Rivian has officially launched its long-awaited R2 SUV after years of development and mounting market anticipation. Smaller and more affordable than its flagship R1, the R2 is positioned as a mass-market vehicle, with projected annual sales exceeding 50,000 units. But CEO RJ Scaringe is aiming beyond volume, emphasizing that the technology powering the vehicle matters as much as the vehicle itself. “We want people looking to say it’s the best car I can buy in that price range, and by virtue of that, it’ll draw new non-EV customers who have historically been on the sidelines, because the product that spoke to them,” Scaringe told a selected group of press, including Observer, at a test-drive event in Park City, Utah, last week.

Part of that appeal comes from Rivian’s A.I.-first approach, which the company believes will resonate with customers. Rivian has been building and training its own A.I., powering everything from its self-driving system, called Universal Hands Free (UHF), to proprietary datasets that help owners locate reliable chargers on road trips.

Like Tesla, Rivian’s system learns from real-world driving data collected from customer vehicles, meaning every R2 on the road improves the company’s A.I., and each improvement enhances the system’s autonomous capabilities. During the roundtable, Scaringe said Rivian is targeting Level 4 self-driving by 2028, a timeline more aggressive than most of the industry considers achievable. He argued this is possible because A.I. models are improving rapidly.

“I think the world is conditioned to say, yeah, sure, autonomy is a few years away,” Scaringe said. “But I think it’s actually finally true.”

While hands-free driving on divided highways is now common in modern vehicles, most systems do not extend to local roads (with the exception of Tesla). Rivian’s UHF system uses a multimodal sensor suite, including 10 external cameras and five radars, to provide a 360-degree view for safer hands-free driving. By contrast, Tesla relies on eight cameras and no radar or ultrasonic sensors for its FSD system.

Rivian’s system is smooth and confidence-inspiring on the road. It integrates with GPS to anticipate upcoming curves, helping keep the smaller SUV stable at speed. On highways, automated lane changes allow the vehicle to pass slower traffic, though that feature is not yet available on smaller roads.

On two-lane roads, the driver-assistance system handles curves well. Rivian says that with the rollout of UHF version 2 later this year, the R2 will be able to handle stop signs, traffic lights and off-highway lane changes. By the end of 2026, executives said point-to-point hands-free driving, where the car navigates a full route after a destination is entered, will be available to customers enrolled in Rivian’s Autonomy Plus program, which costs $2,500 for a lifetime membership.

Volume is critical to training Rivian’s A.I.

Yet Rivian’s autonomy ambitions depend on scale. Scaringe noted that fewer than five Western companies are building large A.I. foundation models trained on extensive real-world driving data—and Rivian is one of them. Every R2 and R1 Gen 2 on the road contributes to that dataset. Both vehicles will receive the same self-driving updates simultaneously, meaning existing owners are also part of the company’s training infrastructure. Rivian said UHF has already been used nearly 4 million times across more than 14 million miles since its rollout.

Rivian’s production plans reflect the scale needed to sustain this data flywheel. Its plant in Normal, Ill., which already builds the R1 and commercial vans, has added a third production line for the R2, bringing total capacity to roughly 160,000 units. A second plant under construction in Georgia will add another 300,000 units of capacity across the R2, R3 and additional vehicles built on the same platform.

The backdrop of a softening U.S. EV market

EV adoption in the U.S. has slowed since Trump regained the presidency due to a mix of cultural, political and economic factors. According to Cox Automotive, electric vehicle sales fell 27 percent year over year in the first quarter to 216,399 units. That’s also down 7.8 percent from the previous quarter, though an improvement over Q4 2025, suggesting the post-incentive drop is beginning to stabilize.

Scaringe argued the numbers reflect limited choice rather than weak demand. “More than half of the total EV market share is Tesla, across two products, one of which launched in 2016 and the other in 2019,” he said at the roundtable. “That does not reflect a market that’s being served in a healthy way. It reflects a market that has far too little choice.”

He added that U.S. EV adoption trails Europe by three to four times and China by nearly tenfold, where a broader range of options has driven mainstream uptake. The R2 is designed to close that gap, targeting buyers cross-shopping vehicles like the Toyota RAV4 and Subaru Forester—consumers who are not opposed to EVs but have yet to find a product that resonates.

If Scaringe is right, the R2 will serve as a critical test case. The company is betting that a high-tech, A.I.-first vehicle at a more accessible price point can bring genuinely mainstream buyers into the EV market. The next few quarters will show whether that bet pays off.

Ferrari launched its first all-electric vehicle, the Ferrari Luce, to a cacophony of criticism this week, leaving the storied brand stumbling. Following Monday’s launch, the stock dropped 8 percent and didn’t rebound until Thursday, when CEO Benedetto Vigna defended the Luce, saying that customer interest was “strong.” 

What made the response so unusually broad outside of automotive circles is a specific quality of the Luce’s design failure, according to automotive design experts. Ferrari has always sold desire across class lines, and people who could never own one still had a relationship with the brand, through posters, racing and the simple fact that a Ferrari looks like nothing else on the road. Yet the Luce flattened the aesthetic while keeping the $600,000-plus price tag, enraging not only its own fans but the broader public as well. 

The backlash even reached Ferrari’s own past. Luca di Montezemolo, the company’s longest-serving chairman in the post-Enzo era, reportedly told an Italian news agency that the Luce risks “destroying a legend,” and said he hoped Ferrari would remove the prancing horse badge from the car. Di Montezemolo ran the company from 1991 to 2014, and his public rebuke of a current Ferrari product is unprecedented.

Paul Snyder, a veteran automotive designer with decades of experience at major volume manufacturers like Ford and Honda, and currently the Paul & Helen Farago Chair of Transportation Design at the College for Creative Studies in Michigan, called the Luce “Shocking, because it just doesn’t look like a Ferrari at all,” comparing its proportions to a student’s first exterior clay model and arguing that it misses Ferrari’s two most fundamental visual reads: silhouette and surface. “There’s just no originality,” Snyder told Observer.

Derek Jenkins, SVP of Design and Brand at Lucid Motors, whose Lucid Air has been compared to the new Ferrari Luce,  made a similar distinction between the car’s exterior and interior. “The face of the car isn’t identifiable. This is where the response is coming from. It’s a mismatch with the brand,” Jenkins told Observer. He was more favorable toward the cabin, calling the steering wheel “both nostalgic and modern” and praising the switchgear and air vents as “thinking about the brand in a future context.”

Jony Ive’s design magic isn’t translating to sports cars

Ferrari contracted with Jony Ive and Marc Newson’s design firm LoveFrom for the Luce. The interior, unveiled last year, received mixed reviews for its analog and digital blend. The exterior design, however, has become the butt of internet memes. Ive is best known for designing the first Apple iPhone and working on the never-launched Apple Car, while Newson is known for his design of a concept car for Ford called the 021C. 

But just because Ive and Newson have designed beautiful and iconic devices and furniture doesn’t mean they can design a car. Industrial design and automotive design are two very distinct skill sets, as Snyder points out.

Snyder said that Ive’s work on the Luce would have scored “two out of five” on exterior evaluation criteria such as originality, proportion and appeal at the college, equating the exterior design to a middle-of-the-road sophomore project. “It doesn’t have any of the emotional factors or sculptural factors or the dynamism and verve that Ferrari should have,” he said.

“It really does look completely derivative of all the A.I. slop you hear about car design,” he continued, adding that if the aerodynamic wing over the front windscreen had been removed, the dramatic glass line Ferrari created at considerable engineering expense might have been something genuinely new. Snyder also noted that if the interior design language had been applied to a city car, or a smaller vehicle like a Cinquecento, it might have resonated more positively with audiences, but in a Ferrari, it makes no sense.  

CEO Benedetto Vigna’s risky pivot

The interior restraint reflects a deliberate approach that reportedly came from the top of Ferrari. In an interview with Autocar India published in April, CEO Vigna called it “bizarre” that people assume an EV must have many screens, saying Ferrari’s approach with the Luce is to bring together tradition and innovation. The company opted for tactile buttons, dials, and switches rather than following the industry trend toward touchscreen-dominated interiors.

Automotive analyst Stephanie Brinley at S&P Global Mobility argued that the market reaction is likely short-term. Ferrari operates at low enough volume that even a polarizing car can find sufficient buyers to be commercially viable. “It’s not the first Ferrari that people have scratched their heads about,” she said. “You can fix design with money and time.” The real risk, she said, is if the car sells poorly and Ferrari does not pivot. 

Vigna told a roundtable in Modena on Thursday that customer interest has been robust from new ultra-wealthy buyers, a group the brand has been trying to recruit for some time, with particular focus on China’s growing wealthy class, even though luxury automakers are struggling in the country because of the economic environment there and local competition. Whether Ferrari’s China audience will take to the polarizing design remains to be seen. 

