Volvo May Not Sell Its Tesla Rival Electric Car in the U.S. Over Tariffs
Volvo Cars may not sell its high-performance Polestar electric vehicles in the U.S. if Washington slaps tariffs on imports from China, reports CNBC. The automaker recently revealed its Polestar 2, which executives said is priced competitively with Tesla's Model 3 sedan. But Volvo is owned by Chinese auto company Geely, and the group has so far intended to make the cars at a factory in China. It expects to sell more than 50,000 Polestar vehicles. A lot of those cars won't make it to the United States if tariffs on Chinese imports are too high, Polestar CEO Thomas Ingenlath told the Financial Times. Competition is expected to heat up around the 2021 model year, said CFRA analyst Garrett Nelson. Competitors are already on the market at a midrange price that's competitive with the Model 3 and higher prices where Tesla's more premium Model S and Model X vehicles sit. The global automotive industry has found itself caught up in President Donald Trump's trade war with China, leading many automakers to re-evaluate where they build and sell their products. Read more here.
Forget What Donald Trump Said: Tariffs Are a Tax on American Consumers
President Donald Trump’s trade war provided the kind of real-world experiment that practitioners of the dismal science so desperately crave, but the results weren’t all that different from what their econometric models predict, writes Caroline Baum in MarketWatch. In a new paper, “The Impact of the 2018 Trade War on U.S. Prices and Welfare,” economists Mary Amiti of the Federal Reserve Bank of New York, Stephen J. Redding of Princeton University and David Weinstein of Columbia University document what economists have told us for decades: that tariffs are a tax on the consumer. The Commerce Department reported on Wednesday that the U.S. trade deficit rose 12 percent last year to a 10-year high of $621 billion. A record $891 billion goods deficit — the goods deficit with China set an all-time high of $491 billion — was partially offset by a $270 billion services surplus. Trade deficits are a function of a nation’s savings and investment. They tend to be pro-cyclical, rising when economy is doing well and contracting in downturns. Read more here.
Auto Industry Disruption is Here with Shakeup Starting in Geneva
The great auto-industry shakeout has started to arrive in force, reports Bloomberg. Anyone paying attention knows change is looming for global automakers grappling with new technologies, stricter emissions standards and apps that have turned car buyers into renters or just riders. While the shift sweeping the industry has so far been abstract, the veil started to come off this week at the Geneva car show. Discussions among executives was dominated by collaboration and consolidation rather than new models. In the markets, the fallout is claiming a growing cast of victims. Profit warnings, missed targets and falling stock prices at parts suppliers like Schaeffler AG and ElringKlinger AG – mainstays of the industry – show the depth of the rumbling underfoot. Paired with the news that luxury segment archrivals BMW AG and Daimler AG are teaming up on autonomous driving, and Volkswagen AG is allowing a startup to share the electric-car technology it wants to make a global standard, the industry’s new contours are taking shape. Read more here.
U.S. Auto Fleet Hits Record High Fuel Efficiency in 2017
The U.S. Environmental Protection Agency said Wednesday that the average fuel efficiency of cars and trucks hit a new record high in the 2017 model year, but highlighted in a report "legitimate concerns" about the industry's ability to meet rising annual requirements. The average efficiency increase to 24.9 miles per gallon was modest, up 0.2 mpg from 24.7 miles per gallon in 2016, its growth stunted in part because Americans are buying more large SUVs and pickups and fewer cars. Autoblog reports that EPA Administrator Andrew Wheeler said "there are legitimate concerns about the ability to cost-effectively achieve the Obama administration's standards in the near future" and he noted that just three out of 13 major automakers met the 2017 requirements without using credits. Automakers earn credits for overcomplying with fuel efficiency requirements and can save them for use in future years when they face tougher standards or sell them to competitors if they do not need them. Automakers worry that without significant changes, they will not be able to meet requirements after 2020 because many credits expire. Read more here.
Hyundai Shares Sneak Peek of 2020 Sonata
Hyundai has unveiled a new Sonata, showing off a sporty overhaul of its flagship sedan, reports USA Today. Hyundai revealed the 2020 model on Wednesday, a little over a month before the model makes its official North American premiere at the 2019 New York Auto Show on April 17. The next generation sedan is slightly lower, wider, and longer than its conservative predecessor, according to Hyundai. The 2020 Sonata has an exterior design influenced by the futuristic Le Fil Rouge concept introduced by Hyundai at last year's Geneva International Motor Show. The length of the car has grown 1.8 inches, the height has decreased 1.2 inches and width has increased by a little less than an inch. Hyundai also extended the wheelbase by 1.4 inches. “Sonata celebrates innovative coupe-like silhouette,” said Sang Yup Lee, senior vice president and head of the Hyundai Design Center. Yup Lee called the new design "sensuous." Read more here.
Urgent Tax Update – Extensions Might Be Your Best Tax Plan This YearFinal IRS regulations on the Tax Cuts and Jobs Act (TJCA) have not been issued on interest limitations, causing confusion on how to apply the law.
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Every dealer should consider filing an extension for 2018 returns even if they file by the original deadline. Filing an automatic extension provides additional timeto wait for guidance and for CPAs and clients to make better choices, some of which are irrevocable.
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If you extend and then file, the IRS normally allows for the filing of a "Superceding Tax Return," rather than requiring an amendment for business tax returns.
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Many dealers avoid extensions, but this year is the most significant tax change in decades. Some laws are still being drafted and filing an extension this year gives you time to study regulations yet to be issued and make smarter tax decisions.
For more information please visit www.mossadams.com.
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