A 10 Year Permit Process for EV Minerals, New Vehicles Sales Got Gains, a $30k EV Battery Replacement

‍SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:23

Hey, it's Thursday and Kyle. I can't believe it's September. September man. Good news is new vehicle sales seem like they might be coming back a little bit for Kia and Hyundai. A good way to start September

Kyle Mountsier  00:39

is a great way to start. And if I had, I want to make like a few calls today, you know, okay, because what do you mean? Like what's your prediction mission? I have predictions is what is not predictions but a few calls across the industry because I have a sneaking suspicion that there's a, there's a good amount of people that experienced some lift last month, like when I was talking to dealers mid month and things like that, that it was like, hey, things are looking things are looking pretty good. So I think yeah, yeah, that's at least that was my perspective and Okay, so it's like maybe five to seven dealers that I had a one on one conversation, but

Paul Daly  01:17

you know, a couple of dealers as well.

Kyle Mountsier  01:19

I know at least a couple just, you know, to tree to tree dealers two or three. Got Bob's

Paul Daly  01:24

Bob's used cars over there on the block. Yep. And Ralph's Ralph's rides around the corner and over to at least,

Kyle Mountsier  01:31

at least a guy across the street, he sold a few solemn rollem

Paul Daly  01:35

thinking 97 Honda Accord he got he's gonna, yeah, oh, well, today we're talking about. We're not gonna tell you we're gonna talk about one thing is the sales left, we want to tell you about a few things. What let's start with things that are happening in September. If you live in the Northeast school is going to start so we're a little behind our southern friends, like I started like three years ago. But school is gonna start, right we got a holiday weekend. The leaves are going to start changing ish ish. Because we have a little bit called asotucon.

Kyle Mountsier  02:07

Oh, really? Wow. I think there's some people coming to that we should go.

Paul Daly  02:13

It is really weird that we are in the same month of September. And I've been seeing some text messages and messages and talking to some dealers that we know, coming through as being like, Yeah, I know, like 20 more people that are coming, they just haven't bought their tickets yet. I'm like, That's so automotive. Right? Like, we're just gonna buy our tickets last minute. So look, if you're a dealer and you are coming, just buy your tickets, just buy your tickets, like food and headcounts and all those things, buy your tickets, we need to know who's coming, so that we can be ready for you. I mean, we're ready for you regardless. But you know, do us a solid, there is one really amazing thing that is happening that unfortunately call you and I won't be able to be a part

Kyle Mountsier  02:50

I'm so frustrated about it, you and I might have to go out on Sunday and do the same thing, or something.

Paul Daly  02:55

I know that sounds that sounds really good. But there's going to be a Rocky Run on Monday morning. And if I can't think of a way to start out an awesome like 36 hours with all of your peers and industry partners and brilliant people, it's going on the Rocky Run that's going to start at center city and City Hall. And we're going to go to the art museums about a mile so like everyone can can do this. And we're gonna go run the Rocky Steps at the end and just think of the photo ops, right car guys coffee, the SU certified solution, Ares,

Kyle Mountsier  03:26

Kevin Jones going out there with his dog. Actually, Kevin was kind of the one that was like, Hey, we should do this. And they were like, we're gonna do it. And then they were in Philly last week recorded a video all about what they're going to be doing like the energy is unbelievable, right?

Paul Daly  03:41

Yes, Joe just commented, yes, the live hotel block is sold out. But there are two more hotels one is like just a few blocks from the venue that has plenty of space. And also there's Doubletree by the airport, we have a really special rate, if you're going to like get in, get out on the cheap 139 room. Actually, the most expensive rooms we have are like 165, just because we did it right, like and they're nice rooms, too. And they're nice rooms. So if you want to go to the Rocky Run, oh, what's the best way to get to it? You got to go search Luke Ramirez on LinkedIn. And look at his last post. Actually, I shared it this morning because I was so excited about it. We're going to run the Rocky Steps Go run the Rocky Steps. Even if you're in Philly, go run the Rocky Steps even if you're not coming to the asotucon because I can tell you the view from the top of the steps is amazing. It is an awesome spot to get some pictures. Got some auto collabs episode streaming again. Today is today Doug Miller. Yeah, Doug. Is that's an excellent today. Yeah, that's Oh, man. We got two great ones coming up for you, Doug Miller, I'll tell you what, talk about someone who is just poised and experience from multiple industries and bringing that wisdom and he's telling some stories about exp. It's just great. It's just a great interview. Check it out. And Jocelyn, a new kind of new to the asotu crew. So you can come and meet her for the first time. That was actually I met her for the first time on this podcast interview. So you can check that out as well. But it's Thursday, it's September 1 and Kyle we have some new Who's to cover?

