With Biden promising 100% tariffs on competitive Chinese EV, is the US car industry going the way of the Dodo - excellent rant this from David Fickling
What we’re witnessing is an astonishing loss of nerve in a country whose capitalist hunger once created the modern auto industry. … In its long recovery from the 2008 financial crash, Detroit has progressively quit the international businesses that made it a world leader. Ford’s divisions outside North America accounted for a third of its assets in 2008. Last year, they had dwindled below 15%. GM sold European marques held since the 1920s into Stellantis NV’s burgeoning house of brands. Cosy within a market protected by distance and tariffs, and fearful of the wrenching shifts required by both electrification and Chinese competition, many executives would like to believe the whole energy transition thing was just a bad dream. Those much-discussed figures of $100,000 losses or more per EV are a good example of this. The figure is bogus, dependent on a quirk of US accounting rules that mean the one-time expense of rethinking the automotive power train for the first time in a century is being treated as an ongoing annual expense, and then divided by 2024’s lackluster EV sales. (Those who want to go into the weeds of this issue can read this X thread, which explains it in more depth.) … The enthusiasm with which some auto executives bandy about such spurious figures shouldn’t be taken as a sign of how costly EVs are, but of the deep cultural aversion to change within many US car companies. If you’ve worked all your career in an engine division that’s now being starved of R&D and capital so it can work as a cash cow for the fresh-out-of-college Zennials in the EV team, such numbers are a way to lobby the C suite to change course. If you’re an executive terrified not so much by the price but the quality of the new EV models being developed by would-be Chinese rivals, they’re a useful way of convincing politicians to ratchet up the tariffs yet further — at least until you get past the “production hell” phase that every carmaker appears to endure during its EV switch. … Like birds on isolated islands, America’s carmakers are evolving to suit an oddly congenial environment — one where they can grow big and bloated in the absence of competition from hungry rivals. Gradually, they’ll lose the ability to fly. Consumers who’d like to get their hands on affordable, clean and innovative cars will be the ones to lose out. “The American people won and special interest lost,” Biden declared as he announced the IRA. Increasingly, it looks like the reverse is happening.
Source: Bloomberg