There are 4 possible solutions to this problem;
a) convince Americans that it's worth paying more for a locally built product. This is the simplest approach, but there's only so much margin here that the consumer will tolerate. At the moment this gap is too large.
b) Tariff foreign imports to raise their cost. So the US consumer pays more, whether they like it or not.
c) subsidize local production out of the "national interest to support this industry" budget. This has the effect of ramping up demand, hence production, hence production being developed, and eventually getting cheaper.
d) improve US products, and prices, so that they compete in price to the import - or at least fall inside the margins such that a) becomes effective. c) can help bridge the gap here until the US companies have caught up.
In the long run, not all these strategies win. If you go the tariff route, then it's hard to undo it later. Local products fall behind, and the harder it becomes to catch up. Not impossible, but hard.
If Ford wanted tarrifs to help boost EV demand, and so allow Ford to build out infrastructure and lower costs, then fine. But it seems it's more of a short term play to just keep ICE Fords selling in the short term.
This is one of those "the internet is a fad, it'll never catch on" moments. EV's are here to stay. They're going to win. That's pretty obvious to anyone paying attention. If the question is "how to maintain the US car production" then they should be all-in on EV development now. It seems to me though that the current strategy seems to be very short term thinking - trying to just hold back the tide.
Onshoring can be done, but it will have a real cost someone will have to bear. The industry would prefer consumers just pay twice as much for cars, meanwhile consumers are at a breaking point like they've never felt. In the meantime there's a stalemate and nobody can move, as the decline continues.
I agree that onshoring is likely impossible without some sort of contextual reimagining of US industry.
Realistically it’s the consumers who didn’t want to pay for it
It's only rather recent that all the big name car makes from US/Europe/Japan/Korea are pretty good & reliable. There were huge differences 30-40 years ago.
On purpose. (Good)
An accident. (Good)
On accident. (Bad)
That's not true. Reality is far more nuanced than that. Sadly, it is the equivalent of a bunch of Dodo birds falling off a cliff. And this applies to every industry, not just automobiles.
The simplified version goes something like this:
Three companies manufacture forks and knives in the US. They share the market equally. Each has 1/3 market share.
One of them decides they can be clever, manufacture in China, reduce the price of their products and get more than 1/3 share.
Their plan succeeds. Their market share goes up to 1/2 and the other two companies down to 1/4 each
Try as they might to compete, they cannot, the cost basis in the US is higher.
One of them decides "We can be just as clever" and they start manufacturing in China.
Now two of the companies, on account of their lower prices, have 2/5 of the market each. The third company is down to 1/5 share.
The last company has no choice at all, they have to manufacture in China or shut their doors.
With all three companies manufacturing in China, we are now back to each having 1/3 of the market again. Except that, due to the price war, they are now selling the same product they were selling before the transition for half the price. And, of course, their margins are no better, maybe even worse.
And now, the grand finale: The industrial development all three companies effectively funded in China has taught one or more factories how to make these products. Now the Chinese companies enter the market directly, compete with their customers and drop the prices even more. All three companies go out of business. One of the companies is acquired in bankruptcy by one of the Chinese factories who sell the same product for less under the same brand.
Ironically, the reason (one of them) consumers are at the breaking point is because this chain reaction --which required consumers to prefer cheaper goods from abroad-- managed to destroy untold number of industries everywhere. This destroyed jobs by the millions. And here we are.
In some ways this is no different from the race for higher minimum wage. The huge sucking sound you are hearing are the millions of jobs that are being lost because of it.
This debate is as old as Adam Smith, or older. I think the examples he used were centered around textiles? Everyone was afraid of the new job-destroying looms.
> This destroyed jobs by the millions. And here we are.
US unemployment has been about 5% for a while. If you look back on the graph: https://www.bls.gov/charts/employment-situation/civilian-une... , there are two big outliers. One is the business cycle disaster of 2008, which blew up the property market. One is COVID.
Unemployment is basically a managed number. It can't go too far below 4% before inflation kicks in, which everyone absolutely hates, so interest rates are raised to reduce investment and consumption and thereby increase unemployment and reduce wage pressure. All of this is orthodox economics.
Everyone laughed when Trump did it, now EU is doing the same.
