Newsletter · · Ashutosh Agarwal

Car Affordability Wall Hardens as Polestar Is Banned and Waymo Bets on Snow - The Auto Disruption - Week of July 13, 2026

Autos newsletter for the week of July 13, 2026. The delivery recovery keeps hitting an interest-rate affordability wall, the US barred Geely's Polestar while sparing sister brand Volvo, China keeps flooding the world with EVs, and Waymo opened four new cities including its first snowy market as a chaotic July 4th weekend stress-tested the robotaxi thesis.

The Auto Disruption

Week of July 13, 2026: Car Affordability Wall Hardens as Polestar Is Banned and Waymo Bets on Snow

Last week the story was that electric-car demand was finally coming back. This week the podcasts moved on to the harder question: at what price, and who pays it? Three threads ran through the shows. First, the recovery keeps bumping into an affordability wall that has less to do with sticker prices than with interest rates. Second, the wall being built against Chinese cars is going up in a strange, selective way (one Chinese-owned brand got kicked out of the US this week while its sister brand, built in the same factory, walked free) even as China's own factories keep pushing cars out the door faster than anyone can absorb them. And third, the robot-taxi race took a real step toward everyday customers, only to be reminded by a chaotic Fourth of July weekend just how messy the real world still is. Here is what operators and the people who watch them actually said.

1. The recovery is real. The affordability wall is realer.

Last week's headline was that deliveries were rebounding. This week the number that mattered was a smaller, more stubborn one: the gap between what people want to pay and what a car actually costs to finance.

Start with the myth-busting, because it was the most interesting thing said all week. On Automotive News Daily Drive (Jul 10), Cox Automotive executive analyst Erin Keating, a pundit who studies dealership economics, pushed back hard on the idea that new cars have simply become unaffordable. Her data: the average new-car transaction price of roughly $50,000 is only "under a $500 differential from what it would be" if you'd just taken 2016 prices and adjusted for normal inflation over ten years. In other words, cars roughly kept pace with inflation while getting materially better and safer. The cheapest new car in America, she noted, is a Hyundai Venue at about $22,000, which in 2016 dollars is "just under $16,000." "Bravo to the automakers," she said.

So why does everything feel so expensive? Interest rates, and the games people play to hide them. Keating said average auto loan rates have moved "from, say, an average of six and a half percent to nine and a half percent," and that loans stretching past 72 months are now at an all-time high of 30% of the market. Her most striking example of how strapped buyers are: a shopper who could pay roughly $8,000 in total interest on a 48-month loan will instead accept "all the way up to, say, $13,000 extra in interest" just to push the monthly payment down to $700. "The consumer is actually taking on added expense just to get those monthly payments down, and that added expense is coming from interest. And that's the real driver." She described a "K-shaped economy where there's just a lot of people left out of the marketplace who are hanging on to their vehicles."

For electric cars specifically, the affordability gap is narrower than it used to be but still there. On Bloomberg Tech (Jul 2), Cox Automotive's Stephanie Valdez Streaty, also a pundit/analyst, said "the price premium between a new EV and a new ICE vehicle has gotten to about $5,500, so the lowest it's ever been," but added that "getting that monthly payment down is the biggest prohibitor for any vehicle… especially for EVs where there's still a price premium." Her read on the quarter's Tesla delivery beat was pointed: her data had Tesla's US sales actually down about 20% year over year, with Europe (returning German and French incentives, plus higher gas prices) doing the heavy lifting. "At the end of the day, we need more affordable EVs launched in the US."

That is the whole game for the newer EV makers, and it explains the week's most brutal cost math, coming out of Europe, not the US. On Patrick Boyle On Finance (Jul 5), the host, a pundit, walked through Volkswagen reportedly considering cutting up to 100,000 jobs and closing four German factories, a move he said would save "roughly 1,000 euros per car" spread across the 9 million vehicles VW sells a year. The problem: citing McKinsey, he put the Chinese cost advantage on building an EV at "20 to 50 percent." On a Volkswagen that costs roughly €30,000 to build, "that's a gap of at least 6,000 euros per car… So Volkswagen's historic once-in-90-years layoff proposal is designed to claw back 1,000 euros per car. The competition is already ahead by 6,000 euros per car or more. It just doesn't add up." (These are the host's figures and estimates, not audited numbers.) He also flagged BMW planning up to €1 billion of restructuring and a 15% cut to European car production, and Mercedes-Benz postponing a summer bonus for 90,000 workers. The point that ties it back to the US: the affordability squeeze here and the survival squeeze in Europe are two symptoms of the same disease: cars are expensive to build, and the cheapest way to build them now runs through China.