Whether the market agrees with Ferrari’s design bet or with the rest of the world’s visceral response will be answered by Ferrari orders, not on the internet. Vigna noted that order numbers will be disclosed in July when the company releases its second-quarter earnings. 

Last month, Ford CEO Jim Farley told The Detroit News ahead of the Detroit Auto Show that vehicles like the Bronco, Raptor and Tremor have become major profit centers for the company. “The off-road business is very unusual because it’s extremely profitable, and the customers love the product, and it’s an enthusiast product,” he said.

Off-road vehicles and their derivatives have been a core profit strategy for Ford in recent years, and it’s not alone. Across the industry, off-road SUVs and trucks have become a financial engine for legacy automakers. They also help keep newer EV makers like Rivian and comeback brands like Scout Motors in the spotlight at a time when overall EV sales have cooled. Rivian founder and CEO RJ Scaringe frequently highlights the brand’s rugged design and off-road capability as central to its identity. Scout CEO Scott Keogh is betting that Americans’ renewed love for adventure-ready SUVs can revive the 1960s-era nameplate.

Off-road-looking vehicles are everywhere today. They fill grocery store parking lots and school pickup lines. But most log far more miles on pavement than on dirt. In many cases, today’s off-road trims are as much about image as they are about capability.

Among buyers who want an off-road appearance package, only 21 percent plan to take their vehicle off pavement for recreation, according to AutoPacific data. “The appeal of off-road trims is more about aspiration and image than any actual intent to go off-road,” Ed Kim, president and chief analyst at AutoPacific, told Observer.

To be clear, models like the Bronco and high-performance Raptors are genuinely capable off-road. The broader market, however, is saturated with rugged-looking packages. Shoppers can choose from trims such as Toyota’s Woodland, Honda’s TrailSport, Subaru’s Wilderness, Mazda’s Meridian Edition and Nissan’s Rock Creek, among others. Many add plastic cladding, all-terrain tires, unique wheels or more durable interior materials.

Those features can be useful. But they do not always translate into significantly improved off-road performance. Often, the changes are cosmetic, designed to project toughness rather than enable serious trail use.

That gap between image and use is where the business case becomes compelling. According to AutoPacific, off-road appearance packages such as Kia’s X-Line, Hyundai’s XRT and Nissan’s Rock Creek typically add about $1,000 to a vehicle’s MSRP. The cost of the added hardware to the automaker—often tires, cladding and minor trim changes—is relatively low.

“It’s an easy way to increase the margin on an SUV or truck,” Kim said.

The spread can be even wider on higher-end trims. The Toyota Tacoma TRD Pro starts at roughly $65,000, compared with about $32,000 for a base Tacoma. “That upgrade represents plenty of profit for Toyota,” Kim said.

For automakers, derivatives are far cheaper than clean-sheet designs. A new trim can draw attention and reach a different audience without the cost of developing an entirely new vehicle.

“The Bronco Heritage Edition is functionally the Bronco Big Bend with some white paint, a new grille and different wheels, at a premium of more than $10,000,” Sean Tucker, managing editor at Kelley Blue Book, told Observer.

He argues that the appeal runs deeper than features alone. “Many Americans see their cars as an expression of their personality. Settling into a car that makes you think of the outdoors can be an actual comfort, even if you’re mostly using it to commute to work,” Tucker said. “Automakers know that, and they make the obvious business decision of making more derivatives.”

SUVs have dominated the U.S. market for decades, buoyed by regulatory changes, aggressive marketing, technological advances and shifting consumer tastes.

The COVID-19 pandemic accelerated the trend. As indoor activities shut down, off-roading and overlanding gained traction as socially distanced pastimes. “There have been distinct increases in off-road lifestyle activities like overlanding in recent years,” Tucker said. Overland Expo estimates that 8 million Americans participated in off-roading in 2024, with 12 million expected to take part in 2025.

Like fashion, automotive design trends move in cycles. For now, rugged styling is ascendant. Even mainstream SUVs are adopting tougher-looking cues in their base models. Whether the aesthetic fades or evolves, analysts say the underlying business logic will endure.

“As SUVs continue to fragment, we’ll see more niches within the SUV umbrella,” Tucker said. “That ranges from on-road performance design to rugged off-road design, and everything in between.”

This week, Ford announced it will end production of the F-150 Lightning, the electric version of its best-selling pickup truck, and take a $19.5 billion write-down tied to its current and planned EV programs. The move marks a sharp reversal from commitments Ford made eight years ago to transition toward an all-electric future. Since 2023, the company’s EV business has lost more than $13 billion. The F-150 Lightning was designed to bridge Ford’s core truck buyers to electric vehicles. Instead, a combination of policy headwinds, overestimated demand, rising costs and weak marketing undermined the program.

At its launch in 2022, Ford promoted the Lightning with a video showing a prototype pulling a one-million-pound train. In practice, the truck is rated to tow up to 10,000 pounds when properly equipped, but doing so cuts its range roughly in half, from about 320 miles to 160 miles. The commercial “raised expectations of what they could do, and when people realized how much range is impacted by towing a large trailer, they were really disappointed,” Sam Abuelsamid, an automotive analyst and Vice President of Market Research at Telemetry, told Observer.

Abuelsamid noted that gasoline-powered trucks face similar range penalties while towing. “The Lightning is actually better than the gas version of the F-150 in pretty much every other way.”

Still, sales never matched Ford’s ambitions. The automaker had expected to sell 40,000 to 150,000 units a year, but even at its peak in 2024, it sold just 33,5100 units. By contrast, the gas-powered F-150 continues to sell hundreds of thousands of units annually.

Anticipating high demand initially, Ford relied heavily on components shared with other vehicles in its lineup to scale production quickly, which drove up costs and made the Lightning less efficient to build.

“Instead of ramping up capacity in short order, they should have invested in optimizing systems, which would have also benefited other electric Ford products like the Mach-E and e-Transit,” Abuelsamid said. “With so much underutilized capacity, the fixed costs were way higher than they should have been, which led to a lot of the losses.”

Timing also worked against the Lightning. When the electric truck debuted in 2022, Russia had just invaded Ukraine, disrupting supplies of nickel, a key material in EV batteries. Prices surged, and Ford passed those higher costs on to customers, raising prices and further dampening demand.

Ford pivots to hybrid and A.I. data centers

Ford is now trying to recoup parts of its electrification investment by introducing a hybrid version of F-150 and shift some battery production toward A.I. data centers.

Ford is promoting an extended-range electric vehicle, or EREV, which uses a gasoline engine to generate electricity for the battery. EREVs aim to ease concerns about charging time and range, but Ford hasn’t offered a timeline for an EREV F-150.

The company is also repurposing some of its EV battery plants into battery systems for data centers, a shift other battery makers have already made. LG Energy Solution took a similar approach at its Holland, Mich., plant, which was originally slated to produce nickel manganese cobalt (NMC) cells for electric vehicles. After acquiring GM’s stake in a joint-venture facility in Lansing, Mich., LG retooled the Holland plant to produce lithium iron phosphate (LIP) cells for grid storage and data centers.

“The data center bet, in general, is not a bad idea. Ford has a battery factory, and there is an absolutely huge demand for energy storage systems from data centers,” Abuelsamid said. “The difference…is in timing.”

For Ford, the transition carries risk. “Ford has a plant configured for producing NMC pouch cells that they now have to retool for LFP prismatic cells,” Abuelsamid added. “The revised equipment will probably be coming from China. That means they won’t be producing again until sometime in 2027 at the earliest, paying huge tariffs on the new equipment and risking the data center bubble bursting before then.”

Despite a sharp decline in global electric vehicle sales, Tesla has found an unexpected bright spot in Norway, a longtime leader in EV adoption that appears unfazed by the company’s tarnished brand image. Tesla has sold more than 26,000 vehicles in Norway so far this year, putting it on track to surpass Volkswagen as the country’s top-selling automaker, according to Teslarati.

Norwegian consumers are rushing to buy Teslas ahead of changes to the VAT that will make EVs more expensive. More importantly, Norway offers a glimpse of what Tesla can achieve in a fully mature EV market—though its success there also masks broader challenges in Europe and around the world.

Norway, which is not a member of the European Union, has long been at the forefront of EV adoption. A combination of higher-income consumers, ambitious climate targets and generous government incentives has electrified the country’s car market far more rapidly than the rest of Europe. As of May, more than 97 percent of new cars registered in Norway were electric, with Tesla leading the pack, according to the European Alternative Fuels Observatory.

