Talking Michigan Transportation

EVs, magnets and drones. Oh, my!

• Season 7 • Episode 225

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On this week’s edition of the Talking Michigan Transportation podcast, a check-in with Joann Muller, the Detroit-based transportation correspondent for Axios.

Muller explains the thinking behind General Motors officials’ announcement to invest $4 billion in the U.S. and move some vehicle production back from Mexico.

She also offers some insight she gained in reporting on negotiations between the U.S. and China over rare earth magnets, underscoring the need for the U.S. to develop a long-term strategy.

Also discussed: The likely result of easing regulations that have held back commercial drones in the U.S. 

Jeff Cranson:

Hello, welcome to the Talking Michigan Transportation Podcast. I'm Jeff Cranson. On this week's edition, I talk with Joann Muller, who is the Detroit-based transportation correspondent for Axios. Joann is a frequent guest on the podcast and always has a lot of interesting things to say. All things, mobility, that's her beat. She has more than 40 years of experience covering the transportation industry and lives in the Detroit area. We cover everything from General Motors announcement this week that they'll invest $4 billion to move some production back to US factories from Mexico, slowing electric vehicle sales, the belief that drones will soon be everywhere, if they're not already, and US efforts to break China's hold on rare earth magnets. So I hope you enjoy the conversation. So, Joann Muller, thank you for making a return visit to the podcast. I always enjoy talking to you about all things, mobility and your beat. Which boy? It's just busier than ever, isn't it?

Joann Muller:

It sure is. It's nice to be here, Jeff, thanks.

Jeff Cranson:

Yeah, so there's so much going on right now and I look at your stories in your newsletter and I don't know how you keep up with it all. But I wanted today to really talk about some of the freshest news, which is the General Motors announcement to invest $4 billion in the US and move some of that production back from Mexico. Can you talk about that a little bit and the significance?

Joann Muller:

Yeah, I mean, I think this is. We'll probably see even more of this from automakers, but I think President Trump will definitely tout this as a win for his tariff policies. He wants to see more production in the US and he's getting it from General Motors. What I think is interesting from GM's standpoint is they do make a lot of -currently- they make a lot of trucks and some crossovers in Mexico. They are moving some of that to the US and, importantly, this plant outside Detroit, the Orion Township plant, was supposed to be making electric pickups and they have basically scrapped that plan entirely.

Joann Muller:

So what it means is they're going to make more gasoline products in the US, because that is what the consumer is buying. They also happen to be very profitable. There's great margins on the trucks and SUVs that are coming to this back to the United States. So it's like the Equinox and the Silverado and Sierra pickup trucks. So these are vehicles that they make good money on and that are in high demand, and so if you have to move stuff away from Mexico, you might as well make the stuff you know you can sell and make a good profit on. So it's a very logical decision, I think, for GM under these circumstances.

Jeff Cranson:

Yeah, that makes a lot of sense. Do you know how much retooling is involved in that if they had already planned to go the EV route there?

Joann Muller:

Yeah. So, if you'll recall, there were some years ago they said they were going to invest $4 billion to turn that into an EV plant. Now they say they're going to spend $4 billion to turn it back into a gasoline plant. I was told by someone at GM that there's a lot of tooling that can be just reused, repurposed, and in fact, I think the strategy that you're going to be seeing at GM here and at other plants across the country is a flexible setup that can do either gas or EVs, because they're still all in on EVs, but until the consumer wants to buy a lot of them, they're just going to keep riding the gasoline trucks for the time being, but they can feather that up and down as needed, and so it's smart to be able to be flexible, and so I don't think they're going to lose their shirt on.

Jeff Cranson:

This flip-flop is the answer to your question, and you touched on that EV component in your story a couple of days ago, but it isn't a new trend. I mean, this didn't happen with the change in administrations. You've been noting and you're reporting for quite some time that either for you know, for range anxiety, fear of not being able to charge or other reasons that maybe we can't even completely diagnose EV sales just haven't taken off at the pace that automakers had hoped they would right.

Joann Muller:

Yeah, well, I think one thing is to let's acknowledge that EV sales are growing faster than other segments in the market. So they are growing, and faster than some other gasoline models, but not as fast as was projected in order to get to, you know, sort of a entirely electric fleet by 2035. That trajectory is just not happening, and that has been true for two big reasons. You mentioned one of them, which is charging. The charging infrastructure is not yet there sufficiently for people to feel good about it. But the other thing is the price. Good about it, but the other thing is the price. These EVs are still over $50,000 on average. Partly that's because many EVs are luxury cars, so they just compete in a different segment. But the batteries are expensive. The technology is still you can't get the economies of scale yet on EVs. It's coming, it's coming.

