Where Credit Is Due, DTC EV Makers Looking More Like Their Older Siblings

Paul Daly: 0:32It's that day again.Well, it's Tuesday is that day again, it's June 20. I have Jordan Cox in the studio for the second time we got some segways got some conversations, and we got a fun show for you today. So hopefully, you got your Jordans getting a behind the scenes look at what actually happens before the show rolls in the morning.

‍Jordan Cox: 0:52

My favorite part and let

Paul Daly: 0:55

off it often good.Well now you know why when Kyle and I roll into the show in the morning, we already have kind of like some like pre charged energy. Yeah, because we come in and usually like one of us will get here and then like Nathan's on and he's got the show up and then the other person will arrive. And somebody will be like, hey, guess what I saw? Or you know what I was thinking and, and today Jordan rolls in because I was I was given him I was given you yesterday. I was I was complimenting your shoe, but he rolls into the show people the shirt.

Jordan Cox: 1:23

Oh man, this is it.This is it.

Paul Daly: 1:26

Okay, tell us about where that come from bootleg merch

Jordan Cox: 1:30

so here's what I was thinking was I wanted to be a part of the more than cars premiere so bad. And I wanted to get some merch so bad that I actually went out to target bought a shirt, and then made some special graffiti stuff on it right? In a very special style. So man, check that out.And this let me show you maybe this will be available one day,right? Look.

Paul Daly: 1:49

Let me just show you something.

Jordan Cox: 1:51

Oh, let's do it.

Paul Daly: 1:54

So you're never troublemaker unless you have some spray paint handy. Right?You got the fear. If you're listening to the podcast, we got a little ASMR we got sprayed.Look. It's got spray paint, too.So listen, there's there's an element of spray paint that is just a part of my DNA. Our very first asoto event with the swag boxes we had we literally had like 100 Swag boxes, we've laid them out. We made stencils for them. And we literally spray painted them. No kidding. They were so cool. I remember some some of the guests would be like, I've never thrown this thing out. It was so cool. So thank you for harnessing the spirit and energy of asoto. But bringing some rattle cans on the show. Hey, we want to thank our friends at Automotive News, by the way, because the print edition of last week was our issue came in and we looked at it and they featured more than cars in the print issue. So and that's the kind of collaboration and that's the kind of support that we know exists in automotive like there really, I can't think of another industry where so many people and so many like operators share secrets,they celebrate one another's wins. And that really is the essence of what we're building with the asoto community. And thank you for our friends at Automotive News. Putting that in the print edition. Again, thanks to Jim Fitzpatrick also in CBT,for featuring more than cars more than cars. We filmed the second episode last week. And really it is just an initiative to tell the inspiring stories that happen inside dealers everyday Jordan, you have like a front row seat to these things.I'm actually kind of jealous of that.

Jordan Cox: 3:24

Well, the cool thing is like you are a part of it every day. So you actually are part of the production part of it, the shooting the post production and it's cool where I get to see it with like that fresh perspective. So I love that because I get to sit down and watch those kinds of premieres. And I'm really looking forward to episode two when you guys were at Beaver Toyota, I mean, Patrick and Bob and the team over there. They're known for man just putting their employees first so that their customers will also be put in front of their employees. You pour to your employees they pour into their customers, but

Paul Daly: 3:54

I'm sure we got a lot of people saying hi, Joanna.Good morning, Brian Ortega. Good morning, Charles. We can go You're the man Charles is the first one. I think the send us a picture of the article that was in there. Thank you. Charles.Adrian says morning Hello from Florida. Even though it's raining you're not going to get any sympathy from the people in upstate New York it is yeah, but we love you guys. Thank you for being here on the Livestream.today. Let's talk about some news. What do you mean let's do it. This would be great to hear.All right, we got some fun ones.Today. In an attempt to clarify evey battery sourcing guidelines. The National auto Dealers Association, nada and the Alliance for automotive innovation are urging the US Treasury to adjust its definition of what it says when a vehicle is quote unquote placed in service. They're arguing that the current interpretation limits the effectiveness and application of the Evie tax credits that we've been hearing so much about the proposed changes aimed to ensure that the EVS remain eligible for credits even if the year passes so or if the year moves on. So let me give you a sample so EVs right now, the credit it says when the vehicle is delivered is when the credit can be issued.However, this nada associate and the Association for automotive innovation are saying, actually the credit should be when the vehicle tied to when the vehicles actually manufactured.So Joe Manchin, the Democratic senator or a congressperson from his senator, Senator, I cannot figure this out. He's a senator.Right? Yes, yeah. He detailed his concerns over the handling of the tax credit also wants it's the change, arguing that the Treasury has seared quote,seriously misconstrued the plain language and clear purpose of the critical minerals, and battery component requirements.So if you're trying hard to keep up, it's because it's complicated 24, batteries manufactured by what they call excluded entities, which could include companies controlled by,for instance, China, starting in2024, they will no longer be eligible for the credit,starting in 2025. There are quote unquote, critical minerals that also have to be, you know,sourced from the US or approved entities, and or you can't get the credit. And so all nada and these companies are saying, Hey,we're making all these EVs.We're manufacturing them,according to guidelines in 2023,when it so if the vehicle was manufactured in 2023, it should still be eligible for the credit, even if the calendar date passes to 24. Did you keep up with all that?