Norway aims to be carbon neutral by 2030, ahead of the E.U. and U.S., which target 2050. To get there, the government has used tax policy to make internal combustion vehicles more expensive while eliminating or reducing VAT, registration taxes and road fees for electric vehicles. Norway has also invested heavily in charging infrastructure—a striking paradox given its status as Europe’s largest oil and gas producer.

The profits from that oil and gas production flow into the Government Pension Fund of Norway, the world’s largest sovereign wealth fund with $1.7 trillion in assets. That wealth has allowed the country to offset EV incentives and build out a robust public charging network, including widespread fast chargers along major roadways.

Tesla’s image problems—largely tied to Elon Musk’s politics—have mostly bypassed Norway, according to Reuters. The company’s long-standing presence in the country has “bred brand loyalty and insulated against blowback,” the outlet reported.

Tesla’s strength in Norway contrasts sharply with its performance elsewhere. In Sweden and Denmark, both E.U. members, Tesla registrations have dropped in recent months even as EV adoption rises. Some of the decline stems from heightened competition from Chinese and European automakers, while some reflects growing distaste for Musk’s politics and public behavior.

Across Europe, Tesla sales fell 28.5 percent in the first nine months of the year, according to Reuters. In China, sales slid to a three-year low, and in the U.S., Tesla accounted for only 40 percent of EV sales in October.

Norway offers a clear look at how an EV company can thrive in a mature electric market and what the next stage of the EV transition in the U.S. could resemble if incentives, infrastructure and vehicle pricing were aligned, though such a scenario remains highly unlikely under the current administration.

Earlier this month, electric carmaker Rivian unveiled a $4.6 billion compensation plan for its founder and CEO, RJ Scaringe—a package that has drawn comparisons to Tesla’s $1 trillion deal for Elon Musk. Like Musk’s award, Rivian’s plan hinges on a series of highly ambitious performance targets over the next decade, including lifting Rivian’s stock price to $140 (it currently trades around $15). In a softening EV market, and without the financial momentum or investor fervor that once buoyed Tesla, those targets appear particularly steep.

In an SEC filing, Rivian’s board said the package is designed to retain Scaringe as the company enters a “critical next phase” and prepares to launch production of its new electric SUV, the R2. The compensation plan doubles his annual base salary from $1 million to $2 million and gives him the right to buy up to 22 million shares across 11 tranches if Rivian’s stock hits specific price milestones. Scaringe can acquire an additional 14.5 million shares if Rivian meets profit and cash-flow targets before 2032. He can exercise his first tranche at $40 per share. Scaringe currently owns about 1 percent of Rivian. If the plan vests fully, he could add roughly 3 percent more.

Unlike Musk’s plan, Scaringe’s award does not require a shareholder vote, because it was issued under an already approved 2021 incentive program. Rivian’s board ultimately deemed the original performance goals as unrealistic, including a target that envisioned the stock hitting $295.

The Tesla story is hard to replicate

Much of Scaringe’s windfall hinges on the success of the new $45,000 R2 SUV and the smaller R3, which is expected to be priced in the mid-$30,000 range and has already generated significant consumer interest.

Rivian faces a very different landscape than Tesla did during its early ascent. Tesla benefited from low interest rates, abundant capital, and an early-adopter boom in EV enthusiasm. Musk also rode a wave of unique tailwinds—from meme-stock mania to rapid early profitability and a cult-like following—that helped him meet some of the lofty targets in his famously controversial 2018 pay package.

And a successful EV business is far from enough. Since reaching profitability in 2019, Tesla’s high stock price has been increasingly buoyed by optimism on its non-vehicle products, such as software and robotics.

Rivian’s non-EV prospect is less clear and appears to be reliant on external partnerships. Earlier this year, the company formed a joint venture with Volkswagen Group to develop a scalable “software-defined vehicle” architecture, with winter testing of a reference vehicle planned for early 2026. This technology underpins the upcoming R2 and R3 lines, which Rivian hopes will move the company into more affordable, higher-volume segments.

But Rivian’s financial picture remains strained. The company recently missed Wall Street earnings expectations, laid off 4.5 percent of its workforce in October, settled a $250 million lawsuit over R1 price hikes, and restructured top leadership. Although Scaringe is well-liked by Rivian owners, he lacks the cult-of-personality advantage Musk enjoys. Meanwhile, Rivian faces the same nationwide cooling in EV demand—exacerbated by cuts in EV tax credits—that is weighing on every major automaker.

Toyota Chairman Akio Toyoda has some explaining to do after appearing at a race event in Japan on Sunday wearing a “Make America Great Again” hat and a red T-shirt emblazoned with photos of President Donald Trump and Vice President JD Vance. The image quickly caused a stir, especially given that Trump’s tariffs have cost Toyota billions. His appearance came days before Toyota announced it would invest an additional $912 million in U.S. manufacturing.

Toyoda, a grandson of Toyota’s founder, Kiichiro Toyoda, wore the controversial outfit at the final event of Japan’s ENOS Super Taikyu Series. Toyota hosted a NASCAR demonstration at its home track, attended by George Glass, the U.S. ambassador to Japan, and featuring six NASCAR cars flown in specifically for the occasion. Glass and Toyoda led the cars onto the track in a Ford F-150 in an overt display of Americana.

“The photo opportunity was intended to underscore our company’s support for efforts that strengthen U.S. industry and create new opportunities for American vehicles in Japan,” Toyota said in a statement to Observer, without addressing Toyoda’s choice to wear the MAGA-themed apparel. 

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Toyota has invested roughly $60 billion in the U.S. over the past 70 years and now operates 11 manufacturing plants across multiple states—many of them pro-Trump strongholds, including Kentucky, Mississippi, Missouri, Texas, Tennessee, West Virginia and Alabama. Yesterday (Nov. 18), the company announced another $912 million investment in its U.S. operations, which will bring new jobs to Tennessee, Missouri, Kentucky and West Virginia.

Most automakers have fallen in line under the current administration as tariffs continue to squeeze profit margins at major auto companies. In its earnings release earlier this month, Toyota detailed the damage: operating income fell by $3.3 billion from a year earlier for the fiscal half-year ended September, largely because of tariffs. In September, the Trump administration lowered tariffs on Japanese auto imports from 27.5 percent to 15 percent—still a substantial burden.

According to reporting from Road & Track, tariffs were clearly on Toyoda’s mind at the Japan event, and many observers interpreted his outfit as an attempt to curry favor with the President. Toyoda told reporters, “I’m not here to argue whether tariffs are good or bad. Every national leader wants to protect their own auto industry. We are exploring ways to make tariffs a winner for everyone. The people we want most to be winners are our customers.”

It’s no secret that many auto CEOs are trying to stay in the good graces of the mercurial Trump administration through both visible shows of support and political donations. Ahead of Trump’s second term in office, Toyota donated $1 million to his inauguration. According to OpenSecrets.org, the company donated more money to Republican states and politicians than to Democrats between 2023 and 2024.

While Toyoda’s choice of garb was remarkable for the chairman of a global automotive giant, one thing is clear: the images serve as a stark reminder of how deeply politics are now intertwined with global automaking and how much is at stake for these enormous companies.

Tesla recently lost several key executives responsible for its most well-known electric vehicle models. Siddhant Awasthi, a rising star at Tesla who previously led engineering for the Cybertruck and, most recently, the Model 3, announced in a LinkedIn post on Sunday that he had left the company after eight years. Emmanuel Lamacchia, the program manager of Tesla’s most successful product, the Model Y, also revealed his departure on LinkedIn over the weekend after eight years with the company.

Awasthi, who began his Tesla career as an intern and quickly rose through the ranks, didn’t specify why he left, noting only that it wasn’t an easy decision given Tesla’s “exciting growth on the horizon.” He earned a master’s degree in engineering from the University of Cincinnati in 2017 and became program manager for both the Cybertruck and Model 3 within five short years. According to his LinkedIn page, Awasthi oversaw product strategy, quality improvements and supply chain management for the oddly shaped truck.

The Cybertruck has been plagued by problems since its 2023 launch and has largely been considered a commercial failure for Tesla. The company discontinued sales of the base Cybertruck model, which started at $70,000, in September due to weak demand. In March, the National Highway Traffic Safety Administration (NHTSA) forced Tesla to recall nearly all 46,000-plus Cybertrucks it had sold over an engineering flaw that caused exterior panels to detach while the vehicles were in motion. Last month, Tesla issued another broad recall affecting 63,000 Cybertrucks because of dangerously bright headlights.

It has also become a symbol of the broader rightward political shift in the U.S. since Donald Trump’s re-election last year. Dubbed the “MAGAmobile” and “Deplorean,” among other nicknames, the e-pickup has been tied to Elon Musk’s right-wing views, his close ties to Trump, and his involvement in the Department of Government Efficiency early in Trump’s second term.