Jeff Cranson:

But you're right, that is the second reason I think I hear from people that tell me that they'd like to buy an EV. First they're worried about charging, but second they just cost a lot, yeah, yeah, well, because I kind of thought that your stories this week made me think of a title for this whole thing, which is EVs, magnets and drones. Oh my! Talk a little bit about your reporting on what's going on with the deal reached between the US and China on these rare earth magnets and I know that the term rare earth is really deceiving, because it's not necessarily rare, but that's just a scientific term that's been used for years. But talk about why that's important.

Joann Muller:

So there's certain elements at the bottom of the of the table, the thing that was on our wall in our science classes.

Jeff Cranson:

Yeah, yeah.

Joann Muller:

Periodic table of the elements. That's it. I was having a blank there for a minute. Anyways, some of these materials are essential to making really powerful magnets. The magnets are the things that run all the motors in everything that we have, anything electronic, whether it's a car or, you know, a weapon, you weapon a missile or a windmill or anything. So these things, especially as we get more our society becomes more high tech, they're very much in demand.

Joann Muller:

Unfortunately, China makes 90% of the rare earth magnets in the world, and so they have everyone over a barrel. And so, as the trade dispute between the US and China has gotten worse, naturally China has pulled that lever and said well then, we're going to slow down the licensing that we have for export of these magnets to US companies. They did it to Europe too, but we're focused on the US here, and frankly that's the reason why President Trump said well then, we're not going to take any more Chinese students at our universities, we're not going to have any more visas for Chinese students. And that got China's attention. And so the two sides met for two days this week in London and they finally announced a deal yesterday that the circumstances of it are still coming to light. It's sort of a framework of a deal, a concept of a plan, as Trump was famously quoted as saying in a debate during the campaign. But the point is they've sort of said, okay, you can have magnets and we'll take your students. You know it seems like it's a short term deal, though, so it might be just kicking the can down the road on this issue, which is why I wrote about what the US is doing to find long term alternatives. And you know, when I say long term, I mean long term, because mines can't open overnight. It takes seven to nine years to open a mine, and so what we're doing.

Joann Muller:

One interesting deal there's a company in California that does have a rare earths mine. Uh, they don't make magnets yet t hey're starting to ramp up. They have a new factory in Texas and, interestingly, that GM has already moved in and locked up the uh, the offtake of that of those magnets, um, at least for the first wave of production. But this company it's called MP Materials is going to become very important strategically to the US and they have just struck a deal with a Saudi company. So Saudi Arabia also has some minerals that we can use, and the US is getting closer to Saudi Arabia as we get farther from China, and so this is a new partnership that could yield some long-term solutions.

Joann Muller:

But it will take years.

Jeff Cranson:

Yeah, and I think that it's good that your reporting was delving into not just how do we keep fighting with the Chinese about this, but what do we do long-term? And I told you that I've heard people talk about this in terms of a strategic reserve. Just like we have a strategic oil reserve, we need a strategic you know, rare earth materials reserve, and that's what the US should be focusing on.

Joann Muller:

It really should. And I think you know this is one of the problems, you see, with the US. We're very innovative, we invent things all the time and then we don't. We don't, you know, commercialize them very well. We don't have a long-term plan. You know, many countries have industrial policies and the US really doesn't. You know, politically we swing from one side to the other and there's no continuity.

Joann Muller:

You know, right now, I mean, I think President Biden had tried to lay the groundwork for a strategic plan or some industrial policy around climate, right, and so that's why he put in all these EV incentives and EV manufacturing tax credits. It was a lot of stuff. You can debate whether or not that's where we should be going toward EVs. I know a lot of people would disagree over that, but it was the first time I had ever seen sort of a cohesive strategy. It's trying to stimulate both demand and supply. Now President Trump is ripping all that out, or the Congress, the Republican controlled Congress, doesn't want to pursue that anymore, but what you have then is an interruption in what was beginning to be an industrial policy. So will Trump put in a different kind of industrial policy now maybe? But in four years could it be ripped up again. There's no long-term thinking in the US.

Jeff Cranson:

Yeah, and that crosses administrations for sure. Yeah, stick around, there's more to come right after this short message.

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Jeff Cranson:

What's your crystal ball tell you about this. You can't separate the politics, I know, but if there is critical mass and inertia toward becoming an electric vehicle, mostly nation at some point you know when would that happen?

