The Toyota Tacoma Can’t Be Beaten

Illustration for article titled The Toyota Tacoma Cant Be Beaten

Photo: Toyota

The Morning ShiftAll your daily car news in one convenient place. Isn’t your time more important?

Tacoma is still king, Mercedes will make EVs in Alabama, and Cadillac is up to some new tricks. All that and more in The Morning Shift for December 14, 2020.

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1st Gear: Taco Still Winning

It’s interesting, this idea that some consumers don’t want giant trucks from the Big Three. Toyota has been happy to mop up the rest with the Tacoma.

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From Bloomberg:

Even in the middle of a pandemic, there’s one model that auto dealer Crown Toyota in Ontario, California, can’t keep on the lot: the Tacoma pickup. With just a 10-day supply of the truck — in an industry where 60 days is considered ideal — most are already sold before they’re unloaded from the car hauler.

[…]

The Tacoma is to midsize pickups what the Ford F-Series is to full-size trucks: a dominant player that has remained the best-seller of its kind for the last 14 years. Sales, which rose 8% last month, have more than doubled this decade, even as General Motors Co. fielded the Chevrolet Colorado and GMC Canyon, Ford Motor Co. revived the Ranger model and Fiat Chrysler Automobiles NV rolled out the Jeep Gladiator.

[…]

When Toyota looks at it, it sees a cash cow. The Japanese automaker is reaping dividends from sticking with it after rivals abandoned smaller pickups a decade ago, winning over buyers in search of something less than a half-ton truck. Toyota hopes to repeat that strategy in passenger cars as peers cancel sedans in favor of crossovers, sport-utility vehicles — and midsize trucks.

The article also includes an interesting tidbit about margins. It’s interesting because automakers are always blaming low margins for discontinuing smaller vehicles. Toyota says its margins on the Tacoma are just fine:

And buyers are paying up for them. Smaller pickups once sold for rock-bottom prices to first-time buyers. Now they’re boosting the bottom line at automakers that trick them out with elaborate entertainment systems and color-coordinated bash plates underneath to protect beefy off-road powertrains. The Tacoma starts at $26,150 for a utilitarian model but can climb above $50,000 for a fully-loaded TRD Pro. The Japanese company says half of all Tacomas sold in the U.S. include the optional TRD off-road package.

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Half! A lot of these buyers are coastalCalifornia, to be preciseand I can imagine how a lot of people would view buying a Colorado or Ranger as simply passé. Related: Where is a new Dakota?

2nd Gear: Truckmakers In Europe Say They Will Be Done With Emissions-Producing Trucks By 2040

That’s ten years earlier than originally planned. And I don’t mean pickup trucks, I mean semis.

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From The Financial Times:

An alliance of Daimler, Scania, Man, Volvo, Daf, Iveco and Ford have signed a pledge to phase out traditional combustion engines and focus on hydrogen, battery technology and clean fuels.

The industry will spend about €50bn-€100bn on new technologies, Scania chief executive Henrik Henriksson told the Financial Times, ahead of the pledge announcement.

The truckmakers, under the umbrella of EU carmaker association ACEA, are working with the German funded Potsdam Institute for Climate Impact Research to consider the best technologies and approaches.

The pledge signed by the chief executives of the truck and van businesses also calls for widespread investment in energy grids and a higher tax on carbon across Europe to help drive the change.

“If we can make this happen, we need to work all together,” said Mr Henriksson, who chairs ACEA’s commercial vehicle board.

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It is shocking to me how quickly everything has pivoted away from fossil fuels. The race to abandon internal combustion engines seems likely to only quicken.

3rd Gear: The Mercedes EQS And EQE Will Be Built In Alabama

Those are the all-electric SUV versions of the S-Class and E-Class. The EQS and EQE will also be be built in Germany, as part of Mercedes’ big electric push.