Jordan Cox: 6:32

I think so I might have to take some notes on it.But man, so it's interesting because they have this incentive setup so that more consumers buy these EVs. But now you're seeing the switch to actually be you know, it's a benefit to the manufacturer. But now they're almost classifying it more like a manufacturer incentive, which,that's a good thing manufacturers, they want to be able to produce their number of vehicles, it used to be half a million at one point, it was a million also, to qualify for that. And I think it's a big thing that they will now know which vehicles qualify for that based on when they're produced.It's also cool now because now that incentive will actually be tied to the VIN, which it really never was tied to that way before. So it's at that level,which is amazing. So I think that's a big win for manufacturers. So they have a little bit clearer perspective on that. There are some big manufacturers out there, whether it's GM, whether it's Nissan,whether it's Tesla or whether it's Rivia. All

Paul Daly: 7:26

set and Spike, big way. Speaking of verdient we got this little thing who's going to bump set and a spike on the segways today I love it. These These next two are fun in a move that sounds awfully familiar to those of us in the retail auto industry electric vehicle startup rivian has launched in in person shopping event on a parking lot as it invites buyers to its factory parking lots to browse by drive vehicles and actually buy them and take delivery off the lot as it struggles through this elevated inventory level that it has of its AR T one pickup truck. So the company is actually literally calling it the quote unquote rivian dealership where customers can look at you know,probably between 30 and 5050trucks available for immediate purchase. It's a sale it's happening on Saturday, and they have a lot of the variants of their Ford Motor R one T pickup with their biggest battery pack starting at a very affordable entry level $87,000. If you want the rivian SUV, you still are on a really long waiting lists like a year and a half. And Stephanie Brinley, the principal auto analyst at s&p Global Mobility says they don't want to try the dealer path, she says but they are getting to a point where demand isn't gone. But electric vehicle makers are having to work harder for customers. This is my favorite part of the quote. You do have to sell vehicles Believe it or not. No way 70 Brittany's are people, I don't know her but she's our people.

Jordan Cox: 9:05

We know Paul, it's interesting how the rivian now you can actually see them before you buy it. Before it was always the the web version, the ecommerce version. And Paul Paul, have you ever driven a rivian? No. Have you been in one? No, really? So

Paul Daly: 9:21

but that's the only EVs I've driven. I've driven a Ford Maki. I've driven a Tesla Model three, and Tesla Model y.

Jordan Cox: 9:29

Yeah, that's that.Yeah. So I had the chance to be in a rivian r1 t about man's maybe nine or 10 months ago. It was last year some time. And it was a friend of mine that had it. He took me for a ride and I was like, Oh my gosh, this is amazing. But it's different.When you get to sit in a vehicle, feel it touch it. I don't know if we're going to be doing test drives out there at the factory. Probably pens,really, but they will. Okay, so that'd be cool. That'd be very cool if they do because you can experience that drive feature.It's nuts.

Paul Daly: 9:58

Stupid to have everyone on I mean, have somebody everybody there, you can't drive it, but you can buy it like that doesn't that doesn't feel right to me. I like the fact that it's like, not only, like moving toward the dealership model, calling it a dealership model, but it's even like another level of old school because we're going like to like parking lot sales. Yeah, right?Back old school, but the 80s,right. It's like super old school, like the wacky waving guy is gonna be there as you put balloons on the trucks, right?Like, get a tent where the sales guys are on the point in a golf cart. And like, we could just really go for it. Here's, here's a question I have. And I'd love to know the answer to this is that when someone is engaging the shopping process, while on site, they're at a lot. Sure.What process are they going use?Are they going to open the app and ordered through the app? Is there any kind of continuation like start on line and continue at the lot? I bet there's not a bet there's not. But I be really, I'd be really interested to see how they process the transaction right there on the spot, because they don't have anywhere else where they do that. I don't know. Do you know if they can sell trucks right out of their little showroom things that they have in their retail storefronts?

Jordan Cox: 11:04

Well, it's tough,because think of what they're doing at the retail storefronts right now, the way I understand it is you have to go through their app process order online,things like that. It's just there. So you can kind of like touch and feel it. That's my guess. And my guess too, is that they're not going to have an online or I'm sorry, in person process that there's their factory, just because of the laws surrounding that direct to consumer model without going through like a franchise dealer.That's, that's my guess. Now, if you look at other manufacturers of what they're doing, it's all online. Just like Tesla.

