stiff, and they are taking steps to prevent their people from getting poached.

At Bowman Auto Group in Michigan, the Chevrolet dealership removed its technicians’ names from its website. Service managers noticed some visitors snapping pictures of mechanics’ names on their licenses on the wall, which it figured was for recruiting purposes. The dealership repositioned a display in the customer lounge so that names and license numbers are partially blocked. 

“The war is on, and you’ve got to be smart about it,” said Rhonda Jensen, the group’s general manager. 

Over the last few years, the dealership has spent $1.5 million to upgrade the service shop in part to make it more comfortable for workers, with new flooring and walls, an upgraded lounge and better lighting, Jensen said.

The car companies have an interest in helping their dealerships solve the service bottleneck. As they roll out more electric vehicles, the carmakers are relying on their networks of thousands of dealership service centers to emerge as an advantage over Tesla, Rivian Automotive and other newer rivals that don’t have franchise dealers. 

Ford, for example, has been working with its dealers in recent years to expand a complimentary mobile-service operation that can offer oil changes, tire rotations and other repairs at customers’ homes, said Elena Ford, the company’s chief customer experience officer, who is a descendant of Henry Ford.

“Customers really are asking to be serviced in a more simple way,” she said. “We’re meeting them on their terms.”

In March, the Dearborn, Mich.-based company said it would invest $1 million in a scholarship program for students working to become auto technicians. It focused on four markets: Atlanta, Chicago, Dallas and Phoenix.

GM also has invested in programs that train technicians, including sponsoring students at community colleges and providing retention incentives for GM technicians. 

“We’re looking at being able to support our customers how and when they want,” said David Marsh, GM’s executive director of sales and marketing for aftersales. “You can’t do those things without a strong technician base.”

Meanwhile, lingering supply-chain choppiness throughout the auto industry has pinched inventories of key components at repair shops, from computer chips to tires.

Factory shutdowns during the pandemic stalled production of semiconductors, which are integral to car systems such as blind-spot detection and automatic braking. While the computer-chip shortage has eased, other supply-chain and logistical snags continue to plague dealership parts departments, dealers say. 

“The chip shortage right now is more disruptive to profitability, but it will eventually end,” said David Whiston, analyst for Morningstar Research Services. “The technician shortage is probably going to be around for a long time.”

For Swan, the long wait for his BMW’s tire replacement caused him to gear up for future delays. He ordered a couple of backup tires. They took a few weeks to arrive.

By Riley Beggin | Twitter: @rbeggin

Washington — The leading advocacy group for car companies on Monday urged the Biden administration to “ease up” on proposed emissions rules that aim to push automakers to sell 67% electric vehicles by 2032.

It’s the industry’s strongest rebuke to date of the Environmental Protection Agency’s proposed rules, released in April and acknowledged by the agency as its most aggressive proposal yet to rein in greenhouse gas emissions from passenger cars and trucks.

In a blog post penned by John Bozzella, CEO for the Alliance for Automotive Innovation, the group argued that EPA’s proposed rules would give China an opening to dominate the auto market in the United States.

China has had electric vehicles at the center of its industrial policy for more than a decade. It now controls most supply chains for key minerals needed to make EV batteries.

Even though the Inflation Reduction Act will pump money into building up domestic and allied supply chains for critical minerals, it takes time to build new mines and stand up processing and refining facilities, Bozzella wrote.

So if policymakers require a rapid increase in sales of battery-powered cars, U.S. automakers will have to use minerals controlled by Chinese companies, he said, to “meet the aggressive (and arbitrary) EPA requirements.”

“And it will be subsidized, scratch that … incentivized by American public policy,” he wrote. “Unintended consequences … there’s no sugarcoating it.”

EPA spokesperson Shayla Powell said the agency “welcomes input on the proposal.”

The proposed rules call for a 56% reduction in emissions for model years 2027 to 2032. The EPA projects that by 2055, the rules would remove nearly 10 billion tons of carbon emissions — equal to twice the total U.S. carbon emissions in 2022 — reducing fine particulate matter in the air that can have negative health effects and potentially saving up to $1.6 trillion.

EVs represented 5.8 percent of U.S. sales in 2022, according to AutoForecast Solutions LLC, which expects that to jump to 8.8 percent this year. But even by 2032, the market forecast firm is unsure adoption will reach 45%. Other analysts’ predictions also fall below the EPA’s proposed 67%.

