Some of the world’s largest automakers may not survive our government-created debacle, but collapse of the industry can still be stopped.
When President-elect Donald Trump is sworn in as our 47th president of the United States on January 20, 2025, he will inherit an auto industry that has been greatly diminished in recent years. There are many reasons for this decline, including the misguided environmental policies of the Biden administration, Chinese market manipulation and exploitation, and trade deals and regulations that cripple American auto manufacturers.
Just how bad are things? Well, Stellantis (the parent company of Dodge, Chrysler, Jeep, and Ram) reported a 48 percent profit decline in the first half of 2024, followed by a 27 percent drop in the third quarter. Astronomical fuel-efficiency fines from the Environmental Protection Agency (EPA) have forced them to phase out their consumer-favored Hemi V8 engines from all four brands and to spend billions on developing electric vehicles (EVs) in which brand loyalists have no interest. From January to June of 2024, Ford reported that their EV division lost $2.5 billion (about $48,000 per vehicle sold). GM announced that it is working to reduce losses on electric vehicles by $2 billion to $4 billion in 2025 compared to 2024.
Some of the world’s largest automakers may not survive this government-created debacle, but collapse of the industry can still be stopped. Here are some of the steps that President Trump can take in his second term to make the American auto industry great again.
End the Regulatory Stranglehold on Car Companies
The U.S. auto industry employs the best automotive minds in the world but has been crippled by the increasingly regulatory regime in Washington, D.C. Former New York Rep. Lee Zeldin is being tapped to head up the EPA, an agency that could play a pivotal role in saving our automakers.
For decades, California has attempted to regulate fuel economy and emissions, independent from the federal government’s standards. The head of the EPA should establish and Congress should pass legislation prohibiting a state from dictating its own fuel economy standards, since it impacts the sales of vehicles in the rest of the country. California’s current policy is unreasonable, costs our automakers hundreds of millions of dollars, and needs to end.
Next, the EPA should shift its attention to fixing the stifling Corporate Average Fuel Economy (CAFE) standards. Currently, automakers face a no-win choice: Sell vehicles with internal combustion engines based on consumer demand and pay hefty regulatory fines to the federal government, or spend massive amounts of money to meet federal fuel economy standards and have sales fall short.
The CAFE standard in 2015 was set at 35 mpg, which appears to be the sweet spot, as the majority of automakers were able to achieve this and avoid excessive fines. The EPA should return to the 2015 standard and lock it in place with no phased increases. This would provide American automakers with a consistent standard and allow them to continue to find ways to make their products more efficient and clean while being guided by public demand and organic innovation, not by the threat of government regulation or fines.
