Through the offices of the major automakers, an ill wind is blowing. Change is on the horizon, in more ways than one, and today’s difficult conditions may be poised to develop into something altogether more catastrophic down the line. The big players in the American auto industry are sounding the alarm—things are tipping towards disaster.
If you haven’t heard of the SAE Detroit Section’s Global Leadership Conference (GLC), you’re not alone. A gathering for top automotive executives, the GLC usually flies entirely under the radar as an event for insiders only. However, this year, outside forces have seen the group deciding to raise its voice on important matters. “The GLC Committee is so concerned with what they see coming in the automotive industry that, for the first time, they decided to publish this White Paper and issue a Call to Action,” states the group in its whitepaper, entitled “The US Auto Industry at Risk.”
But what is it that has them spooked? It’s the combination of several major changes all happening at the same time that are pushing domestic auto manufacturers towards “breaking point.”
“Multiple waves of technological changes are washing across the industry and revamping the ways in which cars and trucks are engineered, manufactured, sold, and recycled,” reads the paper. You don’t have to be a top auto executive to know that electrification has posed a major challenge for legacy automakers. Beyond that, new manufacturing technologies like gigacasting are shaking up the status quo. Automakers have to grapple with these technological changes if they want to build cars that remain competitive in the future. However, the white paper notes these issues are just the tip of the iceberg.
According to the GLC, the arrival of ‘Peak Auto’ is only complicating matters. The worry is that it’s simply not possible to keep selling more vehicles every year to the same old markets. The paper outright states that demand for cars has stopped growing in the US, Europe, Japan, and South Korea.
At the same time, the threat of competition from new Chinese manufacturers is looming ever larger. It’s a perfect storm—the pie isn’t getting any bigger, but a bunch of new players are trying to grab a slice. The paper claims that Chinese EV manufacturers have a cost advantage of up to 35%, which it credits to a “national strategy to lock up the supply chain for electric vehicles.” The result is a huge boon for Chinese automakers to the detriment of all others. “By the end of this decade, China is on track to export as many vehicles as the U.S. makes annually,” the paper’s authors note.
Regulatory issues are also a concern, particularly when it comes to pending environmental rules. “The U.S. automotive industry is investing tens of billions of dollars in electric cars and plug-in hybrids to meet emission and fuel efficiency standards which become especially stringent in 2027 through 2032,” reads the paper. The automotive industry has, in effect, been coerced by government policy to move in this direction, at great cost. It appears there is some resentment in the GLC regarding this fact. “So far, the public is not purchasing these vehicles in the numbers required to satisfy those requirements,” reads the paper. “In fact, a significant part of the public wants no part of them.”
It’s clear that the big players in Detroit are more than just concerned. Indeed, the tide is already turning against them—and against legacy automakers overseas as well. From the paper:
Over the last five years, the Detroit Three automakers lost 6.6% points of global market share to Chinese automakers and EV startups. That represents about 5.6 million units of capacity and tens of thousands of jobs. In a global market of 86 million light vehicles annually, each percentage point of share equals 860,000 vehicles, which in turn equals three or four assembly plants worth of production. Each of those plants have several thousand employees. Japanese automakers have lost 3.4% points of share, the Germans 1% point, while the Koreans have not lost any. China gained 8.2% points and the EV startups—mainly Tesla—gained 2.1% points. The loss of global market share by the traditional automakers is reducing their economies of scale and economic output.
Ultimately, none of these issues are brand new, but these challenges are now looming large for domestic automakers. The paper does, however, lay out a path to salvation. The paper’s authors are pragmatic, noting that the industry will not be saved by government policies alone.
