A BIG HURDLE FOR THAT WAS ENGINES. THEY NO LONGER NEED ENGINES TO COME HERE. THEY HAVE BATTERIES, THEY HAVE MOTORS, AND THEY COULD GET HERE MUCH MORE QUICKLY. >> THANK YOU, MICHAEL. >> IT'S SO FASCINATING. SO, NOW THEY CAN -- EVEN IF THESE TARIFF'S ARE SUCCESSFUL IS THERE A WORLD WHERE THEY COULD BACKFIRE ON THE U.S. AUTO INDUSTRY'S LOANS ON THE PUSH TO ALL ELECTRICAL DRIVING CONSUMER RESENTMENT BEHIND VEHICLE PRICES? HE IS FOUNDER AND CEO OF CAR DEALERSHIP GUY. IT'S GREAT TO HAVE YOU HERE. WHAT'S YOUR TAKE ON ALL OF THIS? IT'S KIND OF THE POINT MICHAEL WAS MAKING. IF THE WORLD IS GOING IN THIS DIRECTION OF CHEAP CHINESE EV'S THAT ARE EVIDENTLY OF FINE QUALITY. WHAT HAPPENS IF THE U.S. IS NOT PART OF THAT? >> ON ONE HAND THESE TARIFF'S ALTHOUGH THERE IS NO CHINESE CARS BEING REPORTED TODAY THEY DO PROTECT U.S. JOBS. THAT'S ONE SIDE OF IT. THE OTHER SIDE OF IT YOU CAN SAY IS IT'S ACTUALLY INFLATIONARY FOR CONSUMERS. IT DOES NOT BENEFIT CONSUMERS AT ALL. IT'S NOT HOW A FREE MARKET SHOULD OPERATE. IF YOU REALLY THINK ABOUT IT I DO AGREE WITH MICHAEL THAT LONG- TERM CHINESE CARS ILL ENTER THE UNITED STATES. I SPEAK TO LOTS OF DEALERS, AND IT SEEMS LIKE EVERYONE IS CONCERNED ABOUT MEXICO. THAT SEEMS TO BE THE BIG FOCUS ON WHAT HAPPENS. BYD IS BIG IN MEXICO ALREADY. WHAT HAPPENS IF THOSE TRYING TO GET VEHICLES INTO THE U.S. THAT WAY. IN THE SHORT TERM IT SEEMS MORE REASONABLE THAN POSSIBLY IMPORTING DIRECTLY FROM CHINA. ESPECIALLY, GIVEN TARIFF'S. >> HERE'S MY QUESTION. FOR THE LAST FOUR YEARS LET'S CALL IT. MAYBE THREE TO BE REALLY FAIR. WHEN THE U.S. UTO INDUSTRY WAS REALLY FOCUSED ON NEW EV'S, AND NEW MODELS. THE FORD F-150 EV IS $100,000 VEHICLE. WHY DID NOBODY MAKE A $20,000 ENTRY-LEVEL EV THAT COULD'VE PERHAPS FORESTALLED THE ARRIVAL OF THIS CHINESE COMPETITION? >> IT'S INTERESTING YOU $700,000, BECAUSE I BELIEVE THAT'S HOW MUCH FORD IS LOSING ON EVERY EV THEY SELL ON A NET BASIS. SO, IT'S PRETTY BAD. TO ANSWER YOUR QUESTION WHAT HAPPENED WAS WE HAD A DECADE OF LOW INTEREST RATES. VEHICLE PRICES CREPT UP. SO LANTUS IS A NOTORIOUS EXAMPLE WITH INCREASED PRICES FROM 2019 ALL HE WAY TO 2024 BY ABOUT 50%. WHAT YOU HAD WAS OU HAD THIS DECADE OF ZERO INTEREST RATES. PEOPLE ARE FORDING MORE EXPENSIVE VEHICLES, AND CHEAP VEHICLES WERE SIMPLY NOT A THING ANYMORE. AMERICAN CONSUMER GOT HOOKED ON LUXURY VEHICLES, BIGGER VEHICLES, MORE OPTIONS, MORE FEATURES. GUESS WHAT? INTEREST RATES ARE NOT ZERO ANYMORE. TODAY I TWEETED YESTERDAY ACTUALLY THAT THE INTEREST RATE ON A CAR TODAY IS A NEARLY 10% ON A NEW CAR. THAT'S A 20 PLUS YEAR RECORD. YOU'RE IN AN ENVIRONMENT WHERE CONSUMER EXPECTATIONS NEED TO RETRACT. PEOPLE CAN'T AFFORD THIS. BUT, WE FELT UP TO THIS POINT IN THE ECONOMY. SO, YOU HAVE A REALLY PROBLEMATIC ENVIRONMENT WHERE THE VEHICLE PRICES ARE A LOT HIGHER THAN PEOPLE CAN AFFORD. >> EXACTLY, AND PERHAPS PART OF YOUR ISSUE TO YOUR POINT IS IS IT TRUE THAT AUTOMAKERS INCLUDING TESLA CAN'T PRODUCE A $20,000 RIVAL TO CHEAP CHINESE EV'S WITHOUT. SHOULD WE SUBSIDIZE THEIR ABILITY TO DO SO? SO, THEY CAN ORGANICALLY STAY AHEAD OF WHAT'S COMING? >> YEAH, IT COULD BE. THERE HASN'T BEEN A LARGE FOCUS ON IT FOR THE LAST SEVERAL YEARS, DECADE REALLY. SO, NOW THE MARKET IS STARTING TO REALIZE SOME CONSUMERS WANT TVs. MANY MORE WANT HYBRID. MAYBE WE SHOULD RETHINK OUR STRATEGIES, AND FOCUS ON WHAT THE CONSUMER WANTS. WE OVERBILLED SUPPLY FOR THE LAST FIVE YEARS WHEN IT CAME TO EV'S, AND WE GOT AHEAD OF OURSELVES. NOW, WERE GETTING BACK TO BALANCE. TIME WILL TELL. I THINK THE MANUFACTURERS ARE REALIZING IT'S A DIFFERENT ECONOMY. I DON'T KNOW IF ARE GOING TO GO TO CHEAPER CARS TO BE HONEST WITH YOU. I THINK WHAT'S MORE LIKELY IS GOING TO SEE HIGHER LEASING PENETRATION WITH CONSUMERS, AND ALTERNATIVES TO TRADITIONAL FINANCING. THAT DOES LOWER YOUR PAYMENT TO 15, 20%. THAT'S BEEN THE BRIDGE FOR CONSUMERS. >> SO, YOU KIND OF ANSWERED MY QUESTION. BUT, I'M GOING TO ASK IT ANYWAY. YOU TALK TO A LOT OF CAR DEALERS. WHAT YOU DEALERS TELL YOU ABOUT THE CURRENT MARKET? AND WHAT ARE DEALER SELLING THE MANUFACTURERS ABOUT WHAT CUSTOMERS WANT? >> DEALERS HAVE BEEN VERY VOCAL TO MANUFACTURERS THAT THEY HAVE OVER SWUNG THE PENDULUM WITHIN THE EV MARKET. RIGHT? I WANT TO BE VERY CLEAR. I THINK THERE'S PHENOMENAL EV'S ON THE MARKET, AND IT'S A GROWING MARKET. BUT, THE PENDULUM SWUNG TOO FAR. WE OVERBILLED SUPPLY OF THE EV'S THAT PEOPLE DON'T WANT. MANY OF THESE ARE -- FRANKLY, TESLA HAS BEEN THE LEADER. BUT, EVEN THEY HAVE DROPPED
