What the Trump Administration means for the future of cars
No matter how nimble and lean the automotive industry becomes, however many Silicon Valley practices it adopts or innovative business leaders are hired, it will always be slowed down by the basic fact that it actually makes things.
Big, complicated things with thousands of moving parts that have to combine with a software suite; meet sometimes conflicting international safety standards; align with marketing and consumer expectations; integrate into an existing supply, distribution and repair chain; and operate in almost any conceivable conditions for years.
So until an entire car can be printed on-demand—which unless we hit the technological singularity is realistically decades away—the manufacturing process is going to continue to look more or less like it did 50 years ago: slow.
Aside from certain broad trends, playing the future is a sucker’s game. We think we’re going to run out of oil, but a cheap method of extracting petroleum from landfills might be six months away. It looks like sea levels will be a meter higher in the next 80 years, unless North Korea starts a nuclear winter or a mysterious cloud of space dust comes between us and the sun.
So while automakers have to plan for the most likely scenarios, they also have to hedge their bets. Right now dealer lots are full of slow-selling hybrids, cars designed when gas prices were heading towards $4.00 a gallon in 2013, instead of hovering around half that and sending full-size SUV and pickup sales through the roof. And that was with a consistent and predictable Obama energy policy in place. What on earth will the next four years bring?
Uncertainty, if nothing else. The Trump White House will almost certainly be easing CAFE (Corporate Average Fuel Economy) standards, which should be good for carmakers, right? Unless that means that they’ll have an American market which wants affordable big cars with V-8s, while the rest of the world is happy to pay $15,000 more for 75mpg.
Then they’ll have a choice between selling cars that one side or the other doesn’t want; or trying to develop platforms that will work in very different situations. Either one is far from profitable.
Where will they make these cars? Clearly you don’t want to be increasing Mexican production, because even if you were allowed to in the first place you might be hit with penalties, tariffs, or both. Many of your suppliers are entirely based overseas, so what happens when half of the components going into a car become 20 percent more expensive? Do you start making more of them yourself, or find a new American supplier?
Neither is a good choice, because in either scenario the skilled labor might not even exist, nor the basic supply chain for the third-tier manufacturers, nor the rail transportation infrastructure to move raw materials. Hyundai and Kia are already putting over $3 billion in US manufacturing, soaking up an already limited pool of resources. Multiply that by Honda, Ford, Toyota and GM. Who is going to build these factories, and work in them?
A trade war over raw materials like steel, aluminum, and the rare earth elements in batteries and computers could, and maybe will, break at any time. In fact, on April 21, President Trump made definitive statements that steel tariffs were just around the corner. If you think increased domestic automotive manufacturing takes a long time to ramp up, you should see what reinventing American steel will require.
At best, though, any of that is a guess, a massive gamble that the Trump administration will develop a cohesive policy and follow through on it, neither of which are skills they’ve shown us yet. Who would want to take a chance on that, or assume we’ll have the same President in 2021? Fear is the enemy of invention, and inconsistency smothers innovation.
There’s no way a major company can commit to a future with even more variables than usual, because to choose the wrong path could be fatal. We will all end up paying that price for many years to come.
David Traver Adolphus is a freelance automotive researcher who recently quit his full time job writing about old cars to pursue his lifelong dream of writing about old AND new cars. Follow him on Twitter as @proscriptus.