The document’s most interesting highlight is that the issue of cost needs to be addressed by legacy auto—particularly where its engineering methods are out of date or irrelevant in light of modern advances. In particular, it notes several ways in which electric vehicles can be built cheaper if designs are approached with a fresh sheet of paper:
One obvious example is that automakers need to “unlearn” old engineering practices and specifications that made sense for internal combustion vehicles but are not needed with electric cars. For example, the structural beams inside the instrument panels on EVs from some legacy automakers are built to specifications that were needed for cars with piston engines. Those specs were drawn up to eliminate the vibrations that come from piston engines. Yet even though electric cars do not generate those kinds of vibrations, the structural beams are still built to those specs and that adds unnecessary cost and weight.
Another example of a practice that must be “unlearned” is with the sealant applied to the panels in the trunk area, which is there to prevent carbon monoxide from leaking into the passenger cabin. Even though EVs do not emit carbon monoxide, those trunk wells are still built to the old specs with sealant. Automakers need to review their specifications and eliminate those which are unnecessarily driving up the cost of making electric vehicles.
The white paper has more advice for legacy automakers. It states that suppliers should be given less restrictive specifications to enable them to work faster. Common componentry is cited as an excellent cost saving measure, particularly if brands are willing to share parts with competitors. For example, it notes that this makes the most sense for parts that “do not contribute to a brand’s image”—things like windscreen wiper actuators or tire pressure sensors. If multiple automakers chose to share these basic components, there would be great savings to be had thanks to the economies of scale.
As covered by Forbes, the white paper is ultimately preaching that there is a way through the coming malestrom. “We really wanted to not just focus on here’s a laundry list of everything that’s wrong, everything that’s haywire, but rather, how can we bring this into a set of recommendations,” said JP Flaharty, a Toyota North America executive who chaired the GLC this year.
The hope is that this white paper will light a fire under the industry, and get things moving in the right direction. Legacy automakers face a great challenge in the years ahead, some more than others. Time will tell if they’ve got what it takes to make it through.
Image credits: Ford, GM, Lewin Day, Chrysler
A small note is my (potentially highly flawed) impression of the American makes slacking on efficiency and emissions on volume passenger cars and then needing to nickel-and-dime the trucks to hit targets. (and then oops my lifters collapsed!)
Toyota isn’t exactly the gold standard this new generation but a healthy fleet of hybrids across the board let them run with more proven but older powertrains longer. (but of course, not exactly a winning strategy in the full-size pickup market.)
And then there’s the whole “peak car” situation today where every new thing has to be viewed with suspicion. (Is the ‘25 Maverick’s GPF going to be alright with US buyers? The 2.7 and 5.0 wet belt seems reliable but limits the upper lifespan of the engine artificially without spending serious money.)
Take the new 4Runner, it’s nice that the base SR5 MSRP is around the same place but you lose so much previously standard features like metal skid plates, a full-size spare, auto rearview mirror, power driver’s seat, the base Tacoma has lesser axles I heard, etc. And who knows where they’ve skimped that won’t show up on a spec-sheet? and the 5th gen already gated (sometimes selectable) full-time 4WD behind the top trim where it was standard since it first appeared at the end of the third gen.
I don’t want to have to play “minesweeper” when buying a car, I already got burned with a key-start Kia.
Cars cost too much money
Well, fortunately for them, Chrysler is no longer American and General Motors has slimmed down enough to where they are now small enough to be allowed to fail, so, I don’t think the US government has any real obligations anymore if they collapse again.
The losing of global market share is not surprising – GM has divested from everywhere aside from China, Latin America, and South Korea (and they are getting their ass kicked in China and have severely downsized in South Korea), Ford has quit Brazil and India and is also getting killed in China. Protectionist legislation can protect them within the automotive Galapagos of the United States, but it doesn’t do anything to help them in the rest of the world where they still have to compete with Chinese automakers. Realities of the modern car market are that a volume automaker probably can’t be sustained just on the US alone anymore.
Automotive Galapagos! COTD. Now that’s hilarious.
+1
Probably time to let the bad brands *coughstellantiscough* go to that farm upstate.
These guys swore off sedans hatchbacks and cars in general to make gigantic vehicles and now they want help?
