No EV Tax Credits This Fall?, Rare Earth Workarounds, Small Biz Gets Scammed

Episode #1084: Today we unpack the Senate’s plan to fast-track the end of EV tax credits, the global rush to secure rare earth magnet supply, and how small business owners are battling a new wave of AI-powered scams.

Show Notes with links:

• Congress is fast-tracking the elimination of federal EV tax credits, creating waves across the auto retail and manufacturing sectors. A new Senate bill proposes ending both new and used EV credits by September 30, 2025.
  • The Senate plan accelerates the credit phaseout, bypassing both House and prior Senate timelines.
  • Lucid’s CEO warns the change “would make it very difficult for new players in the market.”
  • The bill also ends penalties for CAFE standard noncompliance, easing burdens on legacy automakers.
  • Dealers are concerned; roughly 140,000 EVs sit on lots.
  • NADA:“If EV tax credits are going to be repealed, NADA urges Congress to include a reasonable transition period.”

• China’s latest export restrictions have flipped the rare earths market on its head—sending automakers scrambling for alternatives and giving non-China suppliers the spotlight.
  • After Beijing tightened exports of key magnet materials in April, Western buyers are now urgently securing non-Chinese supply chains.
  • Neo Performance Materials in Estonia has seen surging demand at a $10–$30/kg premium for non-China magnets.
  • Korean and European firms are also investing in alternative sources, even paying 15–30% more to ensure supply.
  • Industry insiders warn that premiums too high could kill demand; too low, and new suppliers can’t survive.
  • “Customers understand there is a premium… but if that premium gets too big, we’re looking at demand destruction,” said Neo CEO Rahim Suleman.

• Small business owners are facing an alarming new wave of fraud—fueled by generative AI. With tools like ChatGPT and deepfake video tech, scammers can now clone brands, replicate storefronts, and impersonate real people—all with little to no technical skill.
  • One scam targeted knife seller Oishya with a fake giveaway campaign, sending fraudulent offers to 10,000 Instagram followers and duping nearly 100 customers out of shipping fees.
  • A recruiter shared how applicants now use AI avatars to cheat video calls, forcing her to ask for ID and personal questions to confirm they’re real.
  • In another case, an engineering firm lost $25 million after an employee was tricked by AI-generated video replicas of his coworkers, including the CFO.
  • “It’s like whack-a-mole, but the moles are multiplying,” said one cybersecurity executive.
  • “Doing business online gets more necessary and high risk every year,” said Nima Etemadi of Cake Life Shop. “AI is just part of that.”

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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Transcript

Paul J Daly: 0:14

All right, today is the first day of the rest of your year. It's July 1 the automotive State of the Union. I'm Paul Jay Daly. It's calm out sear today. We're talking about EB tax credits, rare earth workarounds, and small business getting scammed out of their minds, talking about some new ones today.

Kyle Mountsier: 0:32

That's right, that's the whole thing that's actually super relevant. I would say that the third story is probably the most relevant. A third story has been to retail, auto businesses. I know very long time on

Paul J Daly: 0:43

this, but there, there's a hyper relevant part of all the stories and this day and the first day the rest of the year, and it's the fact that it is Kyle mount Sears birthday today.

Kyle Mountsier: 0:53

Oh, I'm a slightly older man.

Paul J Daly: 0:58

Come on. You never thought it'd be like this, just raining

Unknown: 1:02

money. I love happy birthday. What is it? 29 Yeah, something like that.

Kyle Mountsier: 1:07

Great. I think is what it is. I think we'll call it that, yeah.

Paul J Daly: 1:11

Oh, it's the countdown to 40.

Kyle Mountsier: 1:12

I mean, I know it's the 40, back half of the 30s. You know, it's all good.