Kyle Mountsier  05:00

We got some news to get through and a lot of automotive stuff today. So a lot of times we've touched on what it's like we're just full on automotive. So if you're in the industry and you're like these guys, sometimes they talked about target. Not today. No target today.

Paul Daly  05:17

Yes. All right. So first one actually, this is Automotive News top store today inventory shortage is easing, as Hyundai and Kia see their first year over year growth since summer of 2021. So is Could this be the tides are turning key with the lowest day supply of vehicles according to Cox data set it set an August record with 66,089 deliveries signaling the company's lineup continues to churn at a high rate. s&p has

Kyle Mountsier  05:47

set a record a new car deliveries last month. That's incredible. I know. Yeah. August right. Oh, and August record August record, but I didn't

Paul Daly  05:56

realize it was a record. It's not just your for your growth. They

Kyle Mountsier  05:59

set a record, right? Yeah. So like for and to be honest, IKEA has been growing as a brand and people are getting, you know, the brand, they've expanded their model lineup, which, you know, they don't have like that full model lineup, like a Toyota or Ford or something like that. So anytime you're expanding a model lineup, and people are getting, you know, more attracted to the brand, you're gonna see growth, but to see that in an inventory shortage and acknowledging like, hey, look, we've got a little bit more stock coming in. Now, overall from from an overall perspective, so Hyundai and Kia obviously seeing growth, but we're seeing we saw growth overall last month. It looks like the the light vehicle percentage of growth has gone up over just over a percent and s&p Global Mobility last week. But and then like the contrast to that is s&p global said, hey, look, we are we're going to reduce our total overall sales growth, or sales in 2022, down from 14.6 to 14.1. So again, it's like, up over here, down over here. Down over here. I just think that there's it's it's tough, like there's not a consistent, measured approach, but it's, it's encouraging to see some automakers making some strides. It really

Paul Daly  07:21

is according to JD Power and LMC automotive August mark the 10th consecutive month, that retail inventory closed be low 900,000. So less than a million inventory units on like, round.

Kyle Mountsier  07:33

Now, here's my question, because I've been past a couple of dealers. I've talked to a couple of dealers, I'm like, wow, so okay. 900,000 divided by 17,000. Where are all those cars, y'all

Paul Daly  07:46

in transit?

Kyle Mountsier  07:48

I'm really wondering, like where no, that's retail inventory. I mean, the way I read that a little bit deeper, but like, the way I read that is that's units and like on ground at this point, which they're trying to use?

Paul Daly  08:03

No. I mean, well, I guess I mean, if, if the numbers are, you know, predicting like 13.1 To 13 point 3 million vehicles, I guess. 900,000 right now makes kind of sense. Yeah, assuming that's not a full month's supply. Right, a full month's supply would be about 1.2 million as far as like vehicles that are moving. So I guess it's less Yeah, I guess it makes sense. Right? It's, it's less than a it's like a 26 day supply or something? I don't know. I think that's it's all numbers. It's all numbers. But August was also the fourth consecutive month, when average instead of cumulative incentives average less than $1,000. So

Kyle Mountsier  08:44

thank goodness, keep them low.

Paul Daly  08:47

Man, let me they stay that way. Right. You know, if we were if we were, if there was like a Draft Kings, for automotive, I would certainly be betting on incentives going up at some point, it's generally at minus. You know, there was an extra selling day if you take out the Sundays in the month. So that may have been a contributing factor. But didn't know months are different. Anyone who runs a business and has payroll knows, like, sometimes four times a year, you get that five week payroll week, and you're like, Ah, man, I mean, look, everybody wants to be paid. But at the same time, when you're looking at the PA that p&l Like you're like, Oh, we're gonna we're gonna eke out a profit this month, and then that the payroll hits and you're like, well, at least everybody's happy. So, yeah, so that's a little recent news. I think it's good news. It's a great way to start September.

