With the 2024 US presidential election in full swing, the automotive industry is once again at the forefront.
As America's famous "Motor City" and home to 1.1 million auto jobs, Michigan is strategically important in the election.
Since 2008, presidential candidates who have won Michigan have gone on to win the White House, including Trump in 2016 and President Joe Biden in 2020.
For now, Michigan remains a key swing state.
Vice President Kamala Harris, former President Donald Trump, and their running mates and supporters have all actively campaigned in Michigan in recent weeks, trying to win over undecided voters there.
Because Michigan's economy is so closely tied to the auto industry, Jefferies analyst Philippe Houchois wrote in an investor note recently, "Michigan's 16 electoral votes put the auto industry at the forefront of the political debate."
In fact, the auto industry has been a hot topic in the US presidential election.
While major automakers and suppliers have shied away from publicly endorsing any presidential candidate (certainly not Musk, who has staunchly supported Trump), several auto industry executives and policy experts spoke in interviews about the election, citing electric vehicles, trade, tariffs, China, emissions regulations and labor as top concerns for automakers.
In addition, they discussed how to prepare for the policies each candidate might adopt and how to deal with the possibility of a divided Congress, in which the two houses of Congress are controlled by different parties.
Emission regulation
The most pressing issues for automakers are fuel economy (improving vehicle fuel efficiency and reducing greenhouse gas emissions) and emissions regulations, especially in several states such as California, Washington, Oregon and New York.
In California, for example, under the current requirements of California's Advanced Clean Vehicle Regulation II (ACC II), proposed and developed by the California Air Resources Board, new cars sold by 2035 must be zero-emission models. Starting with the 2026 model year, automakers must ensure that 35 percent of the vehicles they sell are zero-emission vehicles, including electric vehicles (BEVs), fuel cell vehicles, and standard-compliant plug-in hybrids.
The California Air Resources Board reports that 12 U.S. states and Washington, D.C., have adopted the rules, however, about half of the states plan to implement them starting with the 2027 model year.
Since the start of the year, only 11 states and the District of Columbia have had EV penetration of more than 10 percent, according to data from the American Automobile Association and the Alliance for Automotive Innovation, a lobbying group that represents most major automakers operating in the United States.
Regardless of who ends up in the White House, many automakers will focus on delaying the California Air Quality Board's clean car rules in hopes of easing those standards to lower production costs and improve market competitiveness, auto industry executives said.
Auto industry insiders expect Trump to eliminate or freeze corporate average fuel economy (CAFE) standards for the 2027 to 2031 model years, and Harris to seek a compromise with automakers in setting the standards, an approach that is somewhat similar to the one taken by Biden.
Electric cars and the Inflation Reduction Act
Four years ago, electric cars were a hot campaign issue for Democrats; Four years later, it has become a Republican campaign buzzword.
Currently, electric vehicles and U.S. policies that support their adoption (such as the Inflation Reduction Act) are top concerns for auto industry executives and lobbyists.
If Trump returns to power, regulations and incentives for electric vehicles could change significantly, putting the industry in a temporary bind.
Republicans, led by Mr. Trump, have largely condemned electric vehicles, calling them a commodity imposed on consumers that would destroy the American auto industry. Trump has vowed to take office to repeal or eliminate many of the vehicle emissions standards set by the Environmental Protection Agency, as well as incentives to promote the production and adoption of electric vehicles.
By contrast, Democrats, including Harris, have historically supported electric vehicles and related incentives.
However, due to slower than expected consumer adoption of electric vehicles, and consumer attitudes toward electric vehicles, Harris has recently not been as strong in its support for electric vehicles. However, she has said she does not support mandates for electric Vehicles, such as the Zero-Emission Vehicles Act of 2019, which would require automakers to sell only electric vehicles by 2040.
The consensus in the industry is that future EV policy requirements will depend on the outcome of the US elections. If the election results lead to new policies or regulations, automakers could face new requirements, so they are waiting to see the outcome of the election and preparing their plans accordingly.
As Pablo Di Si, CEO of Volkswagen of America, said at a press event in September, "Depending on what happens in the U.S. elections, we may or may not face new requirements." [So] I'm obviously not making any decisions about future investments right now. We are waiting to see (the outcome of the presidential election).