Yeah, I kind of wonder if the shrinking new car market thing could be turned around by making products cheap enough to induce more people to enter the market
That was kind of the whole point of cheap cars like the Cavalier, S-Series, Metro, etc. Sure, you didn’t make gobs of money on them, but you brought new customers into the market who might one day trade up to something more profitable. Automakers have decided to just let dealers sell used cars to try and do that, but it isn’t the same, automakers don’t get credit for those sales, and the pivot upmarket means affordable used cars aren’t available in the needed volumes anyway.
“For example, the structural beams inside the instrument panels on EVs from some legacy automakers are built to specifications that were needed for cars with piston engines. Those specs were drawn up to eliminate the vibrations that come from piston engines. Yet even though electric cars do not generate those kinds of vibrations, the structural beams are still built to those specs and that adds unnecessary cost and weight.”
There is a lot of B.S. here, but this is the most egregious. I prototyped IPs, albeit 25 years ago, and was supplied with cross-car beams from various manufacturers of various materials from magnesium to composite to incorporate with the design. Their #1 purpose is the integrity of the passenger safety cell. Any other considerations are minuscule in comparison.
Jason has advocated for a battery box standard, and it makes sense to me, so as battery technology advances, it could easily be plugged in to used cars with failing units. But that is assuming we actually want to improve the environment.
I have no love for the American auto industry, but i’m not sure the Euro guys are much better off. The Asians, specifically the Chinese, are kicking butt, partly because they have no industrial controls like emissions and safety to worry about while building and copying what the western world has built.
And if it wasn’t for all these websites with self appointed and anointed “experts” writing all their BS, the topics might not seem as important. The manufacturers are complaining about things, but they made their beds, and the industry, regardless of nationality, is following suit.
I, personally, am getting very tired of these insider groups nobody has ever heard of issuing monthly diatribes about how hard it is to make money because EVs and China. The writing has been on the wall for years but domestic manufacturers have been too busy jacking up prices and building trucks to notice.
Yet again, instead of changing how their companies work to better fit the times we’re living in, they just whine and cry about it in hopes that some Republican has pity on them and re-structures the entire economy to ensure they remain not only profitable, but insanely, mind-bogglingly profitable for the next four years. Build better cars, build them cheaper, and charge less for them. Every country but the US has been able to figure this out.
Crocodile tears for these clowns that thought 45k average new car prices were a viable long term strategy.
It’s the $100,000 pickup trucks that I find totally outrageous.
They get bailout money because the are “job providers.” All of my Maga relatives who hate poor people getting food are OK with corporations and billionaires getting bailouts corporate welfare, welfare mining, welfare farming, welfare logging, welfare oil drilling, all of it, because “job providers”. so are poor people eating and they spend money locally and that provides jobs.
They sound like the old school warmonger type of republicans. Most of my family and myself are moderate conservatives who also hate all the rich corporations getting bailouts. I think the majority of people who are somewhat in the middle of either side all agree on this.
What amazes me is a lot of people criticize China for subsidies but both left and right want to subsidize as well. The right wants to subsidize the manufacturers while the left wants to subsidize consumers buying EVs. Either way, a person can’t say its not fair for China to subsidize when you want the same thing.
Remind me, how many hundreds of billions of dollars did “Maga” Obama give banks, investment firms and large corporations, again? How much did the “Maga” democrats, on party lines, give to massive corporations in the Inflation Increase Act, again?
Imagine if the executives of all the American automobile manufacturers went on TV the Internet TikTok, YouTube all of it, and said “OK we need you to buy cars. We’re going to reduce the luxury stuff and drastically reduce the price and take less profit because we want to be there for you as American automotive consumers” and they actually drop the price of the vehicles, that might help, won’t happen, but it would help.
“I make car parts for the American working man because that’s what I am, and that’s who I care about”
“That’s why i’m here, Ray.
You see, back in Sandusky, Ohio,
there are American
workers at “Callahan Auto”.
