How will the presidential election affect America’s automotive landscape?

How will Joe Biden's victory affect America’s automotive landscape?

President-elect will immediately rejoin Paris Climate Agreement

DEMOCRATIC nominee Joe Biden is the new President Elect of the United States, after the state of Pennsylvania announced a raft of votes that put the 77-year old safely ahead of incumbent Donald Trump in the race for the White House. Although President Trump has claimed fraud and is preparing for a month of legal battles over vote counting in Arizona, Pennsylvania, Georgia, Michigan, Nevada and Wisconsin, experts say there is no evidence of wrongdoing.

So Biden is set to take over the reigns in January, but what does that mean for the American car industry?

In the final days before the vote, Trump told voters that electing Biden would destroy Detroit’s already wounded auto industry. “A vote for Biden is a vote to completely eradicate. I mean you will eviscerate your auto industry,” the incumbent told thousands of residents in Macomb County, in one of three stops his campaign made in Michigan over the weekend before election day.

The state, which holds 16 electoral votes, was seen as central to the success of either candidate. Trump’s marginal win in Michigan in 2016 depended heavily on the votes in areas outside of Detroit, its main city, which was widely expected to vote Democrat. In the 2020 election, Biden proved marginally more popular in Wayne County, where Detroit is located, than Hilary Clinton in 2016, winning 68% of the votes there (with more than 98% of votes counted at time of writing) compared to her 66%.

The world’s most famous automotive city has had a well-documented decline over the previous half a century, due in large part to the exodus of American car manufacturers to other locations. In its prime there were more than 40 vehicle plants in the city; today there are just two, owned by Fiat-Chrysler and General Motors. The US Census Bureau cited the city as America’s richest per capita in 1950 but in 2013, the city filed for bankruptcy (the largest city in the US to do so), and is now rated as the second-poorest in America (after Cleveland, Ohio). In the three decades after 1950, 600,000 people are estimated to have moved out of Detroit, and there are around 900 abandoned manufacturing sites in its vicinity.

Creating car industry jobs

Bringing people and jobs back to “Motor City” was a staple of both candidates campaigning in Michigan. At his rally in the city just before the election, Trump claimed that he had helped employment in the area through tax cuts and deregulation “like nobody’s ever done”. He said he wanted to “ensure that more products are proudly stamped with those beautiful words, that beautiful phrase, ‘Made in the USA’”.

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According to the U.S. Bureau of Labor Statistics (BLS), 33,000 car manufacturing jobs were created in Michigan during the second term of the Obama Administration, in which Joe Biden was Vice President. The administration also oversaw the bankruptcy proceedings of two of America’s biggest car companies, Chrysler and GM in 2009, including a bailout that eventually cost American taxpayers around $10bn.

BLS stats showed that between the start of Donald Trump’s presidency in January 2017 and the start of the coronavirus pandemic in 2020, 2,400 car making jobs in the state had been lost. The Covid-19 issues have since compounded pressures on auto makers, with factory shutdowns, increasing unemployment, reduced commuting and buyers less willing to make purchases due to economic uncertainty.

Biden has claimed successes in the state, and reminded voters about the 2009 bailout. “Back when the economy was on the brink in 2009, when Detroit was on its back, Barack [Obama] and I bet on all the workers. My dad was an automobile man. And over the objections of many, including Vice President Pence, we stepped in and rescued the automobile industry and saved at least one million jobs.”

Electric vehicles

Biden has pledged to create a further million jobs in America’s car industry by promoting research and development into electric vehicles. He has also said he will invest $400bn (£306bn) in clean energy, including pure-electric vehicles and a expanding the public charging infrastructure from fewer than 90,000 charging points today to 500,000 points by the end of 2030.

These investments would benefit a raft of American car makers, including Tesla, Lucid and General Motors, which has invested $2.2bn (£1.7bn) in converting a Detroit factory so that it could manufacture exclusively electric vehicles.

Cash for clunkers

Biden has also previously talked about introducing a car scrappage scheme that would encourage people to trade in their older, more polluting cars for new electric ones.

During the first Presidential debate, which was marked by interruptions and personal attacks, Trump also expressed his support for electric vehicles. “I’m all for electric cars, I’ve given big incentives to electric cars,” he said, though it is unclear to which incentives he was referring — the current incentive system that offers up to $7,500 in tax cuts to people who buy electric cars was introduced under the Obama administration, and the White House unsuccessfully proposed scrapping it last year. Biden says he will extend the incentive.

Trump relaxed emissions standards

Trump has championed fossil fuels for the duration of his presidency, and his plans to rejuvenate the American car industry are linked with his efforts to loosen emissions regulations around the country.

During the first presidential debate he said that cars had become expensive due to carmakers’ efforts to improve fuel economy, and argued that deregulating emissions would enable manufacturers to make their wares “much less expensive and much safer”. He also commented on a legal dispute between his administration earlier this year after California decided to set its own (more stringent) emissions regulations, calling it “crazy”.

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In his speeches in Detroit, Trump warned Michigan residents that the switch to alternative means of energy proposed by Joe Biden would mean that car manufacturers in the US would not have the access to resources that they need — crucially, those stemming from oil reserves. Biden is widely expected to make rejoining the Paris Climate Agreement one of his first acts as President.

Biden will be sworn in as President on January 20, 2021. He will now focus on the transition period that takes place over the next couple of months. Trump, meanwhile, has vowed to make a series of legal challenges, and continues to publicly attack the legitimacy of Biden’s win.