After years of planning for an eventual end to internal combustion, automakers are seeing electric vehicles take off less quickly than they projected. However, there’s too much at stake to back out at this point—they’ve already spent billions of dollars getting to this point, and future products are already in the works. But one thing that won’t be phased out any time soon, as evident in Toyota, Subaru, and Mazda’s recent joint “Multipathway Workshop,” is the gasoline engine. And it may even fit into some future EV plans too. 

Welcome back to Critical Materials, your daily roundup for EV and automotive tech. Today, we’re talking about Japan’s big automakers working together to keep combustion platforms alive, Elon Musk’s proliferated payday pushback, and Ford’s reworking of the EV dealer program (again). Let’s jump in.

30%: Toyota, Subaru, and Mazda Reaffirm ICE Isn’t Dead—But Innovations Will Be Needed

Toyota sees the future of motoring as a mix of powertrains, and so it’s reluctant to give up gasoline entirely. Specifically, a shift to synthetic fuel powered by its smaller gasoline engines to fit the needs of markets not ready to make the full move to electrification. The automaker announced at its recent Multipathway Workshop that it will be co-developing new ICE products to meet this need, as will co-presenters and Toyota partners Subaru and Mazda.

Developing and maintaining multiple product stacks can get expensive, though. So Toyota will do everything that it can in order to stay slim on costs while clearly focusing on its new big-ticket market: EVs.

It’s worth noting that news of Toyota and the other Japanese automakers doubling down on ICE powertrains after making a big show of their electric future just last year may be disappointing; after all, Toyota in particular has lobbied hard against EVs globally. At the same time, smaller and less polluting gas engines will be needed and useful in many places, and the plan has some implications for EVs as well.

In fact, the automaker is reversing an age-old trick of hacking battery power into an ICE platform and instead finding unique ways of developing its future combustion powertrains into purpose-built EV platforms meant to house battery-electric drivetrains.

We’re seeing similar moves across the board, from Mercedes to Stellantis, and turning engines into, essentially, range-extenders for EV platforms may represent a near-term future for the technology. 

From Automotive News:

The new engines will be shorter and narrower than their existing counterparts. Smaller dimensions will help them fit into tomorrow’s slimmed-down EV designs. The fresh looks are exemplified by the wedge-shaped Lexus LF-ZC and LF-ZC concepts.

Toyota is already working on a next-generation EV platform based on those concepts that it wants to put into a Lexus EV production model from 2026. The new silhouette could could do double duty, serving both next-gen EVs as well as vehicles loaded with these futuristic engines.

Toyota is rethinking its approach in order to use an EV platform as the starting point, and work backward, in a way, to re-engineer a new group of improved engines that fit into that EV framework. Toyota envisions mating the engines to a range of hybrid and plug-in hybrid layouts.

Toyota says that the engines will arrive sometime in the future, but there’s no concrete date on the books—yet. Some quick napkin math would point at 2027 as being the logical target as the European Union Euro 7 rules go into effect. 

Meanwhile, Toyota’s co-presenting cohorts also note their investments in combustion products.

Mazda says that it will work “relentlessly” to integrate its notorious rotary engine into the company’s future offerings. The automaker showed off two rotary motors at the event—a single and dual-rotor—both of which can be easily packaged for different needs. Don’t get excited though, because Mazda specifically calls these “Rotary EV Systems,” meaning that these motors likely won’t be powering the wheels, but likely rather used as a generator for its EVs.

Finally, Subaru says it will continue to offer its “symbolic” horizontally opposed boxer engines in its cars, as its customers have learned to trust the brand for their unique powertrains. Subaru will work to make these engines compatible with synthetic fuels, including biofuel and liquid hydrogen.

It’s fine to take these announcements with skepticism—after all, synthetic fuels are largely regarded as nowhere close to viable for wide-scale deployment, let alone the replacement of gasoline. And Japan’s automakers still can’t afford to get complacent in the EV race. 

Toyota’s Multipathway Workshop

60%: Musk’s Payday Fued Escalates As xAI Gets $6 Billion Infusion

Over the weekend, proxy advisory firm Glass Lewis advised shareholders to vote against Tesla CEO Elon Musk’s court-rejected $56 billion compensation package (more recently valued at $46 billion). The firm becomes the latest agency to urge shareholders to vote against the 2018 compensation package, sending Tesla’s stock sliding during regular trading hours on Tuesday.