2. The wall against Chinese cars is up, and it's leaking, and it's arbitrary

This was the richest theme of the week, and it split into three pieces: a concrete, slightly baffling US ban; the engine of overcapacity driving all of it; and the trade fight over what counts as a "North American" car.

The ban. The single cleanest news event was that Polestar, the electric brand owned by China's Geely, is being shut out of the US market, apparently on the same national-security, Chinese-data-access logic that once targeted TikTok. What made it a story was the inconsistency. On Automotive News Daily Drive (Jul 9), Kjell Bergh, CEO of Borton Volvo and an operator with, as he put it, "real skin in the game," laid out the puzzle: Volvo (also Geely-owned) was granted authorization to keep selling in the US, while Polestar, built on the same electronics and even sharing an assembly line, was not. "The two Polestar models that we're selling in the United States are made respectively in Korea and in South Carolina, United States, not in China." His theory for the difference is almost entirely about scale and optics: Volvo "potentially affects millions of people instead of 40,000 Polestar owners," it runs a $1.3 billion plant in South Carolina, and, unlike the all-electric Polestar, it still sells mostly hybrids and gas cars, which this administration is friendlier toward. He called the decision "a troubling precedent" and, tellingly for a dealer, said his "level of trust in my government in terms of predictability and acting as a rational actor is substantially diminished from what it has been in earlier decades." One dark comedy footnote: since the ban was announced, Polestar sales have been "absolutely terrific" as buyers grab discounted, soon-to-be-orphaned inventory, a point echoed on Kilowatt (Jul 3), which tallied fire-sale discounts of up to $23,000 on the Polestar 3 and up to $25,000 on the Polestar 4 (now starting around $35,000).

The leak. While the front door slams, the side door is open. On Automotive News Daily Drive (Jul 7), Automotive News editor Jake Neer reported that Chinese EV startup Leap Motor has "entered Mexico using Stellantis' local dealership network to distribute its B10 electric crossover." Stellantis owns a 21% stake in Leap Motor, and the company openly calls Mexico "the start of its expansion into the North American market," with two more models planned. The same episode captured the other half of the trade dynamic, legacy makers reshoring to dodge tariffs: Toyota approved a $3.6 billion expansion of its San Antonio plant to move most Tacoma production out of Mexico by 2030, which Automotive News' Larry Veloquette tied directly to tariffs, Toyota "had their fourth best year last year… and lost money in the U.S. because of tariffs," he said, against what the outlet estimated as an "$8.6 billion annual tariff bill."

The engine. Underneath the trade drama is the reason it exists: China is building far more cars than it can sell at home, and the overflow has to go somewhere. On China EVs & More (episode #251, Jul 7), analysts Tu Le (Sino Auto Insights) and Lei Xing (former chief editor of China Auto Review) put hard numbers on the domestic collapse: gas-engine car sales in China peaked at "around 19 million units" in 2021 and have "fallen by 7 million units or 36%," while electric and plug-in vehicles are now roughly "two-thirds of vehicles sold" and could approach 80% by 2030. They flagged something they'd rarely seen in 25 years of covering China: BMW cut its full-year guidance and explicitly blamed China, quoting BMW's own line that "the negative development in the Chinese automotive market accelerated further in the second quarter, particularly for non-electric vehicles." A sister episode, China EVs & More #250 (Jul 7), reported that China is now exporting close to a million vehicles a month, "just six years ago… China exported 1 million vehicles" in a whole year, and "we'll be over 10 million by the end of 2026," and that at BYD's annual meeting, founder Wang Chuanfu declared BYD would be "number one in 2030… globally." The hosts were openly skeptical: BYD sold about 4.6 million last year, would need to roughly double to pass Toyota's ~11 million, is "constrained by batteries" (ramping only "20,000 to 30,000 units per month"), and almost certainly can't get there without cracking the US market it isn't even in yet. Geely, meanwhile, started building its best-selling Xing Yuan EV in Brazil, and BYD's Europe-designed Dolphin is set to land in the EU at "around 30,000 euro… 33,000 US dollars."