Kyle Mountsier  09:34

It's a great way to start September, we're seeing automakers make strides growing, growing retail volume. And, you know, September for for many dealers is still a very up month. You know, it's not that like October, or law. And so August, September are super out months. I'm encouraged going into this month. And I think I think we're going to hear those stories of dealers and automakers continuing to go up and we'll we'll keep an eye out as more Have these monthly reports kind of monthly and quarterly reports kind of roll

Paul Daly  10:03

it heck yeah man and then northeast and then any probably any snow like September October like kind of right up to Thanksgiving. Everyone's like it's go time it's go time so you know Winter's coming people are trading in the vehicles SUVs snow tires the whole thing's you know what snow tires are right? Yeah you live in Ohio

Kyle Mountsier  10:20

snow No, Ohio we don't do snow tires. You could have found out about snow tires like four years ago I didn't even know that was a thing that existed they got storage things all over the place store in

Paul Daly  10:31

your head. No. Do you know that in Canada, it is mandatory that you put snow tires? I know it's ridiculous I had no it's like it's like a certain day. Like if you don't have snow tires. How'd you get a ticket to get all the Mountie?

Kyle Mountsier  10:43

All Canadian dealers are like, Yeah, we're gonna be fine. When EVs come around. We change tires twice a year for people

Paul Daly  10:50

who got 68% of our revenue can be burning through those babies like crazy. Oh, I can measure it. Oh my god. We needed to pull out of that one we did. Now we're talking about snow tires in Canada, where we got 14 rivian have separately petitioned the US Department of the Interior to speed up the permitting process for Evie materials that are essential for domestic battery production. The letters urged the department to restrict the permitting process to no longer than three years because the current was like three years it sounds like forever. Well, the current process apparently can take up to 10 years. So if you thought meaning that you like wanted to put already is before the year 2032. So

Kyle Mountsier  11:43

that's 2032 so they would struggle I think I think that's the point that the year 2013

Paul Daly  11:49

Unless someone builds build a time machine I mean, I don't know if you've ever had a submit for like a permit for like you know, like to put a deck your house or something like that. You thought that took a while I can you imagine a 10 year permitting process I kind of just imagine the scene from What's that movie with all the animals Zootopia whether in the DMV, all the animals. You're like any Disney movie, any Pixar movie, Jungle Book, and so I just imagined the sloth in there. Right? Like, how may I? You just right, that must be that's what a 10 year permitting process must be like, if you want to open a mine. So today's This is a quote from Chris Smith, Ford's chief government affairs officer today's lengthy, costly and inefficient permitting process makes it difficult for American business to invest in the extraction and processing of critical minerals in the US. He continues in contrast, Canada and Australia have adopted mineral permitting policies, say that fast that enable producers to complete the process in two to three years while maintaining stringent environmental standards.

Kyle Mountsier  12:53

I mean, that's interesting. And I think it's necessary. And we're hearing reports that Australia is a massive mining field for the minerals needed for Evie. And so you know, I think like, if we're going to do this Evie thing, which in my leaves like we are, it's coming right, then we need to this just needs to be it's probably honestly, it's probably just a process that hasn't been focused on because it hasn't been necessitated. And there's

Paul Daly  13:18

one guy, right, it's

Kyle Mountsier  13:20

got one guy, one guy. It's like, okay, so what you're telling me is, you know, and so it's just, it's one of those things that we just have to get better at, and I can appreciate it. And you know, that that use of public funds for for resourcing. Like how to Geo Map and identify all the mineral deposits across the US was mentioned in this in this request. And so I you know, I think that, like if, if, if on one hand, it's like, Hey, by 2030 year by 2035, all all of the cars need to be EVs or certain percentage have to be then you got to play ball on the game of like getting us there, right? We can't just buy and then soccer has been famous for saying we can't just depend on foreign minerals for EBV protecting production. So I appreciate Ford and Rivia and kind of petitioning the US government to play ball here.

Paul Daly  14:12

Yeah, it's gonna be this man. It's just gonna be interesting. Have you ever seen an Eevee mineral mine? And they all look different? They all look but it didn't. It doesn't I mean, some what what subset? Well, sometimes they literally pump water from underneath salt flats, and they get it to the surface and it's like mineral rich water and then it kind of evaporates leaving the minerals, right? Which could be I mean, obviously could be a challenge in places where there's already a freshwater issues, but and then some of them just look like a giant like, it looks like Steve from Roblox made it. Right, right. I mean, it looks just like that.

Kyle Mountsier  14:52

I just, I'm just gonna, I'm just gonna lob this one out there and then we can move to the next one.