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From Automotive News:

Mercedes-Benz will build two electric utility vehicles at its plant in Alabama starting in 2022, part of a global EV production plan detailed Monday that also named sites in Europe and China.

[…]

Other production locations announced Monday are:

  • The EQS, a rival to the Tesla Model S, will go into production in Sindelfingen, Germany, in first half of next year.
  • The EQA utility vehicle will be built in Beijing starting next year. Production of the model has already started in Rastatt, Germany.
  • The EQB utility vehicle will start production in Kecskemet, Hungary, and Beijing next year.
  • The EQE will be produced in Bremen, Germany, and Beijing starting next year. The EQC is already built in Bremen and Beijing.

Mercedes will also produce battery systems for its EVs in Germany, Poland and Beijing.

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You can read Mercedes’ press release on the matter here. Will we get the EQA? I doubt it, but dammit that sure seems like the best of the lot.

4th Gear: Ford Says That 2020 Has Been Stressful For People

This is the kind of work that gives marketing people a bad name: According to Ford’s annual Trends Report (TM?), 2020 really stressed people out. It seems that a global pandemic and inequality and economic disaster are worrisome!

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From the Detroit Free Press:

The 2021 report homes in on seven focus areas, about which Ford surveyed people from 14 countries around the world. Topics included the “pressure points” consumers felt this year; the role of escapism in helping deal with stress; loneliness; persistent inequalities and inequities; consumers’ experiences with shopping; their evolving uses and need for personal transportation; and environmental sustainability.

Globally, 69% of respondents reported feeling overwhelmed by changes in the world. Even so, 47% said adapting to the pandemic has been easier than they imagined it would be.

Numerous data points from the survey indicate young people are struggling more than anyone else; 63% of Gen Z respondents (ages 18-23 years old), for example, said it’s been harder than expected to adapt.

Up 17 percentage points from three years ago, 67% of respondents said it stresses them out to follow the daily news. Many also said they feel they are spending too much time on the internet, and about half said they feel lonely on a regular basis.

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This report doesn’t even seem to help Ford in any material way.

While the trends are not directly related to the automotive industry, they are still important insights into consumers’ behaviors and values, [Sheryl Connelly, Ford’s chief futurist] said. And given the industry’s years-long product-planning process, it’s especially important to think ahead, she noted.

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To sum up: Ford’s chief futurist has concluded that lots of people aren’t feeling great right now and also it would be good for Ford to think ahead. It’s too bad we couldn’t have come upon these insights in any other way than a big and presumably expensive study.

5th Gear: Cadillac’s Smaller Dealer Network, Considered

I touched on this a bit last week, as Cadillac said this month that around 150 dealers had taken buyouts to stop being Cadillac dealers instead of investing in Cadillac’s electric future. Automotive News did a story yesterday with some more context. Basically, a thinning of the herd is for the best.

The average U.S. Cadillac dealer sold 176 new vehicles last year, while BMW and Mercedes-Benz stores sold more than 900 apiece.

By the end of next year, almost 1 in 5 Cadillac dealers are planning to give up their franchise, with hefty buyout payments in hand. But Cadillac will still have about twice as many stores as its German rivals.

That may be why, two weeks after the deadline to accept a buyout, General Motors was still negotiating with some dealers who were on the fence about sticking with Cadillac as it aims for an all-electric lineup around the end of this decade.

“They are so over-dealered compared to their competitors that it’s going to take far more than 20 percent of the stores to close for the remaining Cadillac dealers to become more competitive with their luxury peers,” said Alan Haig, president of Haig Partners, a buy-sell advisory firm in Fort Lauderdale, Fla.

[…]

By 2022, Cadillac will have cut its U.S. retail network roughly in half since 2008, when it had more than 1,400 stores. Nearly 500 disappeared shortly after GM’s bankruptcy, many terminated involuntarily.