Bozzella cited the European Union as an example of how aggressive emissions requirements could give an opening to China:

“With a 2035 ban on fossil fuel vehicles looming, Chinese manufacturers gained a foothold and entered the European market at a budget price point,” he wrote. “They achieved a five percent share of Europe’s EV market in the first nine months of 2022 and are on a steady march to hit 20 percent by 2025.”

He also noted that automakers themselves are betting on EVs and won’t back off, but that a more “balanced” approach is appropriate.

Environmental and consumer advocacy groups have supported the EPA’s proposal and urged the agency to stay the course or propose even stronger requirements.

Automakers also reportedly withheld use of their electric vehicles for an event announcing the new rules in April, prompting officials to move the unveiling from Detroit to Washington.

The comment period for the proposal closes on July 5. The Alliance for Automotive Innovation, the American Petroleum Institute and the National Automobile Dealers Association unsuccessfully petitioned EPA to extend that period.

Staff Writer Breana Noble contributed

A lack of transformers has led to a housing shortage, frequent power outages, and dependence on China

By Allysia Finley

Empty dirt lots are scattered across American cities where developers once planned to build new homes. The problem isn’t that builders can’t find workers or obtain permits. They lack the electric transformers required to connect homes to the grid.

“We were so concerned about things like lumber and appliances, and those all help. But then all of a sudden it was this power transformer—you can’t get them,” a home builder in Greenville, S.C., told a Fox affiliate in March. “We have 106 town-home sites and so we’ve only been able to get the first six going.”

Transformers step up or step down electrical power that passes through transmission and distribution lines. According to the American Public Power Association, 1 in 5 housing projects has been delayed or canceled owing to shortages. The pandemic dearth of semiconductors, appliances and cars eased as demand ebbed and supply increased, but don’t expect this one to let up anytime soon.

Thank President Biden’s green-energy policies, which are increasing demand for transformers and the specialized electrical steel to manufacturer them while creating enormous market uncertainty. The lack of transformers is exacerbating the country’s housing shortage and causing longer and more-frequent power outages.

Broadly speaking, there are two categories of transformer. Large power transformers, which are located at substations and weigh hundreds of thousands of pounds, step up voltage from power generators and step it down for distribution. These are crucial for building out the transmission system to carry renewable energy from rural areas to population centers. Currently it takes utilities from 20 to 39 months to procure them.

Smaller distribution transformers step down voltage to levels that homes and businesses can safely use. These are necessary for connecting homes, businesses and electric-vehicle charging stations to the grid. Until recently, they were easy to obtain and replace but wait times now exceed 18 months.

Both types are made with electrical steel, also a key input in electric-vehicle motors. Yet the U.S. is dependent on a single domestic manufacturer for the electrical steel used in electric vehicles and transformers—Cleveland-Cliffs—and it can’t meet growing demand from the power industry and automakers seeking to electrify their fleets.

Domestic transformer manufacturers can and do import steel but have to pay a 25% tariff even as they struggle to compete with lower-cost foreign manufacturers. The U.S. is increasingly relying on imported transformers, including from China, which presents cybersecurity risks.

U.S. officials seized a Chinese-manufactured transformer in 2019 because they suspected it had back doors embedded in its hardware that could be exploited by hackers. For this reason, President Trump in May 2020 issued an executive order banning Chinese-made equipment from the bulk-power system and required the Energy Department to “identify, monitor and replace as appropriate” equipment that might present national-security risks. Mr. Biden reversed the order shortly after entering office, perhaps because he knew Chinese-manufactured transformers would be necessary to build the administration’s zero-carbon grid.

Demand for transformers is growing worldwide as low-income countries develop their power grids and wealthier ones go green. The U.S. now finds itself in the difficult position of having to compete with other countries for transformers and electrical steel at the same time as the Inflation Reduction Act subsidies supercharge demand.

But forget about building out the grid. We can’t even maintain the one we have. An Energy Department report last year warned that most large power transformers will soon need to be replaced. The average age is 40 years, and normal life expectancy under ideal conditions is 20 years. Aging transformers “cause higher failure risk,” the report notes.

Altogether this means the risk of blackouts is increasing—not only owing to shortages from unreliable renewables but also to failure of aging equipment. Distribution transformers are often damaged in natural disasters, and utilities say the lack of replacements delays power restoration after outages.