Paul J Daly: 1:17

This morning, I saw a promo for the band switch foot, who is, like, one of my favorite all time bands got like, little switch foot album back here, and they're playing at this, you know, like, nice casino venue down here, but it's like the two people in the car, like the lead singer and the drummer is, like, switch foot here. We hope you join. You know, it's obviously a promo that was worked into the deal. Like, you have to make a promo video. And my only thought was this, man, you're getting old. Man, you're getting old, which means, man, I'm getting

Kyle Mountsier: 1:46

man, switch foot. So I can't even believe they're still, like, touring, doing the thing that's pretty wild to

Paul J Daly: 1:52

me. They were the first fans to, like, truly go independent and, like, kind of break hold there before it was right. They built the studio. They recorded their own album. It's like, yeah, I love

Kyle Mountsier: 2:01

the one of the things that I love about my birthday and my half birthday is, it's a marker, right? Happy birthday. It's like, you know, halfway through the year. So I get celebrate. I get July 1 and January 1, you know, okay, okay, so Canadians celebrate their independence day on my birthday, not the other way around. And the whole world celebrates the start of the year on my birthday. It's really my half birthday. It's really nice of

Paul J Daly: 2:25

them. It is, wow, half birthday. I don't know is that a millennial pays attention to that? Unless I say, is that a millennial thing? I'm not aware of birthday, start of the

Kyle Mountsier: 2:34

year. That's the only reason why you get excited about it when you're a kid.

Paul J Daly: 2:37

You know, I bet you want your half birthday off too, just like you want your

Kyle Mountsier: 2:40

birthday off. None of that. I'm not good at all thing. I'm not either. I took it off last year, but not this year. I

Paul J Daly: 2:46

know it just screaming on by, well, we're glad you're older. Here we go. We're glad you're here. Listen, we have an ASOTU Edge webinar coming up next week, next Wednesday, July 9, smart customer transportation management with Steven Chapman of Uber for business, we get to unpack how you can increase better your customer experience, save some money and build some more resiliency and consistency into getting people where they need to be, which is the best place when people are at the service department, most times they don't want to be there. They want to be somewhere

Kyle Mountsier: 3:18

else. Yeah, and there's a little easter egg talking about food that you're not going to want to miss. In that one, I will make sure we talk

Paul J Daly: 3:24

about the food. Yeah, always talk about the food. All right, let's talk about some news. Congress is fast tracking the elimination of federal EV tax credits, creating waves across the auto, retail, manufacturing sectors. A new Senate bill proposes the ending both new and used EV credits. By September 30, we're almost there. By the way, the senate plan accelerates the credit phase out, bypassing both House and prior Senate. Senate timelines. Lucid CEO warns the change would make it very difficult for new players in the market. I don't think any of their cards qualify. Anyway. The bill also ends penalties for CAFE standards, non compliance, easing burdens on legacy automakers. Dealers are concerned, though roughly 140,000 EVs are currently sitting on dealer lots, just hoping someone executes that credit on them. Nada said, quote, If EV tax credits are going to be replayed, repealed. Nada urges congress to include a reasonable transition period. They're saying too fast.

Kyle Mountsier: 4:21

Yeah, I think the the real trigger here, to me, is September 30. That's 90 days away. I most manufacturers have over 100 day supply on new EVs, yep, and that's just what's on ground, not not counting all of the In Transit inventory that's probably already been made. And so when you look at this, yeah, could it accelerate the adoption of those vehicles pull people forward into the market? Yes, but all that manufacturing that's still going to happen for the second half of the year that's already pre planned, it's very, very hard to roll back on those plans for an OEM. Like that man, that could get real dicey, especially for OEMs that have become dependent on that for sales

Paul J Daly: 5:05

pace. I mean, I don't, I don't know what I'm trying to think of like from a process standpoint, this is a bill that's introduced. They can vote on it. They can introduce another bill. Yep, you know the Elon Trump spat that's continuing.

Kyle Mountsier: 5:20

That's not helping. This not helping at all.

Paul J Daly: 5:23

Like, okay, fine, fine. Watch this. We'll get it done faster. Yeah, they're going back and forth. Yeah,

Kyle Mountsier: 5:29

I agree. Like, reasonable. Can we be reasonable? We've been arguing for reasonable transitions, reasonable play, play, talking about politics Kyle, it can't be reason reasonable.