However, Lucid Group CEO Peter Rawlinson said that no matter which presidential candidate wins the election, he believes the U.S. electric vehicle industry is still in its infancy and needs to continue to "nurture."
He also believes that the requirements in the Inflation Reduction Act for taking advantage of the electric vehicle tax credit should not only focus on the size of the battery, as is currently the case, but also on the efficiency of the vehicle. "It's really encouraging the manufacture of power-hungry electric vehicles," he said.
"It's really encouraging car companies to put more batteries in, rather than chasing higher energy efficiency."
Trade, tariffs and China
Both Mr Trump and Mr Harris have expressed an interest in reviewing the United States-Mexico-Canada Agreement, the US North American trade deal, amid concerns about the global expansion of China's auto industry.
The USMCA, negotiated during Trump's first term as president, replaces the North American Free Trade Agreement (NAFTA) and takes effect in 2020.
At the time, Trump touted the deal in his renegotiation, and Harris was one of 10 US senators who voted against the USMCA. For now, however, both sides agree that the deal needs to be improved to better support U.S. auto production.
Gm Chief Executive Mary Barra said last week that the company was "closely monitoring" the election, including how changes in trade and tariffs could affect the company. "Regardless of the outcome of the election, we have and will continue to engage constructively in the policymaking process."
She also said that while some cars sold in the United States are made abroad, many of the jobs created in the United States are associated with allied partners. This shows that while the car's manufacturing location may be abroad, these partnerships still have a positive impact on the U.S. economy and jobs. She stressed the complexity of the issue, meaning many factors need to be taken into account when discussing jobs, manufacturing and international cooperation.
Tariffs are at the heart of Trump's plans for the auto industry.
Trump has said he would sharply increase tariffs - by as much as 500 percent - to prevent Chinese automakers from exporting cars from Mexican factories to the United States.
Although Chinese automakers are not currently pursuing such a strategy, foreign media expects that they may try to adopt this approach in the future. However, Geshe Automotive Research Institute believes that in the future, whether Chinese car companies produce in China, Mexico or other countries, they will be imposed high tariffs when exporting to the United States, which means that other paths for Chinese car companies to enter the U.S. market will be completely closed.
Harris called Trump's tariff proposal a "sales tax on the American people," though she did not outline specific changes she would make to the current tariff structure if elected.
Jefferies noted that non-U.S. automakers account for 48 percent of total U.S. production and 52 percent of USMCA production, so if Harris wins the election, non-U.S. automakers could benefit more from the policy or market environment because of their larger share of production in the U.S. and North America.
Labour force
Industry insiders interviewed almost unanimously agreed that labor would be a concern among the many issues related to the auto industry, and they worried that a Harris victory would mean further increases in union organizing power.
Both Biden and Harris are so focused on the United Auto Workers (UAW) and UAW President Shawn Fain that they even had him speak at the Democratic National Convention.
Arguably, under Fain and the senior advisers he brought in from the outside, the UAW's political influence has grown stronger and it is likely to play a greater role in policy and decision-making.
However, there are different views or differences of opinion within the UAW and other unions. Such divisions may affect the union's political unity and action.
The Teamsters declined to endorse either candidate because of internal disagreements, but UAW leaders not only backed Harris but also helped her campaign in Michigan and other states.
The UAW said last week that internal polls show "Kamala Harris gaining strength over Donald Trump, and Harris' lead over Trump has increased significantly in the last month."
By contrast, the relationship between Trump and Fain is full of gunpowder.
Trump and Fain have traded accusations on social media and in public. For example, Trump has criticized Fain's leadership on social media, arguing that he has not done enough for workers, while Fain has hit back at Trump, accusing him of taking positions on workers' rights and economic policy that are bad for workers.
What's more, blue-collar workers, including UAW members, were seen as key supporters of Trump's victory over Democratic candidate Hillary Clinton in 2016.
But UAW leaders have publicly called for support for Democratic candidates, a political antagonism that has further strained relations between Trump and Fain. But what is certain is that Biden and Harris' aggressive approach to supporting workers and unions, and the degree of emphasis on the UAW, will worry automakers and suppliers, especially the UAW's growing influence in organizing unions and fighting for workers' rights, which could put companies under cost and competitive pressure.