Not saying you're one of them (there are other people here who fit the bill much better) but like with anything else the people on the internet peddling grand narratives lacking of nuance are delusional fanboys, malevolent liars or some combination of the two. EVs are absolutely going to win certain market segments and take good chunks out of others. Unless the government gets out of the business of regulating the crap out of electrical infrastructure at great cost to us all there will likely be a whole bunch of heavier use cases where they just can't pencil out barring some yet unforeseeable breakthrough in the basic physics of batteries.
I think the auto industry is wise to think about the upcoming ~30yr transition period where all that shakes itself out and how to invest the right amount into keeping ICE stuff competitive but without investing to the detriment of winning the EV segment, etc, etc, standard big business stuff.
I’d be surprised if there’s a consequential ICE industry after 2040 (that doesn’t mean there won’t be ICE cars being driven, just that they won’t be selling outside niche industries after 2040).
The collapse of ICE vehicles will happen sooner rather than later due to a few fundamental reasons.
- China has gone all in on EVs. It’s hard to compete against the Chinese and they’re unlikely to ever develop the skills and capabilities to develop cheap ICE vehicles.
- The Strait of Hormuz fiasco has pretty much convinced countries about not being dependent on gas. Electricity is an energy abstraction. It allows you to run your EV no matter where you get your energy from because almost all sources of energy can easily be converted to electricity. Running your vehicles on this abstraction provides a lot of sovereign flexibility.
- ICE infrastructure is incredibly expensive to maintain. You have so many dedicated gas stations spread out all over that use up valuable space and resources, but also then need to be supplied with gas coming from all over the world. As EVs take meaningful share from ICE vehicles, the cost of maintaining this infrastructure for each ICE vehicle driver will keep rising. As demand goes down, gas stations will start shutting down, and then the distance between 2 gas stations or your home and thr closes fast station may increase, and range anxiety will start working against ICE and in favor of EVs.
- ICE vehicles are 100+ years into their development. EVs are just getting started. And they’re almost close to parity. It’s not clear how ICE will maintain any edge outside of very niche use cases as EVs continue to improve.
Yes, some of my friends who live in a house with a garage are very happy with their EVs, I'm still calling it absolutely ridiculous without spending extra time driving somewhere, then charging, then driving back (or a folding bike maybe).
How good they are literally does not matter at all if I can't fill it up.
> I’d be surprised if there’s a consequential ICE industry after 2040
It started in the 00s, really took off around 2010.
And don't forget that 2040 is in 14 years. You can buy plenty of brand new ICE cars today, the majority of them will definitely still be around in 14 years.
* General-purpose Semis for commercial hauling. Yes, there's some EV Semis on the road today - pilot projects, or specific routes on specific schedules. But there's a lot of general purpose semi-hauling that happens every day on odd/long routes without sufficient chargers in the right places, and they need much bigger chargers. And then there's the specialty semis that carry large/wide loads. I see them almost every day in my area, carrying large chunks of power substations, heavy manufacturing equipment, blades for wind turbines, etc.
* Fire trucks, Ambulances, Tow trucks, Police cars - For various similar reasons, it's tricky with some of these, although in well-constrained cases and with extra vehicles on tap as backup (when the other one is low on charge in an emergency), maybe can kinda work, eventually.
* "Personal" trucks that see heavy towing/hauling use (think: hauling a livestock trailer or farm equipment or heavy materials (or maybe an EV race car!), possibly long distances on a regular basis). The battery range really suffers when you put all the extra weight and drag on by towing, and people aren't willing to turn what was a 5 hour diesel trip into a 9 hour trip with supercharger stops (more time in the heat with animals, more time on the road in general, and do you have to disconnect the trailer just to reach the charge cable?)
* Backup generator ICE engines - home, datacenter, industrial use, etc. The problem here is mostly runtime and peak watts of output vs cost. You can use a battery-based solution for most of these cases, but it currently costs prohibitively more for the same performance specs. When they're being used in austere environments, sometimes there's no electric grid to even charge from, so slap on a massive solar array cost, too.
* All military use of ICE engines in general (transport, generators, etc) - Not insignificant in scope and scale, and obviously they're not going to run EVs or find chargers on battlefields.
These cases will diminish over time, especially as we continue to make advances in charging and especially battery technology, but it will probably take a few decades because there's science challenges, not just engineering ones. The military case might never go away.
Do the big Detroit automakers also build a lot of semis, garbage trucks, snow plows, and fire engines? I can see those types of vehicles being ICE holdouts. But certainly not anything you can drive with a regular driver license.
I would gladly vote for a bond to fund electric trash trucks if that resulted in quieter weekly trash service.