Financially, Musk’s political leanings have hurt Tesla’s business, driving away many former fans of the brand. In October, Tesla reported its fourth straight quarterly profit decline, even as sales increased. Cybertruck registrations plunged 63 percent year-over-year in the third quarter, and Tesla has been offering steep discounts amid collapsing demand and the expiration of the federal $7,500 tax credit, which ended in September under the Trump Administration. To boost sales, some Tesla dealers have begun renting Cybertrucks through their showrooms, according to Electrek.

Despite ongoing struggles in its EV business, Tesla is setting ambitious goals for its A.I.-driven next chapter. Last week, shareholders approved a massive compensation plan for Musk that would incentivize the CEO to grow the company’s market value to $8.5 trillion by 2035.

Toyota has long been criticized for its cautious embrace of electric vehicles. But amid slowing demand, tariffs and the phase-out of tax incentives, the world’s largest automaker’s deliberate approach looks increasingly like a smart hedge.

The Japanese automaker reported yesterday (Nov. 5) that it sold 4.78 million vehicles globally between April and September, up 12 percent from the same period last year. That included 2.27 million hybrid electric vehicles, a record high. Still, U.S. tariffs took a toll: operating income fell by $3.3 billion from a year ago to $12.5 billion for the fiscal half-year.

Despite those geopolitical headwinds, demand for Toyota’s reliable passenger cars remains robust. CFO Kenta Kon told investors the company is struggling to keep up with demand, saying it can “barely cover the demand.” According to Kelley Blue Book, dealers typically aim to hold about 60 days of inventory on their lots. Toyota’s U.S. inventory, by contrast, is hovering around 30 days.

Toyota has long been hesitant to fully commit to battery-electric vehicles, but the company is a leader in the hybrid vehicle space, touting its more conservative, balanced approach to electrification as the right path forward. Battery-electric vehicles are only a sliver of Toyota’s global mix (just 1.4 percent of total sales in 2024). The long-term risk, of course, is that markets like Europe and China, which are racing toward a fully electric future, could leave Toyota lagging behind. 

The company’s best-selling model, the RAV4, will be offered only as a hybrid or plug-in hybrid beginning in 2026. Retooling factories for the new powertrains will require temporary shutdowns, potentially tightening supply even further. A slimmer dealer inventory could also push up vehicle prices for U.S. consumers in early 2026.

Toyota’s small steps toward software-driven cars

The next-generation RAV4 also marks another turning point: it will be Toyota’s first software-defined vehicle (SDV). While startups like Tesla and Rivian built their cars around software from the start, Toyota’s move represents a major step into that domain. The new RAV4 will feature Arene, a Woven by Toyota software platform enabling over-the-air (OTA) updates—an early signal of Toyota’s digital ambitions and a reminder of how far it still has to go.

In typical Toyota fashion, the rollout is cautious. The 2026 RAV4 will debut features that rivals have offered for years, such as a smartphone-like cockpit interface, conversational voice commands and OTA updates. But those updates will be limited to ADAS systems and cockpit displays, not the deeper vehicle functions that Tesla, Lucid and others regularly tweak via software. The strategy underscores Toyota’s effort to catch up with competitors, especially those in China, which have already made software a core part of their vehicles.

Toyota now finds itself straddling two eras of the auto industry: one built on mechanical excellence and another driven by software, connectivity and climate regulations. Its hybrid-first strategy has cushioned profits as global EV momentum slows and tariffs rise. But the clock is ticking. If Toyota can extend its hybrid playbook into the software-defined, electrified era it’s hinting at with the new RAV4, it may retain its crown. If not, the conservative approach that once protected it could soon become its greatest liability.

Honda has moved in and out of Formula 1 multiple times over the past 60 years, depending on the state of business. “Business is going good sometimes, and going bad sometimes,” Honda Global CEO Toshihiro Mibe told a roundtable of reporters, including Observer, in Mexico City last week, ahead of the F1 World Championship Grand Prix. “So, sometimes we quit [racing] to focus on the core business,” he said through a translator.

Next year, Honda will return to F1 as a standalone team in 2026, as F1 grows in global popularity and the Japanese auto giant navigates shifting consumer appetite for EVs, hybrids and internal combustion engine vehicles. As F1 grows in global popularity as the world’s most elite and expensive racing series, Honda’s comeback isn’t just about chasing podiums. It’s a calculated business move to merge performance, electrification, and brand relevance at a time when both automakers and consumers are redefining innovation.

Honda’s approach to racing has always centered on building brand recognition. The company began its racing journey with motorcycles in the 1960s, when founder Soichiro Honda believed that entering F1 was the only way for the small Japanese carmaker to be taken seriously on the global stage. At the time, Honda had barely begun building cars—let alone the powerful machines needed for F1.

Honda won its first F1 race in 1965 with the RA272, a car it brought back to Mexico City last week to commemorate the 60th anniversary of that victory. Red Bull driver Yuki Tsunoda took on the challenge of driving the vintage F1 car around Mexico’s 2.5-mile track ahead of the race on Oct. 26. Though the car stalled twice and needed a push out of the pits, it was a sight to behold.

In the 1980s, Honda established the Honda Racing Corporation (HRC) to focus on motorcycle racing and prove its engineering prowess. Its racing technology eventually trickled down to consumer bikes. In 2022, HRC absorbed Honda’s four-wheel racing programs, including IndyCar and F1, to “provide some stability” for car racing and investment, said Mibe.

Honda officially exited F1 at the end of the 2021 season to focus on EV development. But the company is now preparing a full-scale return in 2026 as the power unit supplier to the Aston Martin Aramco Cognizant F1 Team.

“The reason we decided to participate in F1 is that our business is concentrated in North America, and because of Netflix, F1 has taken off,” Mibe said. “With the new homoglation, and our strong relationship between F1 and the U.S., we can use that for our business.”

Honda’s largest market is the U.S., where it holds roughly 9 percent of the automobile market. This week, American Honda reported strong October sales, with total U.S. deliveries up 3.6 percent year-over-year. Growth was driven by demand for internal combustion vehicles, including the Accord and Passport, as well as electrified models like the popular CR-V hybrid. Notably, Honda sold a record 30,471 electric cars in October.

The race track is a sandbox for new tech

Racing has always been a proving ground for automakers to push the limits of technology. F1, known for its blistering speed, high thermal loads and extreme engineering precision, is an ideal environment to test advancements in everything from batteries to engines.

The demands of F1—extreme acceleration, punishing temperatures, and ultra-efficient energy recovery—push performance, packaging and durability to levels far beyond what consumers experience. Yet, many of those lessons eventually find their way into everyday vehicles.

Honda’s decision to return to F1 was driven in part by upcoming regulation changes, said Ikuo Takeishi, general manager of HRC’s automobile racing division. Beginning in 2026, all F1 power units must be 50 percent electric and 50 percent internal combustion, powered by sustainable fuel. That balance aligns with Honda’s long-standing focus on hybrid and battery technologies. At the same time, it underscores how Honda, like many major automakers, continues to rely on internal combustion technology amid headwinds for EVs and shifting consumer preferences.

“The technology we’re using in F1 won’t show up directly in consumer cars,” Takeishi said. “But much of what we learn on the track can show up in consumer cars,” he added, citing improvements in battery technology and efficiency gains from high-powered magnets.

Porsche’s billion-dollar loss last week isn’t just a setback for one of the world’s most profitable automakers—it’s a warning shot for the entire luxury economy. After years of record profits fueled by cheap credit and post-pandemic “revenge spending,” the German carmaker’s sudden slowdown shows that even the world’s most coveted brands are losing altitude as global demand cools.

The company reported a €966 million ($1.1 billion) quarterly loss and a 99 percent drop in operating profit for the first nine months of 2025, marking its first decline in years. Porsche blamed weak demand in China, slowing electric vehicle (EV) sales and rising tariff costs. It also announced a pause in its EV expansion and the departure of longtime CEO Oliver Blume from his role at Porsche AG.

Porsche has long been one of the crown jewels of its parent company, Volkswagen Group, which also owns Bentley and Lamborghini. The brand occupies a unique niche in VW’s lineup, combining exclusivity with scale. SUVs like the Cayenne and Macan transformed Porsche from a niche sports-car maker into a global luxury powerhouse.

Profits surged to record highs after the pandemic, buoyed by aspirational buyers who stretched into luxury purchases when credit was cheap and consumer sentiment was high. Now, as those forces unwind, Porsche is facing a reckoning.