Joann Muller:

You mean? When would we become an EV nation? Yes, okay, yeah, you know it's interesting. I talked to an analyst, a very well-respected auto analyst, last week, john Murphy from Bank of America, and he said he thinks we've peaked at 8% EVs. And I think that's wrong. I just don't think that's true. I think the US is clearly lagging the rest of the world. But if the rest of the world is going electric, we really do need to do that as well. So I think we're just going to be very deliberate.

Joann Muller:

America, we'll get there eventually, but I think we're going to take our time. We're going to have a lot more hybrids. Plug-in hybrids we're starting. We see that in the sales numbers now. It's not that people are opposed to EVs, they're just, you know, some of them have never driven one, so they don't know. You know it really is a superior ride and experience. But there are a lot of reasons that it's not convenient to drive an EV right now. Uh, and so I think people are taking their time and I think we'll get I bet, you know when, I don't know, but I think by 2035, we're not going to be all EV, but I think we could definitely be half EV by 2035.

Jeff Cranson:

Interesting. So yeah, it sounds like your basic philosophy about this is kind of that Churchill quote that America will do the right thing after it's exhausted all other possibilities.

Joann Muller:

Yes, yes, I think so We'll get there. We'll get there. But you have to always remember too that this is a global industry and GM, ford, stellantis compete not just in the US but in other parts of the world. So if they want to play in other parts of the world, they have to develop the technology that's. You know, that is the rest of the world wants, and so the EV momentum is not going away. It's just the US consumer has doesn't have the motivation to buy one yet, and if we take away some of these tax incentives, they'll have even fewer incentives. On the good side, there are more and more affordable EVs in the $35,000 range that are coming out, and you know there's some good cars out there.

Jeff Cranson:

Yeah, and the range is getting better too.

Joann Muller:

Absolutely yeah.

Jeff Cranson:

No, I think you covered that pretty well. So let's talk a little bit about your most recent reporting on drones, and I think the headline was drones will soon be everywhere, and I guess my question is aren't they already?

Joann Muller:

No! Not yet, not yet. If you're talking about drone delivery, drone inspections, drones in agriculture, these things are just beginning right now, and the biggest reason is that the regulations have prohibited drones from flying by themselves anywhere long distance, right. So the idea that the industry was trying to get to is one pilot sitting in a room with a computer screen and he's monitoring 10, 20, 30 different drones at one time. Right now, it's limited to one guy with one drone and he has to keep an eye on it the whole time, and that's required under the regulations, and so that's sort of impractical and holds back the adoption of drones, and so it's impossible to scale it at that level because you're paying a whole bunch of humans to monitor one drone one drone each, that is. So the rules are changing. President Trump just signed an executive order late last week that basically gives the green light to this drone industry, and particularly drone deliveries will take off as a result. They've got to write the rule, you know.

Joann Muller:

So it's going to take some months, but by the early next year I know all the drone companies are ready. They said their technology is ready. It's quiet. It's going to take some months, but by the early next year. I know all the drone companies are ready. They said their technology is ready, it's quiet, it's safe and it's efficient, and Walmart just announced just last week that they're going to expand their drone deliveries. I think you're going to start seeing it a lot more. Right now you could go to Texas and get drone deliveries in many places around Dallas from Walmart and a few other places, but you know it's going to be routine in our yards.

Jeff Cranson:

Yeah, well, you mentioned the quiet factor. I think that one thing that I mean that's really important, because I think it would be really annoying if you were hearing that buzz whirring sound every time one of your neighbors is getting a package dropped off, Right?

Joann Muller:

Well, you know it's not as quiet as like. You will hear that it's sort of a whirring, but it's hearing gone. You know it's. It's 20 seconds.

Joann Muller:

And it's not like a train going by, Right, Right and you know it's, it's 20 seconds, and then it's not like a train going by Right, right, um, and you know, so I don't know. I look out my window right now and I see a lot of trees and I'm thinking, okay, where would a drone drop a package for me? Um, like, that's an issue that has to be worked out.

Jeff Cranson:

Yeah, it's amazing, it's all GPS right? They know exactly where to go. They can pinpoint the spot that they can safely drop out of the sky. It's terrifying, but I think it's one of those things you can't put back in the bottle either, it's coming.

Joann Muller:

Well for people who live in apartments and tall buildings, condos that kind of thing you're going to have like a bin, a receptacle. It should be locked. I've seen various prototypes of this stuff. But they can drop the box, drop the package in through the top and there might be eight different lockers on that box, and so you would get home from work and you'd go and unlock your box and find your package in there, but someone else's box would have it somewhere else, you know, in one of the other lockers. So there's a lot of technology involved here. Some of it's not quite there yet, but it's coming and the drone part is solved.