We make the best parts money can buy.”
The fact that the conclusion of “maybe we’ve reached peak car”, is “let’s make car shitter and increase per unit profit”. Might be a telling reason why we’ve reached peak American car. If only literally anyone there realized the continued Americanization (i.e. make car bigger) push in other markets might not be working out. Maybe, one of those vampires at McKinsey can show the gang a map of an increasingly urbanized global population, who traditionally have not, nor inspire to build post-war suburbia. And idk, build a product that addresses other people’s needs. Instead of increasing size and thus cost in a world where space is increasingly at a premium. But sure, just make manufacturing cheaper. Don’t even think about how you got up Shit’s Creek. Just start throwing out the food, hoping a lighter boat doesn’t crash into some rocks over there.
I read this as “we’re over engineering things and need to reduce quality to reduce cost.” Somehow that doesn’t feel like a winning strategy.
May you live in interesting times.
Fun fact! this quote comes from Neville Chamberlain’s dad. So, might have actually turn out to be a curse on his child.
Maybe Neville didn’t do enough to appease his father?
“Common componentry is cited as an excellent cost saving measure, particularly if brands are willing to share parts with competitors. For example, it notes that this makes the most sense for parts that “do not contribute to a brand’s image”—things like windscreen wiper actuators or tire pressure sensors. If multiple automakers chose to share these basic components, there would be great savings to be had thanks to the economies of scale.”
Or they could go Ford’s route and piss their brands on absolutely everything right down to the bolts.
What’s old is new again. I sincerely hope we return to the days when every car shared one of the three extant designs of window crank knob.
The US auto industry has been fucked for DECADES due to poor leadership/management, shitty products, and protectionist shit lame-ass tariffs and different-but-not-better standards.
Just bad decision after bad decision, and I have NO SYMPATHY for them. Let them ROT!
We just keep bailing them out for no reason, and they never learn a fucking thing.It would’ve been better to bail out the employees and suppliers while letting the “executives” out with nothing except maybe a felony conviction.
Toyota taught GM everything, but they learned NOTHING.
I don’t want them to rot, since it’ll ruin the lives of many tens of thousands of people and cripple countless towns and counties. I do want these companies to fire every white collar decision maker who isn’t an engineer, swallow their pride and study how the East Asian manufacturers have been so successful, and literally just copy them. Ask them to come help you even. It’s not rocket science.
The factories are still extant, regardless of who is running them. It wouldn’t be a smooth transition, but they’re not going to just disappear if the big three go bust.
Yeah, I think you’ve got this wrong, respectfully. There’s no one on a white horse coming to bail out individual factories owned by shitty manufacturers.
I’m now remembering the Top Gear episode where they visited the abandoned TVR factory.
I’m wrong. Wishful thinking on my part.
I live in the rust belt near a lot of closed factories. Companies aren’t exactly clamoring to re-open them.
Maybe that has something to do with the fact that they said, “Ok, we need to make EVs. Big, high end, 4wd trucks are profitable, lets make super expensive luxury 4×4 pickups with ridiculous performance and a footprint the size of a battleship.”
The problem is, a sizable part of the EV thing is the whole green/enviro/saving the planet thing. Draw a ven diagram of environmentalists and a people who buy 100k 4×4 pickups and you basically drew a pair of boobs.
The fact that the Fox news crowd has been attacking EVs as a liberal conspiracy and giant scam since the get-go isn’t doing this issue any favors either.
Hehehe. Boobs
There’s also that pesky issue producing vehicles and then issuing guidance not to park them in garages, by houses, near trees, etc. Yeah, that instills faith in new tech. I get it, changing tech/processes is hard, but paying through the nose on top of that isn’t my thing.
True, but I can recall several times when that same “don’t park this car in your garage” order has been sent out in regards to gas cars as well so that’s not a problem exclusive to EVs. However, I get the point about paying extra for the privilege.
