By Paul A. Eisenstein
If anything, one might argue, we have not seen this much change in the automotive industry since the earliest days of the 20th century, when cars were built by hand, used hand-cranked starters, wooden wheels, and acetylene lights.
Looking ahead, the changes will cover everything from basic design to manufacturing. Tomorrow’s vehicles will feature smartphone levels of connectivity and “hands-free/eyes-off” autonomy. And, even though EV sales have gone into a slump since federal tax credits were phased out last September, “Virtually every vehicle will use some form of electrified drivetrain technology,” forecasted Sam Abuelsamid, Lead Analyst with Telemetry Research.
The coming transformation will also impact the very way vehicles are put together and, perhaps more significantly, by whom. Gone are the days when Detroit dominated the market. The Detroit Three have to contend with a growing list of competitors, from domestic start-ups such as Tesla, Rivian, Slate, and Lucid, to Asian powerhouses like Toyota Motor Corp. and Hyundai Motor Group. Collectively, General Motors, Stellantis, and Ford now hold just a 38% share of U.S. new vehicle sales, and it is far from certain they have bottomed out.
Chinese Exports Pose Major Threat to U.S. Auto Industry
The even bigger threat, many believe, is posed by domestic Chinese start-ups like BYD, Geely, and Great Wall, who have increased their global exports more than eightfold since 2019. Letting Chinese brands into the U.S. market, warned Ford Chief Executive Officer Jim Farley, would pose “an existential threat.”
He and other industry leaders are pressuring the White House to keep the doors closed, though many observers think it is only a matter of time until Chinese brands begin to pry them open – as they recently did in Canada.
A new trade agreement slashed tariffs from 106.1% to just 6.1% on up to 49,000 Chinese battery-electric vehicles annually, about 3% of annual Canadian auto sales. That will eventually climb to 70,000 EVs.
The biggest challenge Michigan and the (Detroit-based) auto industry has is the very real risk that the industry we created will be surpassed by our global competitors,” warned Sandy K. Baruah, President and Chief Executive Officer of the Detroit Regional Chamber. “We’re still too wedded to what was and not wedded enough to what will be.
‘We Can Adapt to Almost Anything But Uncertainty’
It is not that the Detroit Three are idly standing by. They have invested billions of dollars in autonomous vehicle development, for example, and in electrification, only to report massive losses last year as they were forced to back off on aggressive EV development and production plans. Ford, for example, scrapped several EV programs still in development while ending production in December of the all-electric F-150 Lightning pickup.
“We can adapt to almost anything except uncertainty. And unfortunately, where we are right now is there’s nothing but uncertainty,” Ford Executive Chair Bill Ford stressed during last year’s Mackinac Policy Conference.
The level of uncertainty has only increased since the Trump administration took office. Speaking on background to avoid being seen taking sides, several C-level executives praised certain moves by the White House and Congress, notably the tax credits contained in last year’s “Big Beautiful Bill,” the rollback of Biden-era fuel economy standards, and the lifting of penalties for those who miss their targets.
But the sentiment was far more downbeat when the topic of EV tax credits and the frequently revised auto tariffs came up. Said one insider, “His company is slow-walking billions of dollars in investments, waiting to see where trade rules ultimately will settle.”
Positive Policy, Talent Top Industry Needs, MichAuto Priorities
Concerns were also raised about state policies.
