This year’s election isn’t only about who the next president will be. It could also determine the type of car you drive home the next time you visit the dealership.
Inflation, immigration, and abortion are the top issues for many voters, but in the key swing state of Michigan, the biggest political fault line may be the future of the car industry. Vice President Kamala Harris says electric vehicles are a part of the future, while former President Donald Trump says they’ll doom the whole industry. The candidate who wins the auto vote in Michigan, and perhaps Wisconsin and Pennsylvania, could end up making momentous decisions determining what kinds of cars those workers will build for years to come.
Harris is tied to President Joe Biden’s green energy agenda. The 2022 Inflation Reduction Act that Biden signed contained the biggest set of green energy incentives in US history. Some Republicans support renewable energy, especially at the state and local level when jobs or environmental concerns are at stake. But Trump isn’t one of them.
Trump calls climate change a “hoax.” His energy policy is “drill, baby, drill.” Trump’s political play is to win votes by bashing electric vehicles and warning that Democrats are out to kill America’s car culture. “The political wrangling around electric vehicles has turned 2024 into a referendum on the future of EVs, period,” Beacon Policy Advisors told clients in an Oct. 7 analysis.
Trump’s campaign is running an ad in Michigan claiming that Harris wants to get rid of all gas-powered cars (false) and that her “electric only” push is responsible for automakers’ losses and “massive layoffs” (also largely false).
Trump has been fine-tuning that message for a while. Last year, during the monthlong autoworkers strike, Trump gave a dark speech in Michigan saying that EVs are a “transition to hell” that will kill autoworker jobs. He conflates EVs with Chinese production and claims that more electric cars on US roads will mean less American production and more imports from China and Mexico.
Harris is fighting back. “I will never tell you what kind of car you have to drive,” Harris said at a rally in Flint on Oct. 4. She tells crowds that Biden’s green energy incentives are explicitly tied to American jobs and that it’s crucial to build domestic supply chains for American-made EVs. She also touts Biden administration efforts to save auto plants and points out that Trump’s running mate, Ohio Sen. JD Vance, has refused to support government aid meant to convert a General Motors (GM) plant in Lansing to an EV assembly line.
This is more than rhetorical wrangling.
If Trump wins, he’s likely to unwind many of the green energy incentives Biden signed into law, especially those related to EVs. That could sharply slow the investment in production and new technology necessary to scale EVs to the point of productivity. Harris, on the other hand, would leave the Biden incentives in place. That would provide time for huge investments in green energy that are already underway to mature and become profitable.
So who’s right? Are Biden and Harris forcing EVs upon car buyers who don’t want them? Is the US auto industry doomed? Or will EVs help save the planet while keeping autoworkers employed?
As he often does, Trump is exaggerating and in some cases fabricating. Biden and Harris have not imposed or even proposed a ban on gas-powered cars. What the Biden administration has done is issue an emissions rule aimed at speeding the adoption of EVs and slashing tailpipe emissions, which are the single largest source of US carbon emissions. There’s no EV requirement in the rule. But to comply with it, automakers would probably have to shift about half of their production to EVs by 2032, unless some other breakthrough helps them meet the emissions target.
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Automakers regularly haggle with regulators over rules that sometimes get stricter and sometimes loosen up. This time is similar. The auto industry got the Biden administration to stretch out the timeline for the new emissions requirements, and that could happen again if buyers don’t move to EVs fast enough.
Meanwhile, 25 states are suing to block the new rule, and they could win. In a landmark case earlier this year, the Supreme Court put new limits on the power of federal regulators, and that helps the plaintiffs who want to block the rule. Even so, virtually all the big global automakers are investing heavily to electrify their fleets, which is a priority in Europe, Asia, and many other markets.
Electric vehicles now account for about 7% of new car sales, and vehicles with some form of electrification, including hybrids, account for 19%. After rising sharply for several years, the share of pure electrics has dipped in recent months. That’s probably because early adopters have finally bought in, while other potential buyers worry about range or the negative reviews they’ve heard from the likes of Trump.
Many automakers have struggled to make a profit on EVs, since it’s early in the technology curve and it takes time to recoup big investments. The obvious exception is Tesla (TSLA). Elon Musk’s company turned its first annual profit in 2020 and has long been an investor darling. Its market value is $800 billion, 16 times that of General Motors.
Musk is now a Trump crony who calls himself “dark MAGA,” and Trump has slightly softened his attacks on EVs since Musk joined his cause. But Trump is still telling voters that the technology that earned Musk billions is bogus. Musk doesn’t seem to mind.
Biden and Harris, however, can make a plausible case that they’ve been better for the auto industry than Trump was during his presidency. Before COVID struck in 2020, the auto industry employed 987,000 workers. That tanked during COVID but recovered within two years. This past July, industry employment hit 1.08 million, the highest level in 18 years. It’s just a tad below that now.
After striking last year, unionized auto workers got a 33% pay hike through 2028, plus other perks. Biden was the first president to ever show up on a picket line in solidarity with striking workers. Many non-unionized automotive employers raised their own pay in response to the new union contract. And this year Biden imposed 100% tariffs on EVs imported from China to prevent a flood of cheap cars that could undercut domestic nameplates. Trump says he would make the tariff 200%.
By the time of the next election, who knows, it might be 1,000%.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on X at @rickjnewman.
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