Porsche’s China business, which once accounted for nearly 20 percent of its global sales, shrank by more than 20 percent in the first nine months of 2025, Bloomberg reported, amid weak demand and growing competition from local automakers like BYD and Xiaomi. (The company isn’t alone. BMW recently cut its earnings forecast, citing costs tied to China and U.S. tariffs. Aston Martin and Mercedes-Benz have also reported similar headwinds.

Porsche’s EV strategy stalls

Porsche has also scaled back its electrification plans amid sluggish EV adoption, even as rivals like Ferrari prepare to launch their first electric models.

The company had planned to electrify everything from the 718 Boxster to the Cayman. However, in September, Porsche said it had “realigned” its EV strategy after concluding that its previous goals were “overly aggressive.” The company had targeted an 80 percent electric lineup globally by 2030. Its first EV, the Taycan, faced software and battery problems, while the Macan EV—finally available now—was delayed more than a year due to software issues. Porsche now plans to focus more on internal combustion and hybrid models to offset EV losses.

Those EV challenges have weighed heavily on Volkswagen Group’s bottom line. This week, VW reported a $1.5 billion loss in the third quarter, in part due to Porsche’s revaluation of EV assets.

The company’s leadership shuffle adds to the turbulence. Blume, who has served as CEO of both Volkswagen Group and Porsche for the past three years, faced criticism over the dual role and its potential conflicts of interest. He will step down from his position at Porsche but remain CEO of Volkswagen Group, a post he has held since 2015.

Blume is expected to be replaced by Michael Leiters, formerly CEO of McLaren, who will take over Porsche’s day-to-day operations.

The luxury slowdown spreads beyond cars

The broader luxury sector is feeling a similar strain as global economic conditions shift amid geopolitical tensions, rising job losses linked to A.I., and growing backlash against conspicuous consumption.

Bain & Company recently predicted a “normalization” of the luxury market, writing: “The global luxury sector this year confronts its most far-reaching disruptions—and its biggest potential setbacks for at least 15 years—amid mounting economic turbulence and complex social and cultural shifts.”

Major luxury groups like LVMH have seen revenues tumble this year, while Interbrand’s Best Global Brands 2025 report found that the combined value of 13 personal luxury brands fell by 5 percent. On that list, Porsche’s brand value dropped 14 percent year over year.

Even though Porsche isn’t alone in its decline, the message is clear: even the most exclusive brands are not immune to shifting consumer behavior and tightening economic conditions. The question now is whether the power of a name—and the allure of luxury—can endure as the market for aspirational excess runs out of road.

After years of ambitious pledges and multibillion-dollar bets on the future of electric vehicles, legacy automakers are facing a cold market reality: consumer adoption has slowed, incentives have dried up, the political and cultural debate around EVs has grown more partisan, and Wall Street’s patience is wearing thin. Just this week, General Motors took a $1.6 billion loss on its EV unit because it had built more production capacity than it currently needs. Earlier, Volkswagen Group idled two EV plants in Germany as sales stalled. Stellantis scrapped its target of reaching 100 percent EVs by 2030. And Ford delayed full-size EV truck and van programs and reallocated capital once earmarked for EVs to hybrids and gas-powered vehicles.

Despite what looks like a massive retreat from earlier EV promises, analysts say this moment reflects a recalibration, not a surrender. Sam Abuelsamid, a longtime auto analyst and vice president of market research at Telemetry, described it as a “temporary correction” rather than a full retreat.

“Electrification is the direction for the future; it’s just going to take longer to get there,” he told Observer in an email, noting that in today’s highly divisive political climate, many executives have become quieter about long-term plans, but none are completely “jumping ship.”

Consumer behavior, rather than corporate or regulatory retreat, is driving the current EV “correction,” said Stephanie Brinley, a principal automotive analyst at S&P Global Mobility. “Consumers are adopting EVs just as quickly as they want to,” she told Observer via email. “[But] pricing, direct consumer experience and education, and concerns over infrastructure remain the hurdles to more widespread adoption.”

In fact, EV market share is still growing. From January to August, EVs accounted for 8.1 percent of the U.S. market, up from 7.7 percent during the same period last year, according to S&P Global data. Still, EVs remain more expensive than hybrid or combustion rivals. Even Tesla, despite promising a sub-$25,000 model for more than a decade, has yet to crack the affordability barrier.

“The issues have not changed, but moving from early adopters to mainstream buyers is difficult, choppy and not as easy to predict,” Brinley said.

Abuelsamid admitted that the industry’s earlier projections that EVs would make up more than half of the U.S. market by 2030 were overly optimistic. He expects hybrids to dominate in the near future, gradually replacing internal combustion engines as the default powertrain.

For American buyers, hybrids offer what EVs have struggled to provide: no lifestyle changes and a longer range for less fuel. They’re also cheaper to produce than EVs because they use smaller batteries and require less complex software development.

Both analysts agree that automakers are navigating a long and uneven bridge toward a fully electric future, not abandoning it. What happens next will depend on breakthroughs in cost and technology, particularly battery chemistry and cell-to-pack architectures, Abuelsamid said. Automakers, he added, should shift focus away from high-end, high-performance EVs and collaborate to cut spending on expensive features customers don’t actually see, such as software platforms and electrical architecture. “Even most mainstream EVs are plenty quick for everyday driving needs,” he said.

For now, automakers are balancing profitability with progress, trying to meet consumers where they are while continuing to invest in where they’ll eventually be.

Yesterday (Oct. 8) in Maranello, Italy, luxury automaker Ferrari lifted the hood on its first all-electric vehicle, the Elettrica, after five years in development—while simultaneously halving its electric ambitions. The new car marks Ferrari’s long-awaited entry into the EV market, but also underscores the company’s reluctance to fully embrace an electric future at a time when the EV boom has lost some of its early luster.

The Elettrica, in development since 2020, is expected to officially launch in October 2026 with a price tag estimated to exceed $540,000. Ferrari revealed only the powertrain, confirming that the Elettrica will feature a quad-motor setup—one motor per wheel—powered by a 122 kWh battery pack. Built on an 800-volt architecture for faster charging, the vehicle will reportedly reach a top speed of 193 mph, deliver up to 1,000 horsepower, and achieve about 330 miles of range under the European WLTP cycle.

The new all-electric supercar will be built on a platform developed in-house and produced at Ferrari’s “e-building” in Maranello, where the company is headquartered. The facility will manufacture electric motors, battery packs and inverters for Ferrari’s future EVs.

Though those plans are now less certain. Soon after the Elettrica’s debut, Ferrari released quarterly earnings with disappointing guidance that sent its stock tumbling, marking what could become its worst trading day since listing on the Milan stock exchange in 2016.

Despite raising its long-term revenue target to around €9 billion ($10.4 billion) by 2030, Ferrari said only 20 percent of its lineup will be fully electric by then—down from its previous goal of 40 percent. Hybrids are expected to make up another 40 percent, with the remaining 40 percent continuing to use internal combustion engines. The company added that it does not plan to release a second EV until at least 2028, citing weak demand for high-performance electric cars.

While Ferrari framed the scaled-back targets as a response to customer preferences, broader trends tell a different story. Global EV demand has cooled, even as 2025 is shaping up to be one of the strongest years for U.S. EV sales, boosted in part by now-expired federal tax incentives.

Ferrari’s late entry into the EV race isn’t necessarily a problem, according to Stephanie Brinley, associate director of AutoIntelligence at S&P Global. “The transition to an EV-dominant market is a long-term process,” Brinley told Observer via email. “It is about being able to come to market with a compelling product at the right time. Finding that sweet spot has always been a product challenge. The twists and turns of electrification and EV adoption have only complicated the process of finding that position.”

For Ferrari, she added, the key is staying true to the brand’s DNA. “Ferrari buyers will want a Ferrari first, an EV second,” Brinley said. “For Ferrari buyers, it’s not primary transportation. If they are interested in EVs, they can or will also have EVs in the stable. That can work for or against Ferrari’s EV ambitions.”

Ferrari isn’t alone in pulling back. Other luxury automakers—including Volvo, Mercedes, Porsche and Bentley—have also slowed their electrification plans amid softer demand, tariffs, and global uncertainty. All-electric brands like Tesla, which just announced cheaper Model Y and Model 3 versions, and Lucid have cut prices to move inventory. While Ferrari buyers aren’t motivated by tax credits or savings, they do value exclusivity—and the brand’s identity has long been tied to the sound and spirit of its internal combustion engines.

As Brinley noted, “Consumer demand has not kept up with the demands of regulatory change, but it has not vanished and will continue to grow. Timing entry and ensuring profitability are difficult.”

The Elettrica’s success will likely depend less on its range or price than on whether it can deliver the emotional rush Ferrari owners expect. If the car can replicate the visceral thrill of a Ferrari through software, vibration and sheer performance, it could redefine what it means to be a supercar maker. If not, the company risks alienating its wealthy loyalists—customers who prize Ferrari’s sound, speed and unmistakable signal of status as much as its engineering prowess.