Paul Daly  14:56

Is there is there a pin in this grenade or is it like a softball pitch over the plate? What are you loving? Okay,

Kyle Mountsier  15:02

so my question is just you know for the for these minds are that are the things that are pulling all these all these minerals out? Are they electric are all

Paul Daly  15:14

EVs Kyle Kyle? They're all EVs. There couldn't possibly be anything bad about strip mining and acre of land to make one Evie battery at all.

Kyle Mountsier  15:23

Not at all. Not at all.

Paul Daly  15:25

We're good. Good. And who generates the electric? I'm just kidding. Let's just move on.

Kyle Mountsier  15:29

Speaking of Evie batteries segue

Paul Daly  15:34

that was the first. That was easily our first double segue where we both did something different. But they all they both made sense. And we got out it's like each story today we kind of like at some point start falling from the air and someone asked, we're in some kind of mood. We're in some kind of mood today. A $30,000 dealership quote for a battery replacement has been circulated around Facebook and other platforms, the replacements on a 2012 Chevy Volt, and it was indeed fact checked to be accurate by USA Today. The post reads a Chevy Volt with just 70,000 Miles needed a new battery and some coolant. Forget the coolant. That'll be $30,000, please. And it was confirmed by Gary Herrmann Service Director of Roger Dean Chevrolet in Cape Coral, Florida. As he explained, hey, the battery is out of warranty. It's been discontinued by GM. And we had to pay a whole lot to get the battery from a third party supplier. Like we don't set the prices. We just found it for the customer. So I mean, so the original 2012 cost of a Chevy Volt 39,000 That's I mean that drivers

Kyle Mountsier  16:42

average. Yeah.

Paul Daly  16:43

Oh my gosh, right. Oh my gosh.

Kyle Mountsier  16:45

I mean, the value of that car now is probably six grand. Right? Like real? Maybe realistically, no, it? No, it's an awkward battery.

Paul Daly  16:53

It needs $30,000 in the trunk. If you're going to pay six grand for it. She got to put a new battery in. Right like that car is scrapped, man. That's a clunker. That is a clunker the battery places

Kyle Mountsier  17:04

like yeah, this is the product. This is like a thing that we've questioned for a long time. And we had this question when I was originally selling the leaf is like, you know, when When, when, when you've got new iPhone batteries coming out, it's like they don't they don't just take the old batteries. There's a whole recycling process that goes into this. But, you know, creating a standard for a replacement mechanism for these older vehicles. Because that's like, it's it's an it's an engine, but it's an engine that gets discontinued, essentially. And so it's it poses a major focal

Paul Daly  17:37

point, right, a single piece engine that gets discontinued, right? Yeah.

Kyle Mountsier  17:41

And so with average battery replacement already being high at around $6,300 For non discontinued items that are coming from the manufacturer stuff, you know, and then and then things like the maki battery costing as much as 20 grand, you know, I this is this is a this is a piece of like insurability, or battery warranty or financing. Yeah, financing these things have questions of like, what's the, you know, is everybody going to be forced to get into lease renewal or, or product turnover type scenarios? You know, I think about someone that, you know, I've known a couple of people that still got like an iPhone five, iPhone six, and religious people struggle to get anything done on that. And it's like, Yes, I gotta get a new phone, you know. But that's just a phone, not a car that gets

Paul Daly  18:32

well, I mean, we're optimistic that obviously the more of these are made, more batteries are made, they're gonna get standard is gonna be third party replacements and the whole thing is going to go and hopefully they find a way quickly to recycle materials. But the best way, obviously, is not to recycle materials. It's just make batteries that lasts longer. Yeah, there you go. It's just solving problems here this morning.

Kyle Mountsier  18:52

You know, I read through a lot of the comments earlier when this story came out, and I can't remember her actually found the story. It wasn't yesterday, USA Today. But you know, I think like as a as any dealership, as you start to run into these new problems in service that people haven't experienced before, is practicing a very high level of empathy, when you're communicating what needs to be done, how it needs to be done, the cost of replacement, because it's not just, Hey, here's your oil change. Here's your tire rotation. Here's your alignment, those conversations that you've been used to and the customers have been used to for a long time. So you have to exercise a whole nother level of empathy and education in order to move these conversations along and not show up on us to USA Today.

Paul Daly  19:36

Truth Well, we hope you have an amazing fully charged September 1 Today we're in the fight with you don't ever let anyone tell you it's a lost cause because it isn't get a lot of work to do though. And it's September airs, Chris. Feeling good

19:49

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