Paul J Daly: 5:43

It's it's like that. I don't know. We just get to make this show that

Kyle Mountsier: 5:47

we just said what we said, speaking of

Unknown: 5:50

segue,

Paul J Daly: 5:56

China's latest export restrictions have flipped the rare earths market on its head, sending automakers scrambling for alternatives and giving non China suppliers the spotlight. Excuse me, after Beijing Titan exports of key magnet materials in April, Western buyers are now urgently seeking non Chinese supply chains. Neo performance materials in Estonia has been surging at demand at a $10 to$30 a kilogram premium for non China magnets, Korean European firms also investing in alternative sources, even paying 15 to 30% more to ensure supply. Industry insiders are warnings, warning that premiums too high could kill demand. Too low, new suppliers can survive customers. Here's a quote from Neo CEO Raheem Suleiman. Customers understand there's a premium, but if the premium gets too big, we're looking at demand destruction. This

Kyle Mountsier: 6:50

is the definition of a convergence of issues when it comes to having EVs that are available at a price point that makes sense to have enough demand to carry, like the demand bridge that we have from early adopters to the next wave of adopters. And you throw on the first story of potentially not having these EV tax credits, and then these rare earth materials and key magnet materials that are necessary for all of this. EV production being tightened down in China, be raising prices in the rest of the world because they know that they now have a high demand, low supply entity, like it could get really weird out there. And then, you know, we were at the thing last week with, with, with Steve Greenfield, yeah, he said, what

Paul J Daly: 7:40

it is, we can say what it is. It was a it is. It was a it was a consortium. We were with 75 other kind of global experts in China and the supply chains and all that stuff. So then

Kyle Mountsier: 7:53

tightening everything down, restricting going super vertical, owning the vertical like owning the vertical and and not just that, but China is basically like creating this base layer of componentry that every manufacturer is using. So now that's how they're driving down costs. So you see China continuing to drive down costs, removing people from being able to have access to that the rest of the world, raising prices on these rare earth materials and the US, removing EV tax credits. Can I say, screeching

Paul J Daly: 8:25

halt getting crazy in the article, it does say that the average vehicle uses two to four kilograms of this material to make themselves or to be created. So 10 to $30 per kilogram premium, you know, you could be looking at adding between one and $200 per cost. That's just in raw materials, right? And then all that gets baked up. So definitely starts adding up. The big consideration that was being talked about at this closed door meeting was the dominance of electrification in general, and the platform and electricity generation. So there are so many dynamics to this issue. It's not just about the vehicles getting on the lots or being made at a reasonable price or tax incentives. It's about, literally, the mass transition from oil to electricity and controlling all the things you need to have an electricity powered society, I guess, and China moving towards energy independence as best they can through electrification, because they can control it. It's it's complicated. We'll have some more to talk about on this. But in the end, like, how does this boil down to the front line? Consumers are hearing stuff this and that it's still going to come down to you being able to explain the benefits of an electric vehicle and the drive train, making sure it's a good fit for the consumers lives. And at that point, the sale of the vehicle should, like go out, you

Kyle Mountsier: 9:43

know, actually what it is, this is what's interesting when, when I talk, when we talk to there was a gentleman that was very aware of the Chinese market and and why people are buying these cars. The majority are buying because of the drive style and the technology. Inside of them. It's not for the electrification. It's not an an earth conscious thing. It's like, know the technology and the way it drives, and love the way it drives. So I think getting people in these cars creating experiential events that allow someone to drive it, like, actually put their their foot on the accelerator and feel how that thing takes off, touch and feel the technology doing like tech days at the store so people can understand what they're buying. Because it's not just about like going green with electrification. It's actually about the technology in the car. And I think that that as a pivot for dealers will allow people to be more attracted to an EV than just because it's electric and they can save costs, right? Yeah, it's more about buying the technology instead of saving the money on the on the gas.

Paul J Daly: 10:49

There's so much experience to be had in just walking people through and I think there's still a ton of curiosity around it. It's a great excuse to get people in the store. Let them know you know what you're talking about. Let them know you're a great place to do business. It's a good thing. And probably in I don't know what's gonna happen in another week or so, we're gonna have, if you were at ASOTU CON two years ago, you remember John Sacco. He produces this Docu series called repurposed. He's a metal recycler, and season three is launching. They did a ton of stuff with Toyota. We're gonna have him on the show. And I did look it up. Magnets are definitely recyclable. So we're definitely going to have a few questions for Come on now, and this, if it's like, you know, he may just be the most important man in this whole discussion. Whoa.