Paul Daly: 11:38

I know you're setting me up for others, what little there was one little thing that I wanted to add to the show last? I know, I know,

Jordan Cox: 11:47

we'll do a reset up.How's that says, Oh, okay.

Paul Daly: 11:51

We'll do another one.I was in a Mercedes retail experience center. And when we were near beaver Toyota, last week, I was in Georgia. And it was like a shopping center that had, you know, restaurants and a little bit of retail and there was a Mercedes Benz store. And they had some really cool like custom swag in there. And they had a couple What's that new electric vehicle they have? They have this, it's really was really fancy. It was about 100grand. But what the heck was it called there was like an SUV version and a sedan version.It's escaping me at the moment.But either way, you couldn't buy the vehicle in the store. You couldn't even really shop for the vehicle in the store, which was a strange thing that didn't have like an iPad app where you could like configure it and and look at options. You could sit in the car and they're like, Oh,the associate several that go sit in it take take a look. It was really cool. And it was nice to sit in the car. And here,here's a little opportunity,having a phone put this out there. But do so I of course, we start asking questions like, oh,well, what happens if somebody wants to buy one? And they're like, Oh, well, you know, we can schedule an appointment for you at the dealership. And then of course, the next question is like, Oh, really? What are you commissioned on that? Or? You're like, they get $15 If they set an appointment at a dealership,and if that $108,000 car sells,which I'm sure has a market adjustment on it. Sure. They get$75 Oh, my word. So they're getting away. They're getting away with murder over the dealership. So

Jordan Cox: 13:15

So Paul, but like GM is the same way? Have you heard how they agree that they're going to be paying salespeople on the new GM EVs that are coming out whether it's the bone up or the ones in the future?No, tell us? Yeah. So here's how this works is that it's going to be the MSRP asking price is the same exact as the invoice price.So the dealer profit is actually zero on that deal. And then what's going to happen is GM is actually going to pay that salesperson directly, then they're also going to pay that dealer directly to

Paul Daly: 13:42

so it pays the salesperson directly. Yes, it's because you're gonna get like a W two or a 1099. From GM.

Jordan Cox: 13:49

Oh, yeah, you're right. So I need to rephrase that. So the the funds will come from GM, but will still be filtered through the dealer.

Paul Daly: 13:55

So the dealer gets a thing and the salesperson gets a thing.

Jordan Cox: 13:59

Yes, and it's already set. So the salesperson is gonna get, you're not gonna believe this $100. Then if they sit, I know, look at that big eyes, right. And if they help them set up that charging process, because they can opt into charging, they can opt into OnStar, they'll get an incentive another of another $50. And then the dealer gets paid something during that calendar month of about 1%. And then at the end of the quarter, they'll get paid for that entire quarter of about2%. So the tire, so 3% of total.Exactly. If I remember those right, and it's kind of nuts how that works, because it just seems like they're trying to make it a little bit more complicated and complex. And they really want to control the Commission's going out as well as what the dealer is paying.

Paul Daly: 14:44

They want to control the pricing really is what it is they want to make sure there's no incentive or ability at all to change the price of the vehicle. Exactly what else speaking of changing the price of a vehicle. I felt the plane was circling the runway. In a move that appears much more like a traditional OEM, I'm sensing a theme lately, Tesla is providing an $8,000 discount on its Model S and Model X vehicles as well as get this three full years of free supercharging for deliveries made by June 30. At the end of this quarter, as it wants to make the end of quarter look great. It's got obviously investor meetings and earnings,they want to lower their inventory and show that they can move the inventory that they made, they've been known to offer special discounts and incentives. At end of quarter,they recently offered three months of free supercharging for model threes. But obviously,their model s inventory is is very high compared to what it was last quarter. And the Model X is always something that kind of ebbs and flows very expensive vehicle, the free charging could be worth somewhere in the vicinity of several $1,000. If you think about that over three years, that's that's real money.And the $8,000 discount on Model S and X are only available again, if deliveries taken by June 30. It's starting to feel a lot like the car business around here.

Jordan Cox: 16:03

Well, Paul, what's crazy, too, they're doing that push through the end of June,that tells you that they're trying to boost their quarter two numbers, in my opinion,they're trying to deliver for sure, again, like the incentive push on that that would be on top of I think of what they already have discounted whitespace off their MSRP

Paul Daly: 16:19

it is so like the model the Model S, if I remember correctly, I don't have the numbers here, but I believe the Model S is around $82,000Another really affordable grocery getter at 2001. It was as high as like 94. So you know,the eighth out it's definitely continued to be discounted and the supercharging on top of that, and you're absolutely right, they're trying to make quarter to look good. And one of the key indicators of that is going to be inventory levels.What they don't want to see is have have people saying like oh supply or supply is outpacing demand. So if they can lower inventory, it shows a much more balanced equilibrium between supply and demand. Well, there is no shortage of optimistic,energetic empathetic leadership in the auto industry. Jordan,thank you for joining me the last thought it's gonna get some let's do it.

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