Conclusion
Jefferies analyst Philippe Houchois wrote in an investor note that "there are significant differences in rhetoric and views between Trump and Harris, but there are also some points of common ground or convergence."
Industry insiders expect a Harris victory to be a continuation of Biden's four years in office, rather than a replication. They see Harris as likely to be more understanding of business, but there are concerns that some of Harris's policies and appointments are unclear, experts said, as well as concerns about her ties to the UAW, particularly Fain, who has been antagonistic to automakers and may even already be seen as a "mortal enemy."
Most auto industry executives expect that if Mr. Trump returns to the White House, he will revert to the policies and measures of his previous presidency, but perhaps take a more aggressive stance than before.
Industry insiders expect Mr. Trump to loosen or roll back the federal government's tightening emissions and fuel economy rules; Reigniting the fight between California and other states (referring to the dispute between California and some other states over setting auto emission standards) And there could be funding changes to key pieces of legislation in the Biden administration's Inflation Reduction Act.
It would be difficult for Trump to repeal the Inflation Reduction Act outright, but he could eliminate or limit electric vehicle subsidies through executive orders or other policy actions.
Regardless of whether the industry's "weather vane" changes or stays the same, automakers, suppliers and other auto-related companies are preparing for different election outcomes and possible repercussions.
As Stefan Hartung, CEO and Chairman of Bosch, said, the US election will bring clarity to the market and the industry will adjust to the outcome.
"We can't make perfect assumptions. Both presidential candidates offer some opportunities and challenges that companies have to take into account." So says a leading lobbyist and public policy expert for a major automaker.
Some Wall Street analysts have speculated that traditional automakers - particularly the "Detroit three" General Motors, Ford Motor and Chrysler parent Stellantis - would benefit the most under Trump and Republican control of Congress.
Electric vehicle startups such as Rivian Automotive and Lucid Group stand to benefit more after Harris and the Democrats win, largely due to their administration's expected plans involving electric vehicles and fuel economy requirements.
With the 2024 US presidential election in full swing, the automotive industry is once again at the forefront.
As America's famous "Motor City" and home to 1.1 million auto jobs, Michigan is strategically important in the election.
Since 2008, presidential candidates who have won Michigan have gone on to win the White House, including Trump in 2016 and President Joe Biden in 2020.
For now, Michigan remains a key swing state.
Vice President Kamala Harris, former President Donald Trump, and their running mates and supporters have all actively campaigned in Michigan in recent weeks, trying to win over undecided voters there.
Because Michigan's economy is so closely tied to the auto industry, Jefferies analyst Philippe Houchois wrote in an investor note recently, "Michigan's 16 electoral votes put the auto industry at the forefront of the political debate."
In fact, the auto industry has been a hot topic in the US presidential election.
While major automakers and suppliers have shied away from publicly endorsing any presidential candidate (certainly not Musk, who has staunchly supported Trump), several auto industry executives and policy experts spoke in interviews about the election, citing electric vehicles, trade, tariffs, China, emissions regulations and labor as top concerns for automakers.
In addition, they discussed how to prepare for the policies each candidate might adopt and how to deal with the possibility of a divided Congress, in which the two houses of Congress are controlled by different parties.
Emission regulation
The most pressing issues for automakers are fuel economy (improving vehicle fuel efficiency and reducing greenhouse gas emissions) and emissions regulations, especially in several states such as California, Washington, Oregon and New York.
In California, for example, under the current requirements of California's Advanced Clean Vehicle Regulation II (ACC II), proposed and developed by the California Air Resources Board, new cars sold by 2035 must be zero-emission models. Starting with the 2026 model year, automakers must ensure that 35 percent of the vehicles they sell are zero-emission vehicles, including electric vehicles (BEVs), fuel cell vehicles, and standard-compliant plug-in hybrids.
The California Air Resources Board reports that 12 U.S. states and Washington, D.C., have adopted the rules, however, about half of the states plan to implement them starting with the 2027 model year.