Your local DPW with a lot of money for new over spec'd trucks, friendly permitting office approving their permit for charging infra, strict 9-5, etc might make it pencil out for their facility maintenance. But a landscaper who's engaged in fundamentally the same work but out of rented space, a landlord that won't get preferential treatment on the install of charging infra, won't qualify for the same fleet discount, works way harder than 9-5, etc, etc. might not make it pencil out.
Local delivery can potentially make great use of EVs, but if you turn up the operational tempo or the range and have drivers slip seating or really racking up the miles it can be a non-starter vs just buying the same thing in non-ev. And of course the fixed infrastructure cost questions still apply.
You might get hybrids but you also have to remember weight matters in a lot of these applications. Can't be rolling around over weight as part of normal business. And a lot of these applications are trying to stay under 10k while still having as much cargo capacity as possible.
I'm not sure size is the qualifier though. Electric busses are becoming more and more common. I think city vehicles make good candidates for EV - they don't typically go far from home. They are cheaper to build and buy, and much cheaper to run.
The reason I think EVs win is because of the "support system" ICE vehicles need. And as ICE share decreases that support system also starts to dwindle. So those services get more expensive. I'm thinking gas stations, mechanics, parts and so on. It becomes a death spiral.
It's not unlike the switch from mainframes to PCs. At the beginning there wasn't a contest, but now mainframe skills are hard to find and hence very expensive. So the market for them goes down. Indeed most mainframe suppliers (DEC, SUN et al) died off ages ago.
“too-big-to-fail eventually becomes too-big-to keep alive"
A legacy of WW2 was the explosion of the whole defence industry. While a lot of the civilian factories got repurposed in WW2 to build trucks and planes and ships, the tech in all that stuff was very basic. For example the aircraft carrier Yorktown was "fixed" (at least good enough for the Midway battle) in 3 days. I somehow doubt a modern carrier could do that, simply because of the tech required. The US built 150 more carriers in the next 3 years.
The defense industry today gets a trillion $ a year. There's no civilian ship-building to speak of, and military vehicles are now highly specialized.
So why keep Ford et al afloat? Politically it's sold as "national security." In reality it's like more "they didn't die on my watch." And of course, having the ability to make local affects the supply chain. [1]
For example if China invades Taiwan, the US loses pretty much all electronics- especially PCs and Phones. That's a lot of leverage for a foreign country to have.
[1] US cars aren't really local - that's a fiction exposed by the proposed tarif on "car parts", which the industry squashed. In reality car parts are made all over the place (including the US) , and then assembled in the US (or anywhere else.)
https://www.cnbc.com/2026/06/11/mercedes-benz-anti-drone-veh...
Should we get into a big war, we'll likely need mass production of military vehicles and having mass production of consumer vehicles is a good start.
And all those military vehicles we build will be destroyed by tiny fpv drones that cost a tiny percent of what the vehicles cost.
Why do people cling to this WW II era idea that we need car factories in case we go to war?
In the US, there's Slate, which claims to be making a small electric pickup truck. "Preorders will start on June 24, 2026. First deliveries are slated for late 2026." [2] Price in the US$20K range, they claim. Claimed range is 150m with the base model battery. A larger battery is available. It's America's answer to the kei car. If it ships and keeps shipping.
Detroit got way too much into the "more car per car" thing. Chevrolet once had the slogan "basic transportation". They lost sight of that market. The giant pickups are just silly.
I think the demand was there, the supply wasn't.
My country, Uruguay, leads in EV adoption, and some small EVs are absolutely selling like hotcakes, a friend has the BAW Pony and I'd buy it if I had a place to charge it (there's issues with chargers inside condos due to fire risks).
170 km is plenty for city and suburban driving.
Surely 150km
Yes, it has less utility than many other vehicles in many ways, but the bed length (5 ft) is longer than a lot of trucks I see on the road which enables carrying certain kinds of loads that aren't easy in cars or trucks with very short beds as seems fashionable now.
150 miles isn't a ton of range, but it's 50% more than a first generation Leaf and those sold.
The Slate clearly isn't trying to check all the boxes, but every vehicle doesn't need to try to do everything.
The Slate would be the absolute perfect truck for me if it had a 4WD option. Being RWD-only is the only thing making me unwilling to replace my Tacoma with it.
- Neither did all the attempts at EVs from other competitors in the 2010s, like the GM Bolt/Volt or the Nissan Leaf.
