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Seismic Trump, Biden rift has automakers taking sides

By Breana Noble and Kalea Hall, The Detroit News on

Published in Business News

DETROIT — Just days after Donald Trump won the 2016 election, the trade group representing major automakers in Washington called for reconsideration of the Obama administration's fuel-efficiency standards in the face of low gas prices and large capital investments.

Now, the industry is at odds, with General Motors Co. and Fiat Chrysler Automobiles NV supporting the Trump administration's national standard that rolls back the requirements. Meanwhile, Ford Motor Co. has backed the efforts of California and other coastal states to impose stricter standards that would reduce tailpipe greenhouse gases — an effort Democratic challenger Joe Biden has encouraged with plans to reverse Trump's pullback.

"You have these big splits on those aligned with California, and those aligned with Washington," said Kristin Dziczek, vice president of industry, labor and economy for the Center for Automotive Research in Ann Arbor.

"One of the concerns is under the current administration you've seen deregulation and that the pendulum could swing back hard in a Democratic administration. That affects products you're planning seven to eight years out. It could mark a big sea change of events like electrification."

The next four years promise to deliver the most sweeping technological shift in the auto industry since Henry Ford's moving assembly line more than 100 years ago, as automation, connectivity and electrification go mainstream. Electrifying lineups requires billions in investments that carry significant implications for jobs, operations and communities even as consumer acceptance remains largely uncertain.

That makes the federal government's influence on the marketplace even more critical — depending on who occupies the Oval Office come Jan. 20. Biden's plan calls for investments in charging infrastructure, rebates to consumers for purchasing more fuel-efficient vehicles and incentives for manufacturers of electric vehicles. He envisions a zero-emission future in the coming decades and a transition away from the oil industry.

 

A strong supporter of the oil and gas industry, Trump has resisted expanding subsidies for electric-vehicle purchases. Tesla Inc. and GM electric vehicles no longer qualify for the federal $7,500 subsidy. Both Trump and Biden say they would incentivize companies who return manufacturing from abroad.

"It's very tough to sell electric vehicles at $2 a gallon for gas," said Warren Browne, a former GM executive who consults automotive suppliers and is an adjunct professor at Lawrence Technological University. "If the hill was steep at $2, the hill will be much steeper under a Trump administration than under a Biden administration."

A steeper hill, he adds, would challenge the survival of electric-vehicle startups, make it difficult for traditional automakers to gain on their investments in electrification and help Tesla to continue to dominate the segment. Meanwhile, China and the European Union are more aggressively regulating the industry's emissions, which could position them as the hubs of electric innovation.

Trump rolled back Obama-era fuel economy standards that the overall industry has not met since 2015. He reduced the required annual fleetwide average mpg for model years 2021-26 from 5% to 1.5%. Automakers are required to have a fleetwide average of 40.4 mpg by 2026 under the new requirements, down from an average of 46.7 mpg for cars and trucks by 2025. Easing penalties, according to the industry, also has saved at least $1 billion in annual compliance costs, though a federal appeals court in August reversed that action.

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