Since the start of the year, only 11 states and the District of Columbia have had EV penetration of more than 10 percent, according to data from the American Automobile Association and the Alliance for Automotive Innovation, a lobbying group that represents most major automakers operating in the United States.
Regardless of who ends up in the White House, many automakers will focus on delaying the California Air Quality Board's clean car rules in hopes of easing those standards to lower production costs and improve market competitiveness, auto industry executives said.
Auto industry insiders expect Trump to eliminate or freeze corporate average fuel economy (CAFE) standards for the 2027 to 2031 model years, and Harris to seek a compromise with automakers in setting the standards, an approach that is somewhat similar to the one taken by Biden.
Electric cars and the Inflation Reduction Act
Four years ago, electric cars were a hot campaign issue for Democrats; Four years later, it has become a Republican campaign buzzword.
Currently, electric vehicles and U.S. policies that support their adoption (such as the Inflation Reduction Act) are top concerns for auto industry executives and lobbyists.
If Trump returns to power, regulations and incentives for electric vehicles could change significantly, putting the industry in a temporary bind.
Republicans, led by Mr. Trump, have largely condemned electric vehicles, calling them a commodity imposed on consumers that would destroy the American auto industry. Trump has vowed to take office to repeal or eliminate many of the vehicle emissions standards set by the Environmental Protection Agency, as well as incentives to promote the production and adoption of electric vehicles.
By contrast, Democrats, including Harris, have historically supported electric vehicles and related incentives.
However, due to slower than expected consumer adoption of electric vehicles, and consumer attitudes toward electric vehicles, Harris has recently not been as strong in its support for electric vehicles. However, she has said she does not support mandates for electric Vehicles, such as the Zero-Emission Vehicles Act of 2019, which would require automakers to sell only electric vehicles by 2040.
The consensus in the industry is that future EV policy requirements will depend on the outcome of the US elections. If the election results lead to new policies or regulations, automakers could face new requirements, so they are waiting to see the outcome of the election and preparing their plans accordingly.
As Pablo Di Si, CEO of Volkswagen of America, said at a press event in September, "Depending on what happens in the U.S. elections, we may or may not face new requirements." [So] I'm obviously not making any decisions about future investments right now. We are waiting to see (the outcome of the presidential election).
However, Lucid Group CEO Peter Rawlinson said that no matter which presidential candidate wins the election, he believes the U.S. electric vehicle industry is still in its infancy and needs to continue to "nurture."
He also believes that the requirements in the Inflation Reduction Act for taking advantage of the electric vehicle tax credit should not only focus on the size of the battery, as is currently the case, but also on the efficiency of the vehicle. "It's really encouraging the manufacture of power-hungry electric vehicles," he said.
"It's really encouraging car companies to put more batteries in, rather than chasing higher energy efficiency."
Trade, tariffs and China
Both Mr Trump and Mr Harris have expressed an interest in reviewing the United States-Mexico-Canada Agreement, the US North American trade deal, amid concerns about the global expansion of China's auto industry.
The USMCA, negotiated during Trump's first term as president, replaces the North American Free Trade Agreement (NAFTA) and takes effect in 2020.
At the time, Trump touted the deal in his renegotiation, and Harris was one of 10 US senators who voted against the USMCA. For now, however, both sides agree that the deal needs to be improved to better support U.S. auto production.
Gm Chief Executive Mary Barra said last week that the company was "closely monitoring" the election, including how changes in trade and tariffs could affect the company. "Regardless of the outcome of the election, we have and will continue to engage constructively in the policymaking process."
She also said that while some cars sold in the United States are made abroad, many of the jobs created in the United States are associated with allied partners. This shows that while the car's manufacturing location may be abroad, these partnerships still have a positive impact on the U.S. economy and jobs. She stressed the complexity of the issue, meaning many factors need to be taken into account when discussing jobs, manufacturing and international cooperation.
Tariffs are at the heart of Trump's plans for the auto industry.
Trump has said he would sharply increase tariffs - by as much as 500 percent - to prevent Chinese automakers from exporting cars from Mexican factories to the United States.
Although Chinese automakers are not currently pursuing such a strategy, foreign media expects that they may try to adopt this approach in the future. However, Geshe Automotive Research Institute believes that in the future, whether Chinese car companies produce in China, Mexico or other countries, they will be imposed high tariffs when exporting to the United States, which means that other paths for Chinese car companies to enter the U.S. market will be completely closed.
