US carmakers can’t avoid Chinese EVs forever & more related News Here

Signs of confidence, or circling the wagons? US tariffs and regulatory reforms have favored gas-guzzlers over electric vehicles gaining popularity elsewhere. Detroit is the leader in manufacturing those huge pickup trucks and monster SUVs that Americans love and which are highly profitable. But by relying on the power of gasoline behind protectionist barriers, US carmakers risk falling behind competitors – primarily China – in an industry that will one day be taken over by EVs.

Philippe Houchois of Bank Jefferies says the Big Three have a recent “history of layoffs.” In 1950 three-quarters of the world’s cars were made in America; Now there is barely an eighth. GM left Europe in 2017 and sold increasingly loss-making Opel to Groupe PSA, now part of Stellantis. Ford’s European market share fell after it discontinued popular smaller models and failed to excite motorists with its EVs. In China, hyper-competitive locals have vanquished both GM, whose market share has nearly halved in a decade, and Ford, which has lost two-thirds.

GM was the world’s largest carmaker in 2004, selling 8.4 million vehicles. Last year it was at fourth place with 6.2 million. Ford has slipped from third to seventh place. Even at home, the Big Three’s share has declined from 90% in 1965 to around 40% or so. Stellantis, a mix of American and European brands formed by the merger of Fiat-Chrysler and PSA in 2021, sold just 1.3 million cars in the US last year, less than half from 2004.

The forces reshaping the industry – electrification and the rise of China – have come at a cost to the perceived safety of insulation. Joe Biden’s administration imposed 100% tariffs on Chinese cars in 2024, shutting down cars that have rapidly taken over about a tenth of the European market. Mr Biden’s rollback of emissions rules and subsidies for EVs by Donald Trump has eased US carmakers’ efforts to electrify. But the past boom in EVs has been costly. Ford took about $20 billion in writedowns last year and Stellantis took $26 billion in writedowns, mostly to scale back EV plans; GM takes an $8 billion hit.

Mr Trump’s trade policies have also caused damage. Previous free trade deals encouraged moving the production of cars and parts to Mexico and Canada. Now massive tariffs on non-American materials, aimed at bringing manufacturing home, have cost Detroit billions in losses. Renegotiation of the latest agreement starting in July could require even more American content of vehicles to qualify for tariff-free trade, potentially driving up costs further.

Still, Ford and GM’s share prices have soared over the past year (see chart): Investors reward the short-term opportunity to sell gasoline vehicles in the U.S. over the long term. Stellantis, whose shares have fallen 30% since Antonio Filosa became boss last June, is making a similar bet. A plan unveiled on May 21 proposes that 60% of the €36bn ($42bn) it invests in its brands over the next four years will go to North America, where returns will be greatest. Analysts welcomed the plan, but questions remain whether it can be put into practice.

It’s not at all difficult to focus on the world’s largest car market after China, even though it has shrunk from about 1 million vehicles to 16 million a year since the pandemic — and growth will be the slowest at best. “Our international footprint is historically small,” says Paul Jacobson, GM’s chief financial officer, “so we’re focusing primarily on our strongest markets, North America and regions like South America and China.” There is little foreign competition for the biggest money-spinners, and their electrification has so far been unsuccessful. Ford plans to discontinue the F-150 Lightning, an electric version of its best-selling pickup, in 2025. GM and Stellantis have canceled plans to make their large pickup in EV form.

Mark Wakefield of AlixPartners, a consultancy, says the “wall” to keep the Chinese out gives American carmakers runway and money to grow. Despite everything, both GM and Ford have good cash flow. However, while some factories once earmarked for EV production are being repurposed for petrol vehicles, Stephanie Brinley of S&P Global, an information provider, points out that EV investment is “changing in scale but is still happening”.

Thus Ford’s “skunkworks” in California is filled with software engineers and other technical experts. Andrew Frick, president of Ford’s gasoline and electric-car businesses, says a new EV platform that could underpin multiple models is ready to go “head-to-head” with the Chinese. The first product, a $30,000 small pickup, is expected to arrive by 2027. At GM’s global technical center in Warren, a half-hour drive from headquarters, work continues on developing batteries with new lithium and manganese chemistries that will reduce costs without harming performance. Mr Filosa stressed that Stellantis is “not giving up on EVs” in the US and that its large European business and collaboration with Chinese partners means it will be ready to compete. “Europe is a laboratory for EVs.”

Will this be enough, at least to stay ahead at home? The combination of tariffs, regulations to ban cars with Chinese software and hardware, and broad consensus on the threat of Chinese technology in a politically divided country appears to be a strong defense. Mr. Filosa reflects the thinking of many in Detroit when he says he doesn’t expect Chinese carmakers to be in the U.S. “for at least a few years.”

But the Chinese are far ahead and it’s “only a matter of time” before they arrive, says Charlie Chesbro of data firm Cox Automotive. They are patient. State-owned carmaker Chery says it will launch in the US at an “appropriate time”. They already have toes. Geely, China’s second-largest car company, owns Volvo, a Swedish company with a factory in South Carolina. It can produce cars there, even under its Chinese Zeekar and Lynk & Co. brands. Many Chinese brands have design and R&D centers in the US.

Mr Trump is also ready to allow Chinese companies. Detroit bosses were stunned in January when he announced in the city that it would be “great” if the Chinese built factories in America and provided jobs. Ford boss Jim Farley has said it would be “disastrous” to accept him. He has also reportedly suggested that Chinese carmakers should be forced to enter into joint ventures under US control.

They are already beyond the borders. GAC, another state-owned company, is about to begin assembling cars in Mexico, where Chinese imports have rapidly captured 15% of the market. BYD and Geely are said to be eyeing factories there. BYD is also considering a factory in Canada, which recently agreed to allow annual imports of 49,000 Chinese vehicles with minimal tariffs.

Battling the Chinese around the world, other foreign carmakers have also been forced to step up their EV game. They would definitely like to sell in America also. One way or the other, competition is coming. The Big Three have their work cut out for them to preserve Detroit’s former grandeur.

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