As of Jan. 1, Cadillac had 882 U.S. franchises, of which 153 were standalone operations, according to the Automotive News Data Center. That means more than 700 theoretically could remove the Cadillac emblem from their storefronts and move forward with other brands.

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Cadillac’s future at this point is much more interesting than, say, Tesla’s.

Reverse: Indy

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Neutral: How Are You?

I woke up full of Friday Night Lights energy for some reason. Clear eyes, full hearts, can’t lose.

Here’s How California Could Implement A Zero Emissions Vehicle Mandate If It Really Wanted To

Illustration for article titled Heres How California Could Implement A Zero Emissions Vehicle Mandate If It Really Wanted To

Photo: Chevrolet

As you’ve no doubt read on social media by now, the governor of California has sworn a blood oath that by 2035 he’ll grind every gasoline-powered car to dust with the might of his office and force every God-fearing American to submit to the electric car or be summarily executed.

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None of that is true, obviously. Gov. Gavin Newsom signed an executive order last Wednesday pushing the California Air Resources Board to adopt rules that, 15 years from now, would limit new automobile sales exclusively to zero-emissions vehicles. There is no boogeyman, and they aren’t coming to crush your ’70 Chevelle.

This idealistic executive order (it’s only five pages long) kicking the can a decade and a half down the line has caused an uproar among gross polluters and certified tree huggers alike. The hydrocarbon-lovers are appalled at the idea of giving up their diesel-chugging Super Dutys, but even more astonishing is that the people who actually advocate for EVs are so disillusioned with government action that they don’t believe such a thing is even possible. We sent men to the moon because a president said we should, but something as simple as updating the electricity grid infrastructure is apparently an insurmountable hurdle, even 15 years from now.

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There are, admittedly, some hurdles tripping up this order. First and foremost, Newsom was elected as the 40th governor of California in November 2018, and with a limit of two four-year terms he will not be eligible for the office after 2026. He won’t be anywhere near the governor’s mansion by the time 2035 comes around, so he won’t be able to enforce this executive order himself. Any post-Gavin governor would have the ability to completely ignore the order, or issue one of their own that is counter to this one.

Aside from that, California and Zero Emissions Vehicles have some issues that will need to be addressed before such widespread adoption can take place. It’s the direction we’re all moving in, but can it happen in 15 years? California’s power grid is ancient, cobbled together and barely handle the current draw required to survive unprecedented heatwaves rocking the West Coast recently. Not only is the grid itself a mess, California doesn’t currently generate enough power to meet the needs of a massive influx of EVs, even if there were enough charging stations to go around. And finally, there are environmental concerns that more EVs won’t actually make anything better.

Let’s tackle those one by one to give an idea of what California can in fact do to support the transition to zero-emissions vehicles.

The Electricity Grid

As California gradually transitions its power generation away from fossil fuels and toward renewable sources, a few teething problems are surfacing. For one, the state is operating too close to its maximum energy generation capacity, so when fires wreak havoc on the grid and topple power lines, there’s very little reserve capacity to fill in the gaps. California has a habit of importing power from its neighbors in Nevada, Idaho and Oregon when it is feeling the crunch, but as those states follow California’s lead into a cleaner grid, they may have less excess energy to offer.

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While rolling blackouts and widespread outages have plagued California’s grid this summer, it was a long-developing perfect storm of conditions that conspired to make this happen. The national power grid is equal parts ancient and overworked, and that’s before the extra power draw from electric vehicle charging comes fully on line.

There are around 40 million residents in the state of California, and just over 15 million cars registered for road use.

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The California power grid delivers about 255 billion kWh annually, using 2018 figures, the most recent provided by the U.S. Energy Information Administration.