At Climate Week NYC, BMW unveiled its new all-electric flagship, the BMW iX3, marking the U.S. debut of its Neue Klasse platform and reaffirming the automaker’s pledge to electrify more than 40 models in the coming years. The launch comes at a time when EV demand appears to be slowing and many automakers are rethinking their electric strategies.

BMW CTO Joachim Post emphasized that the iX3 is more than just another crossover. “It’s a new era for us,” Post told a small group of media, including Observer, ahead of the event this week. He explained that BMW engineers have merged technology, design and computing power into a single platform adaptable across the lineup, from sports cars to SUVs.

The iX3 promises about 400 miles of range and can add roughly 175 miles of charge in just ten minutes on a 400kW charger. Inside, it features a panoramic head-up display stretching from pillar to pillar across the windshield and four “superbrain” computers managing everything from vehicle dynamics to navigation and climate control.

Such advances come as competition in the EV space heats up. Tesla, Hyundai and BYD are rolling out efficient, long-range, fast-charging models at competitive prices. BMW is betting that it can combine performance and luxury while insulating itself from the geopolitical turbulence shaping the global auto industry.

Part of that strategy is what BMW calls its “local-for-local” footprint, with factories in Hungary, Munich, and Spartanburg, S.C. “Production follows the market and supply chain follows production,” Post said, noting the company’s $1.7 billion investment in U.S. battery and vehicle assembly plants. That approach, he added, allows BMW to adapt regardless of shifting incentives or political headwinds.

At the same time, BMW is pursuing a “technology open” philosophy. Post stressed that combustion engines and hybrids won’t disappear from the lineup, even as EVs like the iX3 and upcoming electric X5 roll out. “The customer decides which car they are buying,” he said. “Government can make regulations, but the customer will decide what they want.”

The iX3’s look has been met with mixed, but largely positive reviews here in the States. The new design moves away from the oversized “chipmunk” grille, with cues inspired by the classic BMW 2002 kidney grilles. Post dismissed the idea that BMW’s previous bold designs were driven by Chinese demand. “BMW makes designs that work all over the world,” he said, noting that market-specific adjustments, like longer wheelbases in China and sport packages in the U.S., have always been part of the strategy.

Inside, BMW’s new Panoramic iDrive system aims to restore its driver-centric reputation. Augmented reality projected on the windshield reimagines how drivers engage with their surroundings, addressing criticism that BMW had strayed too far from its performance roots.

Beyond luxury and design, BMW is sharpening its focus on sustainability. It has partnered with SK On and Redwood Materials (Tesla co-founder JB Straubel’s EV battery company) in the U.S. to develop closed-loop battery recycling. While large-scale recycling is still years away due to the limited supply of used batteries, BMW executives stressed its importance. “EVs are mines on wheels,” said Glenn Schmidt, BMW’s vice president of sustainability. “We need to treat vehicles as resources, where a bumper doesn’t end up as a bottle, but rather a high-value component in a future car.”

Executives also highlighted BMW’s push toward circularity as a hedge against geopolitical risk. The company is using A.I. to track the lifecycle of vehicle components, and has already mapped the complete carbon footprint of its kidney grilles.

The iX3’s debut underscores BMW’s commitment to the U.S. market, EVs and the Paris Accords—even as adoption in the U.S. lags behind Europe and China. Post acknowledged American skepticism about EVs but noted that “most customers don’t go back to combustion engines once they’ve tried an EV.” He also pointed to BMW’s sixth-generation battery technology as a path toward affordability without reliance on fading government subsidies.

In the end, the iX3 is both BMW’s calling card and a test case in an uncertain U.S. EV market. The real question is whether BMW’s strategy of flexibility—in design, powertrains and supply chains—will be enough to win over consumers who remain undecided about electric cars.

The annual Jackson Hole Economic Symposium in Wyoming has long been a stage where Federal Reserve chairs signal the direction of U.S. monetary policy. This year’s gathering carries unusual weight. It will be Jerome Powell’s final appearance as Fed chair, arriving at a moment of mounting economic strain and intensifying political attacks. With his tenure ending in May, Powell faces not only pressure clarify the short-term direction of interest rates, but also a high-stakes struggle to defend the Fed’s independence from the White House.

At last year’s Jackson Hole, Powell calmed a jittery Wall Street by signaling that the Fed would begin cutting rates as inflation cooled and the labor market remained strong. This year, the outlook is far less reassuring and the data far murkier.

Powell has built his reputation on consensus and data-driven decisions, but the numbers he relies on now point in opposite directions: Inflation remains stuck above the Fed’s 2 percent target and has crept higher in recent months. At the same time, job growth is slowing more sharply than expected.

Cracks are also emerging inside the Fed. Minutes from the July meeting show two Fed governors voting against the central bank’s decision to hold rates steady—the first so called “dual dissent” in three decades. Most members on the Fed’s board, like Powell, worried that cutting too soon could reignite inflation. But as Powell’s tenure winds down, his ability to maintain unity is being tested.

As if confusing data and internal disagreements weren’t enough, Powell is also facing political pressure unmatched by any previous Fed chair primarily from the U.S. President.

For months, Trump has blasted Powell’s approach to inflation and urged him to cut rates. Trump’s escalating attacks now threaten not only Powell’s personal legacy, but also the long-term credibility and stability of the institution itself. He has already begun reshaping the Fed by filling board vacancies with loyalists, raising fears that the next chair could be far more pliant to political pressure. The President has even undermined the very data the Fed depends on, ousting the labor statistics commissioner Erika McEntarfer after July’s dismal jobs report rattled markets.

For Powell, the stage at Jackson Hole offers no shortage of perilous options. He could hint at impending rate cuts and send markets soaring. He could double down on holding rates steady to curb inflation—risking deeper recession fears. Or, true to form, he could remain deliberately vague, falling back on his tried-and-true wait-and-see approach.

His legacy is already complicated. Powell guided the Fed through the pandemic, kept unemployment low longer than many thought possible, and presided over one of the most volatile economic periods in U.S. history. Yet critics, including the President, argue he was too slow to act on inflation in 2021 and too quick to pivot in 2024.

Powell is set to address the symposium’s audience tomorrow morning. How he handles the speech is anyone’s guess, though markets are betting he’ll hint at rate cuts in September. What is clear is that Powell now faces a collection of challenges with profound implications—for the stability of the economy and for his own place in history. And Powell’s remarks may matter less for what they signal about the next rate move than for how they defend the Fed itself, an institution long insulated from politics.

Last week, under the blistering heat of an August day at a Ford plant in Louisville, Ky., Ford CEO Jim Farley, a self-proclaimed lifelong petrol head, announced a $30,000 electric pickup truck slated for release in 2027. Farley pitched it as a new “Model T moment,” a breakthrough meant to reinvent how cars and trucks are assembled. The company hopes the move will help Ford remain a profitable U.S. automaker despite rising tariffs, softening EV demand, higher labor costs, and a political climate that is increasingly hostile to electrification.

For decades, Ford’s profits have been anchored by the enormous success of its F-series trucks. These full-sized SUVs and pickups are emissions-heavy but hugely lucrative. In the quarter ended June, Ford sold 222,459 trucks—its highest total since 2019. Yet with Ford now committing $5 billion to electrifying its strongest brand asset, that long-standing dominance—and its combustion-first image—may turn into its greatest liability.

Ford’s EV ambition clashes with its image

In 2018, Ford scrapped its sedans and small cars, a decision driven partly by shifting consumer tastes (Americans favor big SUVs) and partly by the company’s own “Built Ford Tough” mantra. Today, Ford still sells one of the least fuel-efficient pickups on the market: the F-150 Raptor R, which gets just 10 miles per gallon in the city and 15 on the highway.

The perception gap between gas-guzzling, image-driven monster trucks and the green promise of EVs is huge–and one that Ford has struggled to close. That gap was evident in 2020 with the rollout of the Mustang Mach-E SUV. The launch fell flat, relying too heavily on the company’s heritage of big trucks and muscle cars, which left both EV buyers and Ford loyalists confused about what the new model represented. 

The divide is further complicated by politics. As Bloomberg notes, about two-thirds of full-size truck owners lean conservative, and Republicans are less enthusiastic about EVs than Democrats. Ford’s crown jewel—the F-series—has become a symbol of excess and power, making it even harder to market a stripped-down, eco-friendly alternative across the political spectrum.