Unknown: 11:30

Oh, speaking of Whoa. Segue,

Paul J Daly: 11:34

small businesses kit, here we go catch a drink with AI.

Kyle Mountsier: 11:38

Oh, there's an alarming new wave of fraud hitting small businesses fueled by generative AI with tools like chat, GPT and deep fake video tech scammers are can now clone entire brands, replicate storefronts and impersonate real people, all with little to no technical skill. One scam targeted knife seller oisha with a fake giveaway campaign sending fraudulent offers to 10,000 Instagram followers and duping nearly 100 customers out of just shipping fees. Here's a free thing. Give us the shipping fees. No thing. On the other side, a recruiter shared how applicants now use AI avatars to cheat video calls, forcing her to ask for ID and personal questions to confirm they're real. In another case, an engineering firm lost $25 million after employee was tricked by an AI generated video replica of his coworkers, including the

Unknown: 12:30

CFO. Oh my gosh, that$25 million I

Paul J Daly: 12:34

think that was, let's paint that for a second. Yeah, you get on a call, you're, you're you're responsible for approving this and that. And your coworkers are there, the CFO is there, the other people you're jamming with, and they're like, they get on the car. Like, all right, today we're just talking about some transfers we need to have done. Right? Yes, what's it for? Next person flips. They say, what it's for? Blah, blah, blah. Can we get when can we get these done? Okay, you're gonna be like, Oh, we can get these done by this. Okay, great. Execute. You get off the call. $25 million goes away, and the CFO is like, what is this? And you get a call. Yep, that that's that is mind boggling. It's unbelievable. I

Kyle Mountsier: 13:10

think we need some, like passwords, safe words, right? Okay, what is your memorable word? Aardvark, right? That's not a bad that's not a bad plan. I think that, like IT departments and and and business owners should be thinking about how do, especially in high risk environments, things that, things where transactions or money is being exchanged, that you increase the security protocols in your organization. You know, I mean, you look at like we, we've always known about driver's licenses titles, but that stuff is getting so much easier to deep fake, like just getting a photo of someone's driver's license is no longer good enough,

Paul J Daly: 13:47

not even close. You can fake that all day long. Not Not only that, but the the fakes when it comes to just voice cloning was one of the ones they mentioned, right? Faking a bank out. Voice cloning, it speaking to a bank. The article did highlight that some companies are adopting some form of biometric authentication tools. Voice used to be one of those, remember, like all these sophisticated systems now, we know it's your voice you can go through that's over with. Yeah, I don't know. I'll tell you what. This actually boils down quite a bit, even to family safety and security. We've heard stories of people getting calls from police or fire emergency workers saying, like, Hey, here's the situation your loved one got in an accident. We need you to do this. What's their health insurance information? We need to right? And they dupe them into all types of stuff. So I think if you're a family, you also need a code word, yeah, right, because my kids could get a call from me, and if they feel like Something's fishy, they should be like, what's the word? And I would be like, far from newgen. Okay, I don't know what the word is, but I think that'd be a good one. Yeah,

Kyle Mountsier: 14:50

I just and I think this is actually an argument for the move back to retail, like getting people in person is such, is such a critical part of. We do, and if we can create those experiential moments where people want to be a part of it, they'll feel more attracted to it, because we will be like more and more consumers will be concerned with their own online interactions, so they will be excited about going to a place that has an experiential piece to it, that will be the new like, the new thing No longer will online be so exciting because it will be so disparate and so like, it'll be so hard to understand whether or not you're dealing with real that the only thing that will be real is doing, doing things in person. So I think the race back to retail is going to be pretty hefty. I do.

Paul J Daly: 15:38

I think blockchain is going to play a role in this hole figuring out who's who, what's what anyway. I mean, maybe they could just ask us who our favorite child is, which, of course, would change daily, day to day. So get out there, get a password, take care of one another. We'll see you here tomorrow.

Unknown: 16:02

You