Liam Denning: Trucks and tariffs are a disastrous combination for Big Auto

Miami Herald

30-04-2025

When BYD Co. Ltd. announced its newest electric vehicles could recharge in just five minutes, it represented a big problem for Tesla Inc. Rival Contemporary Amperex Technology Co. Ltd., or CATL, then unveiling an even-faster-charging battery is a big problem for U.S. automakers in general. Here is a game-changing technology being defined by two Chinese powerhouses while the U.S., spiritual home of autos for much of the past century, merely looks on.
America's auto industry faces three simultaneous disruptions. First, even as EVs struggle to grow their share of the U.S. market, they continue to take market share from internal combustion engines globally. Second, advanced driver-assistance systems, or ADAS, and other IT increasingly define the design, experience and value of vehicles. Third, China has emerged as a leader in both.
President Donald Trump's rhetoric about the U.S. wresting back leadership of global autos is rooted in these real challenges. His actions, though, threaten to consign Detroit to outright irrelevance. A U-turn on at least some of the tariff burden he unleashed on the sector offers some welcome relief. But the sense of policy being made on the fly and in response to moves in polls and financial indexes is unmistakable and could hardly be in starker contrast to Beijing's decades of methodical industrial strategizing.
China makes and buys more EVs than the rest of the world combined. This year, it should become the first major market where sales of cars with a socket overtake those without. China dominates the battery supply chain, not just in quantity but, as the charging wars show, cost and innovation, too.
EVs still cost an average of $12,000 more than their gas-guzzler peers in the U.S. The cheapest, the Nissan Leaf, starts at just under $30,000. Chinese drivers can pick from an array of EVs below that level, including BYD's sub-$10,000 Seagull mini-compact car. For many years, Detroit, like its European, Japanese and Korean counterparts, profited from China, gaining access via joint ventures that seeded domestic competitors. The latter are now devouring their local market and exporting millions of vehicles. U.S. companies' vehicle sales in China are forecast to collapse 75% by 2030 compared with the start of the decade to under a million units, according to Alix Partners, a consultancy.
While the U.S. spawned the company that brought EVs into the mainstream, Tesla, its leader Elon Musk seems more interested in politics these days - and a brand of politics unfriendly to EVs. Musk has also readily admitted that Chinese car companies are the most competitive in the world, and Tesla's market share in China has come under sustained pressure. BYD, having retaken the top spot in global battery EV sales last quarter, just announced earnings that trounced Tesla's.
In terms of driver assistance and the drive for autonomy, the picture is more nuanced. The U.S. and China are the only countries in the world with commercial robotaxis operating today. Advanced testing of self-driving passenger vehicles, however, is more widespread. All the major auto manufacturers worldwide offer some type of ADAS, such as Tesla's Autopilot and Full Self Driving or Mercedes-Benz Group AG's Drive Pilot.
The fusion of digital smarts with vehicles is at once an opportunity and a threat. The only commercial robotaxi firm operating in the U.S. is Waymo LLC, a unit of Alphabet Inc. Forays into autonomy by Detroit have stalled. GM's recent decision to ditch its in-house robotaxi effort, Cruise, owed something to scandal but also to a simple acknowledgement that GM doesn't have Alphabet's balance sheet. A subsequent partnership with Nvidia Corp. to provide, among other things, hardware and software for smarter cars is a sensible alternative. But, as with Waymo's Silicon Valley roots, it raises the nagging question of who will end up reaping the lion's share of the value from the next generation of vehicles, Big Auto or Big Tech?
Tesla is different, with an in-house approach that has always had more of Silicon Valley's DNA embedded in it; plus, of course, that giant market cap. Rather, its dilemma is that, despite repeated pledges of unleashing millions of genuinely self-driving EVs, it has yet to deliver an actual commercial product.
Here, too, China complicates things even if tariffs keep its cars out of the U.S. market. In February, BYD said its God's Eye ADAS product would be offered on most of its models, including those ultra-cheap EVs, as standard. For Tesla, which charges Chinese drivers more than $8,000 for its Full Self Driving feature, this adds pressure in a competitive market where it is already giving away profits through incentives. Moreover, two-thirds of American ADAS industry executives say that Chinese technology already meets U.S. technical requirements, according to a recent poll by Alix Partners.
Europe's auto giants face similar challenges, but it has put less stringent tariffs on Chinese autos than the U.S. has. Brussels is also exploring other options including allowing Chinese auto companies entry to Europe on the proviso that they form joint ventures with local companies or license their technology, effectively running Beijing's earlier playbook in reverse. This risks ceding market share, of course; after all, it took China's homegrown companies many years to outpace their foreign partners.
Without that, though, tariffs alone will likely dull the edge of competition that results in things such as ultra-fast charging at lower prices. Nowhere is this risk more acute than in the U.S., where Tesla is losing its luster and Detroit is already overly dependent on big SUVs and trucks that have little relevance elsewhere. Yet, rather than helping the sector navigate this epochal challenge, Trump's administration offers a mix of moving tariffs, threats to tear up their North American supply chains and an ideological attachment to tailpipes. Protectionism can buy time, of course - but using that time well requires coherent industrial policy. Absent that, the U.S. auto sector risks becoming ever more like an island of (expensive) misfit toys amid a sea of markets ceded to Chinese manufacturers.
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