Ford’s EV playbook

Despite the enduring popularity of the F-150, sales of its electric sibling, the F-150 Lightning, have slowed. Lightning sales fell 26 percent during the April-June quarter from the previous year. The Mach-E also stumbled in the latest quarter, with sales dropping 20 percent year-over-year. Ford’s EV division, Model e, posted a $1.3 billion quarterly loss, and the company expects nearly $5 billion in EV-related losses this year.

To turn things around, Ford is borrowing from Tesla’s playbook. At the Kentucky plant, where it is investing $2 billion, the company is adopting a flexible “tree” assembly system in which components are built on separate branches before joining at final assembly. Engineers are also working to reduce the costly wiring harnesses that have burdened EV makers like Rivian. Ford is building a new battery plant in Michigan, and its $30,000 truck will feature a lithium-iron-phosphate (LFP) battery to extend range while keeping costs down.

Meanwhile, Chinese EVs have become formidable competition (primarily in overseas market for now) thanks to their affordability, range and technology. The U.S. government has responded with aggressive measures to curb their import. Even so, Farley himself admitted on a podcast that after spending six months driving a Xiaomi SU7 to and from work, he thought it was “fantastic” and didn’t want to give it up.

Ultimately, Ford’s battle isn’t just with Tesla, Rivian or Chinese automakers. It’s about survival. Wall Street’s response to the $30,000 EV announcement has been cautious. Analysts praise the ambition but question whether Ford can scale fast enough or maintain that price point given tariffs, labor costs and declining U.S. tax credits. Many still consider the stock overvalued.

In truth, Ford’s move may be too little, too late. If this truly is Ford’s new “Model T” moment, then the new electric pickup must do what that historic car once did: be affordable, reliable, and unmistakably Ford. Otherwise, the company’s greatest strength—its big-truck legacy—could become the weight that drags it under.

Cross-brand partnerships and collaborations have been the marketing tool du jour for more than a decade, but automakers have been a little slow to get into the game. Over the last few years, companies like Ford, Dodge and Volvo have partnered with seemingly unrelated consumer companies in an effort to attract new customers and solidify existing ones, and it’s changing the way that young people consider their first vehicles. 

“Gen Z has become the most important consumer base,” Parija Kavilanz, a veteran retail reporter and co-founder of the retail news site Bagable.com, told Observer. “Everyone, across industries, they’re thinking of ways to attract the consumer base, and keep them locked into their brand. Gen Z make up between 20 to 25 percent of the overall consumer market, and they’re growing.”

Retailers and automakers alike have taken notice of that growth, too. Nielsen IQ recently released a study showing that Gen Z’s purchasing power is expected to grow to a whopping $12 trillion by 2030, making them the wealthiest generation yet. Their spending is expected to surpass that of baby boomers’ by 2030, the study shows.

Meanwhile, for years, headlines claimed that Gen Z are less interested than their previous generations in owning personal vehicles. However, that began to shift over the last few years as they grow older. The group is still deeply focused on technology when it comes to cars, thanks in large part due to the rise and popularity of Tesla with its single-screen infotainment and quirky features such as its childish fart sounds, but they are also increasingly heading to the dealership to buy their first vehicles.

While Gen Z still don’t drive much and show signs of getting bored with electric vehicles, they still represent a large market for automakers, who are trying to get their attention with unconventional products, such as a retro-style automotive t-shirt from Abercrombie or a lush candle made by the perfumer D.S. & Durga in partnership with Volvo. 

Lifestyle partnerships are a meaningful revenue stream for carmakers

Collabs and partnerships aren’t new, but they are uniquely Gen Z. “I was reporting on these really weird, bizarre partnerships going all the way back to 2016,” said Kavilanz, who was a retail reporter for CNN Business for nearly 15 years. “These unconventional groupings started to pick a pace at the same time when Gen Z was maturing, and sort of starting to dictate the way brands would develop their marketing strategies because [Gen Z] are such heavy social media users. But they’re also fickle, because they’re young, they want something new, something different.”

It turns out that expanding a car brand into, say, perfume like Mercedes-Benz has, is a big business, too. Licensing deals, collaborations, and partnerships where automakers partner with another company to release special t-shirts, small-scale vehicle models, soap and even special boots reportedly pull in billions of dollars each year for automakers. While most carmakers don’t break out how much they make on merchandising, it’s become a meaningful revenue stream for them.

It’s not just overalls born out of a partnership between Ford and Sydney Sweeney or kids’ cars made by Jeeps, either. High-end automakers are investing in luxury homes all over the world as “brand extensions” of their core products.

For example, there’s the Porsche Design Tower in Miami, which was completed in 2016 and allows residents to take their Porsches up to their apartments using a special elevator, called the “Dezervator,” and park them inside their homes. Similarly, Bentley (which is owned by VW Group, just like Porsche) is currently building a luxury apartment complex in Miami equipped with four Dezervators. Bentley has also partnered with Luxury Living Group, an European luxury furniture maker,  to create an entire line of home furniture for those who want a full brand experience.

“For a lot of these brands that have been around forever, it’s important to attract new customers,” Kavilanz said, noting that creative collaborations is also a crowded market. “You really have to find ways to stand out. A lot of the trend about these unconventional partnerships is about breaking through that clutter and making sure that you’re able to keep [young consumers] interested and excited,” he said. 

President-elect Donald Trump has been clear about how he feels about electric vehicles: He’s anxious to do everything in his power to “end the electric vehicle mandate on day one” and kill off EVs that “don’t work.” For better or worse, the Trump transition team is already well into the planning phase of rolling back the hugely popular federal EV tax credits under President Joe Biden’s Inflation Reduction Act (IRA) that has helped drive more than $1 billion in EV sales across the country. The new administration is also looking to claw back any unspent money under the IRA, which could continue to push as much as $1.2 trillion into the economy over the next decade.  

The move could be one of the first actions the new administration will enact to, in Trump’s words, “terminate” the IRA. The bill has pumped billions of dollars into red states like Georgia, North Carolina and Alabama, where large carmakers, including Hyundai, BMW, Volkswagen, Volvo and Toyota have plants that employ tens of thousands of locals. Clawing back on EV credits could throttle the EV industry in the U.S. while offering a significant opportunity to China.

One of the major complaints consumers have about EVs is their prices, which are on average around 16 percent higher than comparable gasoline vehicles. Eliminating the EV tax credits will unquestionably make electric cars even more out of reach for consumers. 

“It is likely to slow sales and could affect automaker profitability. It will mean that consumers have to pay something closer to the actual cost without the subsidy,” Stephanie Brinley, a principal automotive analyst at S&P Global, told Observer via email. “Some automakers may choose to increase their own incentives to help keep momentum going. If they do, that is likely to make it even more difficult to reach profitability on EVs, at least in the short term.”

According to the most recent data from Kelley Blue Book, the average transaction price for new electric vehicles hovered around $56,902 in October. That’s nearly $8,300 more than the average price of all new passenger vehicles. Automobile sales this year have been relatively flat, but EVs represent the fastest-growing segment. Economists estimate killing off the EV tax credit alone will cause EV sales to drop by as much as 27 percent, resulting in 317,000 fewer electric vehicles registered annually.

New tariffs will make matters worse

In addition to cutting the federal tax incentives, Trump has also said he plans to implement very high tariffs on goods and materials coming from China, Canada and Mexico, where many large automakers like General Motors and Ford have plants that supply vehicles for both the American and global markets.  

The U.S. is the world’s largest importer of EVs, according to the World Trade Organization. And every automaker relies heavily on imported materials, chips and battery technology from China. In the first four months of 2024 alone, the U.S. imported $4 billion worth of lithium-ion batteries from China, according to Bloomberg NEF. The Biden administration has kept many of the previous Trump-era tariffs in place on Chinese goods and heaped on a few more in the past year. 

While many Americans said they voted for Trump because he promised to lower prices on goods and services, his proposed tariffs would actually cause tremendous price increases and deeply impact the workforce that relies on manufacturing jobs. Even Elon Musk, who donated more than $200 million to Trump’s presidential campaign, could be greatly affected by the cancellation of federal tax credits and new tariffs. (That is, of course, if Trump decides to apply the same rules to Musk and Tesla as he does to other automakers.) 

In Woodruff, S.C., BMW is nearing completion of a massive 100-acre battery production facility near the BMW Spartanburg complex, which employs more than 11,000 workers to build the X series of vehicles like X3 and X5. BMW makes electric versions of those vehicles on the same assembly lines and ship to both U.S. and overseas consumers. BMW has an agreement with the Chinese EV battery maker CATL for its new electric vehicles coming next year.

While BMW said it won’t speculate about politics, BMW spokesperson Phil Dilanni noted via email that the company “does not base our long-term strategic decisions on political policies or incentives” and is following its long-term strategy to “produce relevant vehicles and establish supply chains locally, whenever possible.”