Why does China keep overbuilding if the champions bleed cash? The most thoughtful answer came from Sinica Podcast (Jul 8), where legal scholar Angela Zhang argued the Chinese government behaves like "a platform company," not owning the car makers, but subsidizing an entire ecosystem into existence and deliberately over-inviting competitors. Her co-author Alex Yang, trained as a control engineer, offered a vivid metaphor: to hit a target fast, engineers use "overshooting, you first rise above the targeted level and then you recorrect back." The predictable result is a boom-and-bust cycle they call "involution": between 2018 and 2025, Zhang said, over 400 EV makers went under, leaving a couple dozen. Beijing is now trying to cool the price war it started, for instance, forcing EV makers to pay suppliers within 60 days, a rule that Zhang said caused BYD's debt "to increase dramatically" because it could no longer quietly finance the price war by stretching out payments to its own suppliers. Boyle's Patrick Boyle On Finance framed the export flood as "China Shock 2.0," unlike the 2001 version that wiped out toys and furniture, this one targets "the capital and technology intensive sectors Europe used to have to itself," and he cited "China speed": Chinese firms getting a new model out "in under 24 months" versus "40 to 80 months" in the West.

The rulebook fight. Finally, the wonky but important battle over what counts as a "North American" car. On The Trade Guys (Jul 7), CSIS trade analyst Diego Marroquín Bitar explained that the Trump administration wants to add a brand-new requirement that 50% of a car's content be specifically US-made and raise the overall North American content threshold from 75% to "82% or more." The catch: a Mexican-assembled vehicle today contains only "roughly 40%" US content, meaning most makers can't meet the new bar without years of phase-in, and the 25% tariff on the non-US portion already leaves Mexican cars paying "approximately around a 10 to 15% effective tariff rate, which is sometimes more than what the Japanese or the Koreans or the Europeans are paying." His warning about the whole exercise: raising the cost of your own inputs means "other economic blocs, think China, think the EU… will be able to outcompete you because you're basically doing self-inflicting damage in your own industries," and uncertainty itself "is a tax on investment." One of the hosts summarized it as "somebody's killing this industry with kindness."

3. Robotaxis take a real step toward the public, and a very human step backward

Autonomy news this week had a clear shape: Waymo pushed toward opening its doors to everyday riders in several new cities, Tesla planted a flag in Miami, a big Chinese player went public, and the Fourth of July delivered a reminder that the hardest problem is still ordinary human chaos.

The concrete expansion news: on Autonomy Markets (Jul 11), hosts Walter Piecyk and Grayson Brulte, both pundits/analysts, reported that Waymo has "lit up four cities" with employees now riding in Las Vegas, San Diego, Tampa, and Denver. "This is the last gate… before the public gets it," they said; Vegas is already fully driverless, with the other three opening to the public later in the year. Two details worth filing away. First, a real-estate tell: "a majority of Waymo's large depots, that's north of 80,000 square feet, are all within five miles of international airports." Second, and more important technically, Denver is Waymo's first cold, snowy, high-altitude market, "every prior market is warm and dry." The Elon Musk Podcast (Jul 10) made the same point about weather being autonomy's real frontier: snow, freezing rain, and road salt "severely degrade sensor fidelity," effectively splitting the country "into zones that can support automated transit right now, and zones that must wait." That show also framed Waymo's employee-first rollout bluntly, it "turns their internal workforce into quality assurance testers for heavy machinery," a luxury only the leader can afford. Competitors are being pushed to move faster and dirtier: it noted Amazon's Zoox "preparing to launch autonomous rides to a segment of the public in Austin and Miami," and Tesla "expanding into other parts of Texas and also aggressively targeting Miami."