- But you’re not wrong, that today EV companies usually start with SUVs/CUVs, but that’s because a larger chassis makes it easier to include a large enough battery.
That's not clear at all from the long-term habits of American consumers. Why did Ford, GM, and Stellantis all cut EV investment and increase ICE investment in the last year then?
We're seeing a moores-law-like improvement in electric cars and their power densities. If the American car manufacturers don't want to be a part of that progress, it's on them, but Asia and Europe will continue to innovate in that area and the US will be playing catch up because they're servicing what consumers want now, not what they will probably want in the future.
In the short term cutting r&d, killing off "not yet profitable" lines etc all lead to improved results this quarter. Who cares about 5 years, or 10 years from now?
If you look beyond the US then you see EV market share growing year on year. Yes, the US is resisting hard, but you can't hold back the tide forever.
Kodak invented digital photography, but kept going with film. In the end the world moved on, even if they didn't.
50 years from now ICE will be a niche market. And if US producers want to own that niche, well that's great. But it'll be a tiny fraction of what they are now.
EVs are roughly at two thirds market share in the largest car market of the world. The third largest market has them at 20%. Funnily enough, India (4th largest market) is slightly ahead of the US for EV adoption in passenger cars.
ICE cars will be a niche market much more rapidly than 50 years.
The local car industry in the US is doing that to itself by dragging its feet on EVs in the US market even when the very same companies are selling EVs outside of the US. Ford, for example, has an EV Bronco that's inexplicably only available in China; that'd sell like gangbusters here in the US, but Ford won't sell it here because reasons.
In that sense, the Ford CEO is about as dead-wrong as it gets. His company needs to either actually sell competitive products or else move out of the way for other companies to do so. His demands to keep foreign competitors out of the very US market in which his company refuses to offer products are downright insultingly greedy.
I also in particular see Cybertrucks and Rivian R1Ts everywhere here in Reno, so the very specific demand for electric pickup trucks clearly exists.
https://www.carsdb.com/en/news/1476
I get that's an apples-to-oranges comparison, considering that labor and material costs (not to mention subsidies and regulations) are probably not the same. But even at $40k, it would be cost-competitive with other EVs if nothing else.
For cars, this would mean federally-guaranteed loans up to the median value of a plant for any manufacturer with any production base worldwide (the plant to be built or retrofitted in America, of course) plus an N-year (N set to the expected payback period for a new or retrofitted plant) tariff schedule starting very high before decreasing to virtually zero. Maybe also pass a special bankruptcy regime to expedite the redistribution of assets for those who fail to really send the message that failure is an option.
I'm not an American, so I want to check with this: this is normal for the broader culture? Not just Musk?
Consider Japan's Kei car initiative, for example.
https://en.wikipedia.org/wiki/Kei_car#Description
https://en.wikipedia.org/wiki/Kei_car#Taxation_and_insurance
One route is to provide incentives, if not regulations, to force innovation on US automakers. The goal would be to yield products that are head-to-head competitive with imports.
> It seems to me though that the current strategy seems to be very short term thinking - trying to just hold back the tide.
I'm seeing that too, but from a different angle. The era of big trucks seems to be as much an effort to extract cash from the economy as it is taking advantage of a peculiar set of EPA and DOT regulations. Basically, "gettin' in while the gettin's good." It's not a long-term strategy because, at some point, people can't afford these behemoths and will go for the used car market next for cheaper goods. EVs may get caught up in that too, considering that they're aimed squarely at the sub-luxury tier and above. As we have no good cheap EV options at the moment, I think it's the same story.
And on the highway, I see tons of other kei cars, too. Light weight class cars even get a toll discount!
Building EVs would seem to be a logical goal. But is that what the policies are promoting?
You'll need to pay workers more to make D) work. That cuts into margins. That means it's DOA.
The US could invest more in battery tech, manufacturing automation, robotics etc. This both lowers cost and increases product competitiveness.
The US is investing in batteries. Domestic production has increased rapidly over the last couple of years and is continuing to do so. The US can now produce domestically all of its battery needs for grid storage, for example.
This is due to government incentives from the Inflation Reduction Act.
Monopoly is the most market-efficient vehicle to deliver returns to capital, and the most natural state of the market; one player using advantages and gains eventually destroys all opponents. Smaller players can never gain a foothold due to the incumbents being so efficient and far ahead, and it makes more sense to merge with the front-runner, allies, or be destroyed (hence the competitor pool keeps shrinking).