Jeff Cranson:

Have you ever tried to operate a drone yourself?

Joann Muller:

No, no, I haven't. I've seen. I know friends have them play around with them with photos and stuff, but I have not.

Jeff Cranson:

Yeah, no, MDOT has some very talented photographers that have been very successful at using them to shoot photos. You know aerials that we otherwise would really struggle to get.

Joann Muller:

They're using sticks to control it? Right. Yeah, yeah. Well, the idea here is it's all going to be autonomous, and so the drone will take off because a computer tells it to, and it will have the route uploaded and it will fly to its destination. It will drop it, it'll come back to the charging pad and wait for the next order yeah, yeah, yeah, and some guy you know, a thousand miles away will be monitoring it,

Jeff Cranson:

Yeah, and it's a whole different kind of logistics operation.

Joann Muller:

Exactly, and that's what the new executive order is going to allow that kind of stuff to happen. So we'll see. You know it's not here yet, but by next year I think it's really going to be. You know the floodwaters.

Jeff Cranson:

Yeah well, it's an exciting time to be on the beat. What do you see coming? What will you be writing about next week?

Joann Muller:

Still trying to figure that out. But you know I'm looking a lot at autonomous vehicles. Tesla is very close to launching its robo taxi service, which might be 10 cars in Austin, Texas. There are a lot of questions about the safety of Tesla's technology. Right now, Elon Musk will tell you it's all great, but the NHTSA, the government safety organization in DC, still has a lot of questions and they are investigating the it's called full self driving technology for safety problems with a person who's still in the vehicle and the safety driver, as they say.

Joann Muller:

Yeah, well, these are, these will be your personal Tesla, and they've had some fatal crashes where people were, where the technology didn't detect certain things. And if it can't do well with a person in the car, how's it going to do with nobody in the car?

Jeff Cranson:

Well, I always questioned whether it was smart from a branding standpoint to call that autopilot.

Jeff Cranson:

I think that's a bad message right from the start

Joann Muller:

And it got worse when their upper level systems called full self-driving. Then they started calling it FSD, so they could get away from that, but in Europe they won't allow them to call it full self-driving. Like where is American regulation on that? We haven't done anything about that either.

Jeff Cranson:

Experts will tell you that they prefer the term automated to autonomous, because automated means it has automated features, but we're not saying yet that this thing is completely autonomous. Yes, so, but it sounds like what you're saying is Google Waymo jumped way ahead on that front.

Joann Muller:

Waymo. Waymo is way ahead. In fact. I saw some data today. You know they're very popular in San Francisco, L. A. and Phoenix right now and a company just did some data comparison on those three rideshare services and they found that Waymo is way more expensive. But people love it and you have to wait longer for a Waymo. Everybody doesn't mind, they're still willing to ride it and they have become a very legitimate player in San Francisco in particular

Jeff Cranson:

What you did

Jeff Cranson:

There is say Waymo stands for-

Jeff Cranson:

You didn't say this, but sounds like Waymo stands for way more expensive.

Joann Muller:

But if you haven't ridden win one yet, I strongly encourage you to do it. It's coming, it's in, as I said, San Francisco, Phoenix and LA. Now, in Austin, uh, they're adding it in the Uber network in certain cities, I think. Uh, in Atlanta, maybe it's coming to Miami, Washington DC, a lot of major cities are going to have Waymo pretty soon, if they don't already. And the first chance you get to ride in one, you really should, because it is a remarkable experience and it will get you over your fear of self-driving cars.

Jeff Cranson:

Yeah, no, I'm more than willing. I know I rode in some mobility vehicles in Grand Rapids and Detroit as they rolled those out. It's fascinating technology. Sure is Well. Thanks, Joanne. As always, I appreciate you being willing to check in and break down some of the things you're working on. It's all fascinating and I think it's just a really interesting time to be writing about transportation.

Joann Muller:

Absolutely Well. Thanks, Jeff, Good to talk to you.

Jeff Cranson:

I'd like to thank you once more for tuning in to Talking Michigan Transportation. You can find show notes and more on Apple Podcasts or Buzzsprout. I also want to acknowledge the talented people who help make this a reality each week, starting with Randy Debler, who skillfully edits the audio, Jesse Ball, who proofs the content, Courtney Bates, who hosts the podcast on various platforms, and Jacke Salinas, who transcribes the audio to make it accessible to all.