On the money question, is any of this a business yet? The most grounded voice was an operator. On Power Players with Brian Sozzi (Jul 9), Lyft CEO David Risher laid out the physical economics. Lyft is Waymo's partner in Nashville and will handle fleet management out of a newly built "80,000 square foot facility" servicing "hundreds of" self-driving cars. His warning about the unit economics: these vehicles "cost, you know, a couple hundred thousand dollars today. Maybe someday they'll cost $70,000, but they're still going to be expensive." Buy enough to cover peak demand "and they will be sitting around idle for 22 out of 24 hours… You can't afford that." His conclusion is that a hybrid network of human drivers plus a fixed fleet of robots is "the right economic model" for "a decade maybe," and he explained why Lyft won't just merge with Waymo: Waymo has "spent… tens of billions of dollars on R&D," and its incentive is to sell its technology to as many partners as possible, so the smart play right now is "a lot of polyamory. A lot of people sort of dating around."

The week's clearest sign that investors are hungry for autonomy came from Asia. On The Road to Autonomy (Jul 10), the hosts covered the Hong Kong IPO of Momenta, a Chinese self-driving software company backed in part by BYD. The debut (July 8) was "massively oversubscribed," raised "$751 million" in new capital, and the hosts said Momenta's system is "currently running in 900,000 vehicles around the world." Their read: institutional money is "shifting their preference away from speculative, capital-intensive physical AI deployments towards proven physical AI providers," you have to "walk the walk at some point." Momenta's trick, funding its robotaxi ambitions off a lower-level driver-assistance business, is one they expect more companies to copy. On the scale scoreboard, a Chinese operator gave a rare direct comparison: on Odd Lots (Jun 29, just outside this week's window), Baidu's CFO said Waymo delivers "about 500,000 trips per week" while Baidu's Apollo Go did "about 350,000 trips" last quarter across 27 cities globally, "only about 25% fewer than Google," on far cheaper hardware.

And then the reality check. Over the Fourth of July, Waymo had a genuinely bad weekend, chronicled with relish on the Center for Auto Safety's There Auto Be A Law (Jul 9). In San Francisco, Waymo vehicles drove over live fireworks in the street; roughly "100 Waymos lined up in a row" created what the hosts called "self-catalyzing" gridlock, reportedly worsened by cell-connectivity problems (the cars, they noted, "cannot work without a direct link to the mothership"). Separately, in San Mateo, two 15-year-olds were caught drinking and "shooting projectiles" from inside a Waymo, in an area where riders are supposed to be 18. The hosts, avowed skeptics, used it to needle the industry's "edge case" language: people setting off fireworks in the street "happens everywhere in the country all the time… I don't understand how these are being termed edge cases." The Autonomy Markets crew, firmly in the bull camp, conceded the point in their own way, their AI research tool's summary was that "the 'autonomy as a utility' thesis is currently being stress tested by the realities of urban chaos," and that the market "should expect increased operational expenditures" as Waymo pays for fleet recovery and closer city coordination. Even the optimists now admit the next phase costs more, not less.

What we're watching

  • The affordability math into second-half sales, whether the rate wall Erin Keating described (9.5% loans, 72-month terms at record highs) caps the demand recovery that looked so strong in the delivery numbers.
  • Whether the Polestar ban becomes a template, Kjell Bergh's worry is that the same Chinese-data logic could eventually be pointed at Volvo or any brand with Chinese ties; watch how durable Volvo's written exemption turns out to be.
  • The Leap Motor–Stellantis experiment in Mexico, the clearest test of whether Chinese brands can walk into North America through a Western partner's back door before the USMCA rulebook is rewritten.
  • BYD's battery constraint, the hosts of China EVs & More flagged second-gen blade-battery ramp as the real bottleneck behind Wang Chuanfu's "number one by 2030" claim; watch whether BYD is forced to buy cells from CATL to keep growing.
  • Denver, Waymo's first snow-and-altitude market is the single best near-term read on whether driverless cars can leave the Sunbelt, and therefore how big the map can actually get.
  • Tesla's Q2 earnings call (July 22) and Rivian's (July 20), the first management commentary on whether the delivery beats came with any margin, now that the tax credit and regulatory-credit revenue are gone.