The Biden administration plans ensure that such problems can and will get worse. The Energy Department in January proposed efficiency standards for distribution transformers that would require an “amorphous steel” not readily available in the U.S. Climate activists lobbied for the new standards because they say more-efficient transformers will reduce power losses and the need for fossil-fuel generation.

That’s debatable. What isn’t is that the standards “would upend the market and manufacturing process” for electrical equipment, as automakers, utilities and home builders noted in a May 22 letter to Mr. Biden. As a result, “plans to expand domestic steel capacity and manufacturing of critical electrical equipment, such as transformers, are now in flux.”

Last week 47 senators—including 13 Democrats such as Pennsylvania’s John Fetterman and Wisconsin’s Tammy Baldwin—wrote to Energy Secretary Jennifer Granholm warning that her proposed rule “could put the administration’s electrification goals at risk by exacerbating an existing grid vulnerability” and threaten national security.

Mr. Biden’s climate policies are working at cross purposes, which might be comical if the consequences weren’t so grave.

Public pensions and proxy advisers try to punish the company using corporate governance as a pretext

By The Editorial Board

It wasn’t long ago that Toyota’s hybrid vehicles were all the rage with the climate-change left. Now progressive investors and government pension funds are targeting the Prius manufacturer in a proxy campaign because it has questioned the climate lobby’s electric-vehicle orthodoxy.

Toyota discloses its CO2 emissions and has pledged to make all its vehicles carbon neutral by 2050. This should please the climate crowd. Yet progressive investors are seeking to oust Chairman Akio Toyoda and are pushing a resolution at its June 14 shareholder meeting to make the world’s largest auto maker disclose its climate-related lobbying.

News reports say the California Public Employees’ Retirement System (Calpers) and New York City’s public-worker pension funds have voted against Mr. Toyoda’s re-election, and the proxy advisory firm Glass Lewis has recommended that shareholders do so as well. They say Mr. Toyoda deserves the boot because Toyota’s board isn’t sufficiently independent of management.

But Toyota’s corporate governance model is old news. The sudden concern suggests it is merely a pretext for punishing Mr. Toyoda for the heresy of doubting the West’s hell-bent EV transition. He made news in December when he claimed that a “silent majority” in the auto industry “is wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly.”

He also emphasized that battery-powered EVs “are not the only way to achieve the world’s carbon neutrality goals.” Toyota is promoting its hybrids and plug-in hybrids as alternatives to battery-powered EVs. Plug-in hybrids contain an internal combustion engine that can kick in when the battery runs low, which alleviates range anxiety. They are also cheaper than EVs.

A Toyota memo to auto dealers in April explained the challenges to full electrification. For instance, “most public chargers can take anywhere from 8-30 hours to charge. To meet the federal [zero-emissions vehicle] sales targets, 1.2M public chargers are needed by 2030. That amounts to approximately 400 new chargers per day.” The U.S. isn’t close to meeting that goal.

Toyota also noted that “more than 300 new lithium, cobalt, nickel and graphite mines are needed to meet the expected battery demand by 2035,” and they could take decades to develop. “The amount of raw materials in one long-range battery electric vehicle could instead be used to make 6 plug-in hybrid electric vehicles or 90 hybrid electric vehicles.”

And here’s an even more striking statistic: “The overall carbon reduction of those 90 hybrids over their lifetimes is 37 times as much as a single battery electric vehicle.” These inconvenient truths undermine the climate religion and government mandates.

Speaking of which, progressives have attacked Toyota for lobbying against aggressive EV mandates. Toyota backed the Trump Administration’s lawsuit against California’s stringent emissions rules. It also pressed West Virginia Sen. Joe Manchin to oppose a $4,500 tax credit bonus for union-made EVs. Toyota isn’t unionized and has a large plant in West Virginia.

The shareholder campaign against Toyota shows how public pension funds and the proxy advisory duopooly of Glass Lewis and Institutional Shareholder Services (ISS) work in concert to exploit corporate governance to push progressive political goals. ISS, Calpers and New York city’s pension funds have all backed the shareholder resolution calling on Toyota to disclose its climate-related lobbying.

Mr. Toyoda deserves support for speaking the truth about EVs, and it’s a shame he’s the only auto leader with the courage to do it.