Should Trump get the Republican-led House and Senate to pass his proposed tariffs, the output at these U.S.-based plants could be significantly throttled, leading to potential layoffs and reduced shifts. It could also affect plans for future plants in red states, like the planned manufacturing site for the Volkswagen-owned Scout Motors in South Carolina and Rivian’s planned plant in Georgia.

“Republican lawmakers from states benefitting from the manufacturing credits available under the IRA will have to navigate between what is best economically for their states, what their constituents tell them they want and what the Republican Party wants,” S&P Global’s Brinley said. “If the manufacturing credits go away, it makes it more expensive for a components supplier or automaker to invest in U.S. manufacturing today.”

Without the incentives, automakers could reconsider their manufacturing plans and look for cheaper options closer to the markets where EVs are growing—places like China, Brinley added. 

As U.S. Energy Secretary Jennifer Granholm told reporters at the COP29 climate conference in Baku a few weeks ago, “It would be so counterproductive. You eliminate these credits, and what do you do? You end up ceding the territory to other countries, particularly China.”

China currently makes more than half of the world’s EVs. Giving up ground in the electric transition, manufacturing and battery development would give China an edge in a growing industry that has improved the economies for many states that voted for Trump in the recent election.

Most young people haven’t heard of a rugged, boxy off-road vehicle called Scout. Volkswagen, the company behind the brand, is pushing to bring it back from its nostalgic roots and into the mainstream electric vehicles era. At a splashy event in Franklin, Tenn. last month, Scout Motors, a company solely owned by Volkswagen launched in 2022, unveiled two new vehicles: an SUV called the Scout Traveler and a pickup truck named the Scout Terra.

Both vehicles will get brand new powertrain options, either full-EV or a range-extended version. The vehicles will be highly customizable and have options for auxiliary lighting, steps, fold-back tops, off-road bumpers with recovery points, a heavy-duty winch, bench seats and other features. The market for these kinds of vehicles is booming, and automakers see a big opportunity in the space. 

“We want to bring the best of the past ideals forward, not some warmed-over nostalgic haze,” Scout Motors CEO Scott Keogh told a crowd of 300 journalists, influencers and guests at last month’s event. “Real ideals like respect, community and, of course, trust.

The new Scouts won’t began production until late 2027 but have already drawn a considerable number of $100 reservations, according to the company. About a third of the reservations are for the Scout Traveler SUV, and two-thirds are for the Scout Terra truck. The Traveler’s retail price (without incentives) will start at $60,000, and the Terra will start around $51,500. Those prices will likely change as we get nearer to the production date. 

The Scout has a rich history

Scout was first introduced by a company called International Harvester in 1961. It was originally a two-door SUV that competed with the likes of Jeep, Bronco and AMC and featured things like a fold-down windshield, chunky buttons and removable hardtops. 

You may see a small handful of old Scouts on the road today, as they are popular because they’re easy to repair and iconically nostalgic. The vehicle recently re-entered the public eye after a YouTube video of the vice presidential candidate Tim Walz working on his own 1979 Scout made the rounds in September. 

“Scout was certainly ahead of its time in inventing the SUV segment and tapping into the American psyche of exploration,” CEO Keogh said at last month’s event. “In order to unlock this magical brand with its vast potential, it’s best to do it as a startup with a running start and an absolutely clean sheet.”

Scout Motors is up against some tough competition and entering a relatively crowded market for electric SUVs and trucks. While the design harkens back to those tactile, button-laden days of the 1970s and 1980s, the modern underpinnings will still be software-driven and EV-focused, according to the company.

It’s clear that Scout Motors has taken pages from the likes of Rivian, Ford, Jeep and Range Rover and packaged them in a friendly-looking, off-road SUV with nostalgic nods to the days of the “8-day-a-week-truck,” a tagline formerly associated with Volkswagen’s Bus. 

While Volkswagen has had some ups and downs in recent history as EV sales fluctuate and the auto industry scrambles to keep up with shifting tides, it has made a significant investment in Scout, breaking ground on a multibillion-dollar factory in South Carolina in February. Scout is investing $2 billion and receiving $1.3 billion in tax incentives to build the new vehicles in Blythewood, N.C., just 20 miles outside of Columbia.  

Volkswagen cars used to be everywhere in the U.S. in the 1960s and 1970s when its iconic buses and affordable Beetles were the best-selling imported vehicles. Today, the U.S. auto market is largely dominated by Japanese companies like Toyota and Honda, and the German carmaker holds just a 5 percent market share.

While the electric Volkswagen ID.4 has sold relatively well, many buyers have been holding out for the upcoming ID Buzz, the electric bus with a nostalgic design first debuted seven years ago. 

Dealers aren’t pleased with Scout Motors’ plans to sell the new Terra and Traveler via retail locations—much like Tesla and Rivian—rather than using the typical dealer model. They are already up in arms over the direct-to-consumer model, and the National Automobile Dealers Association (NADA) threatened legal action against Scout just a few hours after last month’s announcement, stating that it “will challenge this and all attempts to sell direct in courthouses and statehouses across the country,” according to Reuters. 

Like other modern software-heavy passenger cars, Scout will offer over-the-air updates and have mobile technicians and “Scout Workshop” locations to handle any issues that arise. While the models unveiled at the event in Tennessee are close to production, there may be some changes to the final versions that will land in customers’ hands in 2028.

Last week, at a Honda Motor Co. event attended by Observer in Tochigi, Japan, the 76-year-old automaker outlined plans to offer seven new fully electric vehicles. While these will not be Honda’s first EVs, they will be the first built on the company’s in-house platform, Honda Zero. Japanese automakers (both Honda and Toyota) have been slow to roll out EVs compared with their American and Chinese counterparts as they take a wait-and-see approach to meeting the customer demand for new EV platforms. 

Two Honda concepts—the Saloon, a sleek, low sedan, and the Space Hub, a van-shaped vehicle—were unveiled at this year’s CES in January. At last week’s event, the company revealed a few more details of what might underpin these upcoming EVs. “We are creating a new value,” Toshihiro Mibe, the president and CEO of Honda, told a small group of journalists through an interpreter. “We are going back to the starting point to create a completely new platform, from zero.”

Toshihiro Akiwa, the head of battery EV development at Honda, also noted that most EVs on the market are heavy and thick and that the company is taking a new approach, including new manufacturing techniques, to achieve its goal of creating a thin, light and spacious EV with the “Man Maximum, Machine Minimum” (or M/M) concept at its core. 

Honda Zero is Honda’s first EV platform after its relationship with GM’s EV development faltered earlier this year. The only product out of the partnership is an EV called the Honda Prologue, built on GM’s Ultium platform. The original plan was for the two companies to co-develop a full line of affordable EVs. However, that plan was scrapped in late 2023, although GM and Honda still have agreements to work on hydrogen vehicles and other technology. Honda says it still has plans to offer a fully electric lineup by 2040, while GM is slow-walking (and rolling back) its EV plans to focus on profitability. 

Katsushi Inoue, the head of Electrification Business Development Operations at Honda, declined to discuss Honda’s current relationship with GM and how Honda applied what it had learned from the Prologue to the Zero platform.

Executives at the event emphasized that the first vehicle to be built on the Zero platform will be a halo vehicle, or a top-of-the-line vehicle with all the advanced tech that the company can pack into it. It will look very similar to the Saloon sedan concept shown at CES in 2024, but may get a new name.

While the partnership with GM was geared toward creating affordable EVs, Honda is now focusing on the higher end of the market. That’s no real surprise since it can take hundreds of millions to develop an all-new EV platform, and it’s standard practice for automakers to roll out their most advanced tech for their top-of-the-line vehicles first and let the technology trickle down to more affordable vehicles in the future. “Cost and technology make creating an affordable EV difficult,” Akiwa said via a translator. 

Gathered Honda executives also noted that the Chinese EV market is markedly different from North America for which Honda is developing the current Zero platform. EVs targeted for Chinese consumers, such as the Yè announced in April, share a common ethos with the Zero platform with a focus on the M/M concept, the executives said. Still, the actual technology and battery platform underpinning Honda’s Chinese EVs are different from the Zero platform.

When asked why Honda went with a ground-up redesign rather than, say, electrifying the popular Honda Civic, Takashi Onuma, the chief officer of Automobile Production Operations at Honda, said via an interpreter, “We are in a difficult era where the market is difficult to predict.” Mibe, the CEO, added that Honda’s belief is that the company needs to create new values around EVs rather than simply extend the current values of its ICE lineup. “Down the road, EV values will be very different from internal combustion values,” Mibe said. 

A production version of the Saloon will debut at CES in 2025, and Honda is expected to share more details about how it will get to the promised EPA range of 300 miles.