These are features of the system that naturally emerge without counterveiling forces.
For example, AI companies will shortly find its cheaper to just get the government to constrain their competition. The alternative is many companies spending trillions to eek out profits, a poor state to be in. Regulators want money and power, so its in their interest to create this protected state, as the "free and open market" isn't buying elections or vacation homes. And of course, any unprotected competitors left behind will die, consolidate, or sell to the victors; so we will eventually have a "winner takes all" system where one or two big players dominate. Any startups will either be quickly destroyed as people ask "why use a worse product", or will sell to the monopoly when they realize they can't afford to spend $1T training models and building data centers, and complying with all the regulations.
My point is that protectionism (in any form) isn't something to bring down over time to encourage competition -- the system can't naturally function that way, as it would require each player to go against their own interests. Instead, protectionism is a natural ever-increasing good that will be cultivated for the controlling capital and regulators in the system. We only see the "free market" operations during a time before market / regulator capture, as that's the time when there aren't yet dominant players who can guarantee power and money to the regulators, and there isn't enough consolidation of capital to immediately destroy all competition, but its an unstable market state.
Letting the industry guide policymaking seems like it could lead to regulatory capture preventing EVs from reaching the (low!) price points that they should reach. Already the two-track emissions standards and chicken tax make cars too big and the "arms race" of having a bigger car than everyone else to stay safe (at the expense of others) prevents meaningful reform.
Yeah, they have a lot of $$ historically invested in good engines but they don't care that much. They'll buy engines from each other whenever they want. They don't see it as a critical moat.
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1. Worth noting two key differences between the Mexican and American car buying experience: First, prices are fixed. There’s none of this negotiating with the dealer about the price or upselling you on undercoating stuff. You can look on the website and know what the price is. Second, instead of sales tax, Mexico uses VAT to achieve the same purpose. As a result, the price you see for a product is going to be the actual price you pay walking out the door and not the price before sales tax (at my current residence, the total sales tax is currently 10%). As a consequence, some things that might appear to be slightly more expensive in Mexico, depending on where you live, may actually be slightly cheaper.
I don't know that I think the US manufacturers have taken "inexpensive, but good value" cars seriously for decades. The least expensive Ford vehicle, I think is a Maverick which starts around $28k, Hyundai, Kia, Toyota, Mazda and Honda all have cars under $25000.
We already have a trillionaire from subsidizing local production.
Is it national defense synergy / surge capacity reasons? Is it general manufacturing know how / impact on overall domestic manufacturing supply chain? Is it jobs for current workers? Is it to keep the pensions solvent for retirees?
I saw a comment re: this issue in Europe where a Portuguese commenter asked why it was fine for the Eurocrats (lead by Germany) to let all their apparel jobs go overseas, but now he doesn't get the option of buying a Chinese car because German auto jobs need protection. There is something of a point there.
I'd be OK with tariffs if they are not meant to simply keep foreign car companies out of the US, but rather to encourage foreign car companies that want to enter the US market to build factories in the US and build their cars here with US labor.
There would probably still have to be tariffs on parts so they can't just ship all the parts here and just assemble in the US, but if they come here and build cars with US labor and with much of the supply chain being here too and are still causing headaches for the US car makers I don't see why American consumers should care.
Auto manufacturers did this to themselves thinking they could outsource all the heaviest labor portions and pocket the extra and that either the foreign labor would stay cheap and not foster the development of the industry in those countries or local labor would magically be ready whenever they needed despite being starved for decades. But they were wrong on both counts. And on top of all that they squandered all that extra profit they made so they can't seemingly afford to drop the capital needed to return to the cheaper high-volume low-margin market, atleast not with the massive managerial burden they have built up and sustained.
Cars are a way to signal status. Americans don't want to buy cheap cars, because cheap cars means low status. They'd rather go into significant debt and keep up with the Joneses. The people buying pickup trucks and SUVs are mostly picking up their kids from elementary school which is half a mile away.
Stellantis is in talks for the Chinese to invest in them too.
Oh, but the poors but the used cars and competition for their business will lead to greater supply of used cars, diminishing the resale value they can point to to justify purchase of their high-margin vehicles. Can't have that now.
e) End the socialism that is taxpayer-funded bailouts and subsidies for failing car companies, and let the free market decide.
Tired of paying for their losses.