The 71-page analysis slams Tesla’s board for awarding an “excessive” pay package, and further conflating risk by recommending that the company uproot from Delaware to Texas.

“The excessive size of the award, both on a pure dollar basis and in terms of the dilutive effect upon exercise, remains very much top of mind,” wrote Glass Lewis in the analysis distributed to shareholders, according to the Wall Street Journal.  “The company’s provided rationale does little to combat these concerns given their proportionate magnitude.”

Musk currently holds around 13% of Tesla shares and must abstain from voting in the matter. He has voiced his desire to control at least 25% of the voting power at Tesla, “enough to be influential, but not so much that [he] can’t be overturned.”

Among that desire has been thinly veiled threats to pursue artificial intelligence and robotics projects “outside of Tesla” if he doesn’t get the 25% voting power.

 

Meanwhile, Musk’s xAI startup has announced (contrary to the CEO’s denial earlier this year) that it will be seeking $6 billion in funding to help bring the company’s “first product to market.” This might include xAI’s Grok, which has been described as an “edgier” version of OpenAI’s ChatGPT and is currently available on Musk’s social media platform, X.

The recent xAI funding announcement bolsters a call from another shareholder group that voted against the pay package, noting that Musk’s other obligations are preventing him from satisfying Tesla’s fiduciary interests.

Shareholders must cast their vote before Tesla’s annual shareholder meeting on June 13, 2024. And even if the vote passes, Delware’s chancery court may elect to block the pay package again. If the vote fails to pass, Tesla’s board will be sent back to square one.

90%: Ford To Relax Dealer EV Requirements, Again

Ford will once again rework its dealer requirements to sell EVs as the market cools.

The Blue Oval’s program, which originally required a $1.2 million or $500,000 investment in order to be certified to sell its EVs, has been relaxed before following criticism and lawsuits from dealer groups who wanted access to Ford’s EVs without heavy investments into EV chargers and training. Ford eventually relaxed its requirements for the number of chargers dealers were required to install and would no longer limit the number of EVs that lower-tiered dealers could purchase for inventory.

Now, Ford plans to take feedback from its dealer network and rework its EV allocations program—likely enabling all dealers to have access to EV inventory.

From Automotive News:

In response to feedback from a series of in-person dealer meetings with executives, Ford is preparing to reopen EV sales to its full U.S. retail network, instead of limiting inventory of those vehicles to stores that agreed to make significant investments in chargers and training. The automaker also is expected to change the financial requirements needed to sell EVs, executives and dealers said, although the plans will not be finalized until Ford meets with its dealer council in early June.

The automaker this week asked retailers to pause their EV investments as it finalizes the changes. It previously said 53 percent of the dealer body was in the program, which took effect at the start of the year, while other stores were barred from selling new Mustang Mach-Es, F-150 Lightnings and E-Transits.

Lisa Drake, VP of EV Programs at Ford, says that the company no longer believes that its previous strategy of tiering dealers into EVs is the right approach.

“What we’re finding is more dealers want to be involved in it and we don’t want to be exclusive to just a handful,” said Drake. “And so we’re making a change where we’re opening up that and not requiring as many certifications or investments for a dealer to participate in the EV revolution.”

Ford says that it will be more ubiquitous with its EV training as well, making sure that all dealers are equipped to sell EVs—not just the ones that are willing to participate in the current pay-to-play model.

100%: Are Japan’s Automakers Doing The Right Thing Here?

With the EV market leveling off (for now) and more automakers diverting more investments towards the continuation of combustion engines, it seems like ICE is here to stay for a while. However, certain companies are investing in different ways.

Take Mazda, for example—the Japanese automaker is pushing to use fuel to power onboard rotary generators that would charge its EVs rather than needing to just plug-in. This would enable vehicles to have fewer batteries pre-installed and easily fill up on the go. Or, at least that’s the idea behind the tech.

That being said, automakers are going to invest in where they think that the market is headed.

Do you feel that there will be another push for hybrids, alternative fuel, and generator-equipped cars that could be worth buying into? Let me know in the comments.