There are already around 600,000 electric cars and PHEVs running around California today. So, even knowing that there are many possible variables, let’s run a back-of the-envelope exercise based on some reasonable assumptions. Using an energy consumption rate for an efficient electric car at 0.28 kWh per mile, and assuming everyone in the state drives an average of 15,000 miles per year (EV drivers actually drive fewer miles per year than ICE drivers, but we’re estimating generously here to make a point), we can say each EV in this example consumes 4,200 kWh per car per year. Multiply that by 600,000 cars and you get about 2.5 billion kWh per year consumed to charge electric cars in California. Or, a little more than 1 percent of the annual California electricity consumption.

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Now, if California were to wave a magic wand and every car in the state could be transformed into a battery electric vehicle overnight, that would add around 14.5 million cars needing to charge. Multiply that same 4,200 kWh by 14.5 million new EVs and you get a net electricity consumption increase of roughly 61 billion kWh annually. That’s nothing to scoff at — keep in mind that we’re not accounting for efficiency losses in energy transmission and our assumptions are subject to many external forces — but something like an extra 24 percent tacked on now doesn’t sound quite so unimaginable, does it?

Yes, of course the ancient grid, especially in Los Angeles, would need an update. And yes, of course, California would need to find clean, renewable ways to create that power. And yes, of course there would need to be a massive influx of charging stations so that people could actually charge all of these EVs. So how do they do that?

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Here’s my suggestion. A massive public works project the scale of the Hoover Dam, plus a massive solar microgrid subsidy, plus a massive charging infrastructure subsidy. It won’t be easy, but nothing worth doing ever is.

Public Works

California has a homelessness and unemployment problem. Hell, every state in the union does. So why not commit to something we know will be hard, we know will take a lot of work, and create some jobs in the process? California’s unemployment rate recently stood at 13.3 percent, which isn’t as bad as June’s peak of almost 15 percent, though it’s worse than at any point during the post-2008 Great Recession. These are people who want to work, so why not put as many of them to work as you possibly can, building out and managing the construction of an updated power grid.

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Introduced as part of the New Deal in 1933, the Public Works Administration’s entire raison d’être was to invest in infrastructure construction to revive the economy and emerge from the Depression stronger than we had been before. The program was responsible for the creation of bridges, dams, tunnels, highways, airports and the Detroit sewage disposal project. When we work together toward a common goal we can make our country better, and California can make its state better, too.

Of course, the PWA was shut down in 1944 because the wartime economy was booming by that point, and there was no way the country would ever experience economic woes ever again. A California-centric revival of the PWA at a state level could not only help Californians get back to work, but with an updated clean-energy power grid less prone to failure, the state could practically eliminate rolling blackouts and grid-overload-related wildfires like the deadly, devastating Camp Fire in 2018.

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Solar Microgrids

Statewide subsidies for getting consumers to go off-grid are an easy way to both reduce the state’s emissions from power generation and reduce the strain on the grid overall. If everyone in the state were given an opportunity to reduce their draw from the grid by adding photovoltaic solar panels to their roof with minimal financial burden, how many do you think would jump at that opportunity?

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There are already tax incentives in California for shifting to solar, but say you got a 50 percent cash payout from the state to add solar to your roof. Would that be enough to push you over the edge? California also provides for solar-powered homes to route excess energy back to the grid; the power utility then pays the consumer for their electricity. Couple that with solar tech that is getting cheaper every year, and it’s starting to become a money-making exercise for homeowners.

The goal of this program would never be 100 percent adoption of solar, but as we discovered earlier, if every car in California were electric, the state might consume only about 24 percent more than it does right now. Easing the burden of the power grid by adding power generation inside your own home would easily make up the difference consumed by battery-electric vehicles.

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The added benefit of photovoltaic solar and a storage battery in your own home is that your home would no longer be susceptible to power outages from the standard grid delivery strategy. Why wouldn’t you want to be energy independent at home, charging your electric car from pure solar energy and potentially making passive income by selling electricity back to the grid in the process? The state gets reduced strain on the power grid and you get money and peace of mind. Win, win, win.