I don’t think it’s happened that often
Certainly not as a percentage of the whole.
Other than the price point – how different is that from “Don’t sit so close to the TV – You’ll go blind” or “Don’t hold your cellphone against your head – You’ll get brain cancer”?
To me it’s all the same scare tactics against new tech (because ICE vehicles have NEVER caught fire in someone’s garage, gas station or on the freeway before…)
Yes. That’s what I’m drawing, Venn Diagrams. Definitely
I try and apply logic to the current times. After awhile my head hurts and I wonder about the bipedal ape species I am part of. Then I go lie down to feel better.
The rural guys that I off-road and camp with just see EV’s as not only a liberal conspiracy but actual cultural genocide because everything in their life is gas-powered.
Dang. That must make sitting around the campfire a little uncomfortable sometimes.
It does. As the lone liberal ( or one of two) I have to keep my mouth shut but they all spew maga hate constantly and then whip out their concealed carry to show that they are ready for antifa or immigrants. Some of the guys are ok but when in a club you sometimes get what you get.
I went camping with guys who had a Rivian and a Power Wagon. The PW guy was pretty much as you described and giving the Rivian guy “lighthearted” guff. It was the first Rivian I had camped with so I was enamored with it.
He had an aftermarket slide out kitchen since Rivian scrapped their own. It was really cool.
I can’t wait for EV or PHEV off-roading to be better. I love how quiet my Bronco is on the trail. Especially compared to annoying straight piped V8 swapped Jeeps that you need a headset to have a conversation near.
Edited to add: I do have a group I join when out at big events like King of the Hammers or Trail Hero. Rule #1, no talking politics in camp. I’ve gotten called out, and rightly so, after a few drinks. They are good people.
I don’t think the conspiracy is whether new cars are EVs or not. I think the real scary thing is that soon it will impossible to a buy a new car that isn’t connected to the internet. Nobody asked for that. But why do all the manufacturers want to push it? They collect and sell information that’s why. VW just leaked a bunch of personal information. Eventually everything will be subscriptions based, even the car itself maybe. It doesn’t matter how the car is powered if these companies successfully scam us all into paying a monthly fee to use cars we own. How come no one in our government wants to talk about this?
Isn’t paying a monthly subscription for a car you don’t/won’t own a Lease?
Besides the internet thing, a monthly subscription cost to use a car incentivizes the manufacturer to be able to support that vehicle for many years by making it robust and durable.
When I pay a subscription for MS Office, for example, I am expecting it to have near 100% uptime, and when I do have a problem, it will be fixed promptly and at no additional expense.
If I had an EV car subscription, I would expect to have free battery replacements as they wear out.
It doesn’t sound so bad. Unless it’s an obscene monthly cost. Which it will be.
Leases aren’t that good of a financial move unless you just have to have a new car every couple years. And yes it basically is a subscription to a car I don’t own which I is why I don’t lease.
In a perfect world an EV subscription would be cool but you know no manufacturer is going to want to replace the batteries and instead sell you a new car.
I don’t necessarily think that subscriptions are bad, especially for software like you mentioned. But what I would have an issue with is having to subscribe to use a physical machine parked in my own driveway.
Oh look, if it isn’t the consequences of our own actions. Turns out, ignoring that the future will be different than today, for like 30 f’ing years, can really come to bite you
Durrrrr 6,000 pound truck go brrrrrr
-American automakers
I’ll be dead in 30 years so fuck it, where’s the keys to my 0.2 MPG coal rolling F950? That quart of milk ain’t gonna get itself home!
Murica! Fuck yeah!
I’m waiting for Sandy Munro to get his hands on a Xiaomi SU7 or some other Chinese EV enjoying the spotlight right now and do a real teardown of it.
I don’t doubt there are innovative tidbits to find, but I’d love to see a cost breakdown of actual material cost and manufacturing cost. What battery chemistry are they using? What grades of steel/aluminum? How easy is it to assemble?