Harris called Trump's tariff proposal a "sales tax on the American people," though she did not outline specific changes she would make to the current tariff structure if elected.
Jefferies noted that non-U.S. automakers account for 48 percent of total U.S. production and 52 percent of USMCA production, so if Harris wins the election, non-U.S. automakers could benefit more from the policy or market environment because of their larger share of production in the U.S. and North America.
Labour force
Industry insiders interviewed almost unanimously agreed that labor would be a concern among the many issues related to the auto industry, and they worried that a Harris victory would mean further increases in union organizing power.
Both Biden and Harris are so focused on the United Auto Workers (UAW) and UAW President Shawn Fain that they even had him speak at the Democratic National Convention.
Arguably, under Fain and the senior advisers he brought in from the outside, the UAW's political influence has grown stronger and it is likely to play a greater role in policy and decision-making.
However, there are different views or differences of opinion within the UAW and other unions. Such divisions may affect the union's political unity and action.
The Teamsters declined to endorse either candidate because of internal disagreements, but UAW leaders not only backed Harris but also helped her campaign in Michigan and other states.
The UAW said last week that internal polls show "Kamala Harris gaining strength over Donald Trump, and Harris' lead over Trump has increased significantly in the last month."
By contrast, the relationship between Trump and Fain is full of gunpowder.
Trump and Fain have traded accusations on social media and in public. For example, Trump has criticized Fain's leadership on social media, arguing that he has not done enough for workers, while Fain has hit back at Trump, accusing him of taking positions on workers' rights and economic policy that are bad for workers.
What's more, blue-collar workers, including UAW members, were seen as key supporters of Trump's victory over Democratic candidate Hillary Clinton in 2016.
But UAW leaders have publicly called for support for Democratic candidates, a political antagonism that has further strained relations between Trump and Fain. But what is certain is that Biden and Harris' aggressive approach to supporting workers and unions, and the degree of emphasis on the UAW, will worry automakers and suppliers, especially the UAW's growing influence in organizing unions and fighting for workers' rights, which could put companies under cost and competitive pressure.
Conclusion
Jefferies analyst Philippe Houchois wrote in an investor note that "there are significant differences in rhetoric and views between Trump and Harris, but there are also some points of common ground or convergence."
Industry insiders expect a Harris victory to be a continuation of Biden's four years in office, rather than a replication. They see Harris as likely to be more understanding of business, but there are concerns that some of Harris's policies and appointments are unclear, experts said, as well as concerns about her ties to the UAW, particularly Fain, who has been antagonistic to automakers and may even already be seen as a "mortal enemy."
Most auto industry executives expect that if Mr. Trump returns to the White House, he will revert to the policies and measures of his previous presidency, but perhaps take a more aggressive stance than before.
Industry insiders expect Mr. Trump to loosen or roll back the federal government's tightening emissions and fuel economy rules; Reigniting the fight between California and other states (referring to the dispute between California and some other states over setting auto emission standards) And there could be funding changes to key pieces of legislation in the Biden administration's Inflation Reduction Act.
It would be difficult for Trump to repeal the Inflation Reduction Act outright, but he could eliminate or limit electric vehicle subsidies through executive orders or other policy actions.
Regardless of whether the industry's "weather vane" changes or stays the same, automakers, suppliers and other auto-related companies are preparing for different election outcomes and possible repercussions.
As Stefan Hartung, CEO and Chairman of Bosch, said, the US election will bring clarity to the market and the industry will adjust to the outcome.
"We can't make perfect assumptions. Both presidential candidates offer some opportunities and challenges that companies have to take into account." So says a leading lobbyist and public policy expert for a major automaker.
Some Wall Street analysts have speculated that traditional automakers - particularly the "Detroit three" General Motors, Ford Motor and Chrysler parent Stellantis - would benefit the most under Trump and Republican control of Congress.
Electric vehicle startups such as Rivian Automotive and Lucid Group stand to benefit more after Harris and the Democrats win, largely due to their administration's expected plans involving electric vehicles and fuel economy requirements.