Charging Stations

The harsh reality of electric cars right now is that around 80 percent of charging is done at home. Only about 6 million households in California are considered resident-owned houses. Which means everyone else is renting and has little to no control over whether their residence has an electric vehicle charging station or not.

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The reason makers of electric cars are mainly courting upper- and middle-class buyers is that they are typically selling to homeowners, or at the very least home renters. If you’re an apartment dweller in the city, your charging options are extremely limited, and often frustrating. More often than not, this is a major concern that’s keeping the American working class from even considering EVs.

Luckily, California has already made steps in the right direction here to aid EV adoption. Last month the state approved a $437 million program to add 38,000 new electric-car charging stations over five years. The program set a target to install at least 50 percent of the chargers in “state-designated disadvantaged communities” and communities that suffer the most from the effects of air pollution. An additional 30 percent of these charging stations are intended to serve apartment buildings and complexes.

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This is a step in the right direction, but only a drop in the bucket compared with what will be needed if the 2035 universal adoption of electric cars comes to fruition. The state now has only about 25,000 charging stations, so this will mean a huge influx of state-sponsored chargers. In addition to that, private companies like Tesla and Electrify America are continuing to add charging stations to their California portfolio.

What’s the breaking point? How many chargers does the state need to reach 100 percent EV adoption? When will it be convenient enough? Probably when there are around a million publicly available EV chargers. That would be enough to allow every privately owned car in the state to charge up every three days on average. Maybe 2 million?

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Environmental Concerns

There is no longer any debating the fact that EVs are responsible for less carbon dioxide release over their lifetime. In fact, in California the average electric car produces about the same amount of carbon as would a 122 mile per gallon gasoline-burning car. As the electrical grid in the U.S. continues to improve its renewables mix and emissions, electric cars will only get cleaner. If you were, for example, charging from your private solar microgrid, your EV’s carbon impact would be related only to its construction and delivery.

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A major concern when it comes to EVs and the environment — and closely connected, human rights — is related to mining. The cold, hard fact is that the extraction of the necessary elements from the earth, vital to creating these large-scale batteries, is damaging to the environment. Certainly the same can be said of any fossil fuel, but if we’re going to care about one aspect of the environment, we have to care about all aspects.

Cobalt supply chains in the Democratic Republic of Congo are particularly fraught with human rights issues related to the use of child and slave labor. Lithium mining is destroying ecosystems. The mining processes of lithium, copper and nickel require a lot of energy and can release toxic compounds into the ground or drinking water of surrounding communities.

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Investment in new battery technologies, such as aluminium-ion, silicon and sodium-ion is potentially the way to make battery production more environmentally friendly, but we have to take steps in the current moment to reduce lithium ion’s impact on the world. As of 2017, only about 5 percent of lithium-ion batteries were recycled in developed nations. Tesla claims that it will be working to increase that number, considering as much as 20 percent of the lithium in a spent EV battery pack can be recovered and built into a new pack.

In addition to this, we need to be more realistic about what kind of battery range we can accept in a daily-driven electric car. You don’t actually need a 500 mile range EV, and if you think about it reasonably, you’ll understand why. Those long-range electric cars mean huge batteries that are material-intensive. Sacrificing range for smaller batteries means lighter weight, greater efficiency, more interior volume and lower cost. Which means a better car all around, right?

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The average driver in the U.S. travels no more than 25 miles per day, and the average American commute to work is around 12 miles. With 150 miles of range, more than half of the country could commute to work for a week without needing to visit a charging station or plug in at home. We, as consumers, need to stop buying vehicles for edge cases and start responsibly buying for our immediate needs.

Historical Context

California first floated a ZEV mandate back in 1990, requiring all manufacturers selling cars in the state to move at least 2 percent zero-emissions vehicles by 1998, a number that was ramped up to 5 percent in 2001 and 10 percent by 2003. The new executive order is not completely out of left field; it’s something that the state has wanted to do for decades. That original bill was neutered by dealership lobbyists in 1990, but California does require a much higher level of ZEV adoption than any other state in the nation.

