Will Some US Automakers Hit Crisis During Trump Term? – CleanTechnica

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Naturally, when it comes to big macroeconomic changes, issues often seem to come out of the blue. You can reverse engineer what happened and everything looks obvious, and there are always some canaries or boys crying wolf who notice the issue early but are ignored. However, by and large, macroeconomic trends are not easy to predict. Of course, if someone plans to institute a trade war and slap huge tariffs on everything, well, we do know what to expect. Anyway, though, as one stark example, who saw COVID-19 coming, or the full Russian invasion of Ukraine?

When it comes to this article, something that crossed my mind sometime last week was: what will Trump do if US automakers face a crisis during his next term?

There are several factors at play here. For one, electric vehicles are getting more and more competitive, fast. EV sales have already started booming in many parts of the world, but we haven’t even hit some critical price point parity yet. But we’re getting closer. As they say, technological disruption often feels like it’s taking forever, and then seems to happen suddenly and all at once. In China, more than 50% of new vehicle sales are now plugin vehicle sales. In the US, we’re below 10%, but that will change. Automakers that are not prepared for the tech transition could run into financial crises.

Also, as noted to start, macroeconomic shocks are always possible, and those shocks hit the auto industry hard. Third, there’s that risk of tariffs. If Trump follows through with what he said during the campaign trail, US shoppers are going to get hit with severe tariffs and rapid inflation. (Maybe someone will knock sense into the old man before that happens.) Lastly, there’s the fact that much of the country is underwater and struggling, and the market for new cars could go on a downward slide.

In the past, when the US auto industry ran into crisis, it was bailed out. The calculus was that letting big US automakers collapse would cost the country more and do more damage than giving them a big chunk of cash, some slaps on the wrist, and the requirement that they promise to do better. Under a Trump administration, is that the way things would go? Trump is a transactional president with deep ties to the mafia and mafia mentality. If he thinks big US automakers didn’t do enough to support him during his campaign, he may well be happy to see them crash and burn. With Elon Musk as his most recent right-hand man, I think we can assume Trump would be getting whispers in his ear to let these old automakers die.

On the other hand, going down that same train of thought, mafia mentality would then be to squeeze something out of those big companies for oneself in exchange for saving them. What could Trump get from Ford, GM, or others in exchange for having the US government bail him out? Without a doubt, Trump would be coming up with a list in his head and doing the calculations. So, would we end up with the same old bailout but instead of requiring more efficient cars and better business practices, we’d get Trump demanding some all-hail-dictator-Trump performances?

I think there’s a pretty high chance large automakers run into a crisis in the coming 4 years. If that is the case, what I don’t really know and am very curious about is how things would proceed from there. What are your thoughts on this?

Oh, as a footnote, also keep in mind that Volkswagen is hitting a crisis and the CEO of Stellantis just resigned due to their own issues. The whole global auto industry is in a precarious situation, unless your name is BYD.