There’s lots of propaganda from all sides regarding modern Chinese cars, and I’d love to see an engineering teardown of just the car by itself.
This is what I’ve been waiting for as well!
I am not sure they will find anything groundbreaking, they are not going to find “government subsidies” as a physical part.
Yeah fair enough and I’m sure you’re right, I just want to see that factually proven in a teardown vs tabloid headlines and people’s own biases. Something to the effect of “After teardown, the parts cost alone $35k”, so here’s what is getting subsidized.”
“…and there is this small metal bar here that just says government subsidy stamped on the side.”
I read, reduce costs and increase prices for shareholder value.
We reduced costs and passed the savings to our shareholders, but the customers still aren’t buying and we’re all out of ideas!
Guess we’d better build more expensive options! That always works.
1,000%. They know the new administration will happily bulldoze emissions regulations so they will quintuple down on large vehicles.
Make the government buy them at MSRP++++ for ALL the poors.
Problem solved!
I just assume they’ll get no strings attached bailouts. Free money without having to build a thing!
Why not both?
Common components? Yes please.
Maybe if they decided to make something other than $80,000+ body on frame trucks and SUVs they wouldn’t be struggling as much. Mazda has made continuing to build affordable cars a focus of theirs in addition to providing luxury features at discount prices and look how they’ve been doing. Hmmm.
Just to play devil’s advocate, do you mean this Mazda?
https://www.autonews.com/mazda/an-mazda-earnings-report-profit/
I was going off the information shared in this very site. I do suppose I should’ve specified that they were doing well sales-wise.
https://www.theautopian.com/stellantis-and-tesla-were-the-biggest-sales-losers-this-year-honda-and-mazda-the-biggest-winners/
So they’re saying that in general people don’t want EVs, while at the same time Chinese carmakers (mostly electrified) and Tesla have increased their market share, while their own marketshare (mostly ICE) has fallen.
Dissonance much..?
“No one wants the EVs that we haven’t really tried to build.”
The paper claims that Chinese EV manufacturers have a cost advantage of up to 35%, which it credits to a “national strategy to use slave labor.” Fixed it.
Apparently they’re already being accused of trying to use slave labor at their international factories as well.
A little human trafficking never hurt anybody.
I’m surprised they haven’t proposed implementing slave labor here as well (cough- Alabama -cough) to be able to compete 🙂
Looking forward to the next recommendation from the Heritage Foundation that will be rubber-stamped into law by the incoming GOP Congress.
Oh don’t worry they’re on it. They’re gonna let children work in the factories too like the good ole days.
Minecraft is a psyop to get children comfortable with the idea of going to work in the mines
French theaters are seeing an uptick in after-school matinee showings.
The children yearn for the mimes.
https://www.usnews.com/news/best-states/louisiana/articles/2024-01-29/prisoners-in-the-us-are-part-of-a-hidden-workforce-linked-to-hundreds-of-popular-food-brands
Yep, and in addition to mandated slavery, imprisoned citizens also have their voting rights stripped from them (exceptions are Maine and Vermont). Some states don’t reinstate those even after release.
“Land Of The Free”
Also the Chinese inviting foreign manufacturers to come build plants so the Chinese can study and copy them at significantly less cost. Then they build duplicates, undercut the cost and the foreign company has to leave. Result, significant R&D cost savings since they did in on someone else’s back.
“How did China get ahead on [insert thing here]?”
They cheated. Next question.
Not so much cheated but absolutely stood steadfast on becoming #1 globally, at any cost, and, so far, is doing exactly that.
I should’ve added “and/or committed heinous human rights abuses”
It’s easy to become number 1 when you can just kill everyone ahead of you.
I disagree. China got ahead because of western companies’ exec greed.
That exact scenario summarized by JumboG above was as obvious as it was predictable, but those execs promptly ignored it because increased profits for a couple of quarters was all that mattered to them and their stock bonuses, long term prospects were the next guy’s problem.