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Last year, the total market share of battery electric vehicles in California was 5.3 percent, while the national take rate hovers around 1.4 percent. Maybe this isn’t as ambitious as it has been blown up to be. Maybe it’s a little more realistic than you might think. Maybe it’s nothing to get worked up about, if you believe change is possible. It won’t be easy, but when have we ever gotten anything truly amazing out of taking the easy route?

The fact is, this executive order doesn’t take effect tomorrow. It isn’t planned to do anything until 2035. The average age of a car on the road today is about 12 years, and getting older. You can expect the average gasoline car purchased in 2034 to still be on the road until at least 2048, if not longer. If we don’t have the electricity grid problem, and the solar problem, and the lithium problem, and the charging problem fixed in 28 years, we’re truly and properly fucked.

Volkswagen Delays Deal To Supply A Powertrain For Henrik Fisker’s New EV

Illustration for article titled Volkswagen Delays Deal To Supply A Powertrain For Henrik Fiskers New EV

Image: Fisker

Buried as almost a passing note in a recent investor presentation by car designer and EV startup founder Henrik Fisker was news that Volkswagen has delayed negotiations to supply powertrain parts for his company’s upcoming Ocean crossover. Sounds like a big problem.

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Fisker Inc. is Mr. Fisker’s latest attempt at building some cars, having famously worked on the Aston Martin DB9, BMW Z8, and then attempting his own thing with the original Fisker Karma hybrid. A 2012 hurricane damaged the company’s inventory, resulting in bankruptcy and the tooling for that car being sold off to become what is now branded as the Karma Revero, totally divorced from its original creator’s company.

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Now he’s trying again, sticking with the Fisker name (this time as “Fisker Inc.” instead of “Fisker Automotive”) but now with fully electric vehicles, not that compromised hybrid crap. The first production EV is planned to be a crossover called the Ocean.

Fisker claims the Ocean will put out 300 horsepower and be able to recharge up to 200 miles in 30 minutes, with a total targeted estimated range of around 250 miles.

But for a while, the open questions have been the big ones. Like, where Fisker plans to source all of this state-of-the-art EV technology and how he plans to build it. According to The Verge, the plan was to have a deal in place by the end of July to source the all-configurable electric MEB platform from Volkswagen.

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But that didn’t happen, The Verge reports:

In a scripted presentation to investors filed with the Securities and Exchange Commission (SEC) early Friday morning, founder Henrik Fisker says his company has “not achieved our goal of signing a cornerstone agreement with VW by the end of July 2020 as we previously anticipated.” The agreement is supposed to lock in costs, production capacity, and a production timeline.

Fisker says he “look[s] forward to continuing discussions with VW again in September after the traditional European summer holidays,” but adds that Fisker Inc. remains “in conversation with several other potential OEMs and suppliers.”

“It is a reality when working with world-class partners that they might not move at our speed,” Fisker says. “This is something of which we must be respectful.”

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This could be a huge problem for Fisker Inc., as it’s already advertised and sold deposits for a vehicle with certain projected performance—deposits it accepted without even knowing for certain what the fundamental hardware of the vehicle would be. Any major changes from here could mean major changes to the Ocean as advertised. If they’re changes for the worse, expect to refund some deposits.

It’s unclear what other potential partners Fisker is in talks with, but Tesla recently offered to sell its technology to industry competitors again. Rivian has also already made deals with Ford, Lincoln, and Amazon utilizing its new EV pickup platform.

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But considering how finalized the Ocean appeared to be when Fisker announced it, the company seems likely to be tied to working out this Volkswagen deal or face a massive redesign and delay of its production plans. Let’s hope Vokswagen’s vacation is a good one, for Fisker’s sake.

Illustration for article titled Volkswagen Delays Deal To Supply A Powertrain For Henrik Fiskers New EV

Image: Fisker