Auto insiders weigh in on both candidates, top issues

DETROIT – The auto industry has become a crucial issue in the 2024 presidential election as Michigan – home to the Motor City and 1.1 million auto industry jobs – remains a critical swing state.

Vice President Kamala Harrisformer president Donald Trumpand their running mates and supporters have made Michigan a second home in recent weeks as the campaigns try to win over undecided voters in the Great Lakes State.

Since 2008, the candidate who won the state has moved to the White House, including Trump in 2016 and president Joe Biden in 2020.

“Michigan’s 16 electoral votes helped put Autos in the debate. “There are major differences, but also convergence, between Trump’s hyperactive and contradictory statements and Harris’ calmer positions,” Jefferies analyst Philippe Houchois wrote in an investor note on Monday.

With major automakers and suppliers shying away from publicly supporting either presidential candidate, executives and lobbyists from several companies spoke to CNBC on condition of anonymity to discuss how they are preparing for each candidate, as well as a likely divided Congress.

Electric vehicles, trade, tariffs, China, emissions regulations and labor are among the top issues automakers are watching, industry executives and policy experts said.

Harris vs. Trump

Officials expect a Harris victory will be a continuation, but not a copy, of the past four years under Biden. They think she might be more understanding of businesses, but there are concerns.

Some of her policies and possible appointments are unclear, experts say, especially her affiliation with the United Auto Workers union president Shawn Fain which has been a belligerent foe of automakers is worrying some.

If Trump wins reelection, auto industry officials largely expect him to return to policies and actions from his first presidential term, but those positions could potentially be more aggressive than before.

If in power, insiders expect him to roll back or eliminate tightened federal emissions and fuel consumption controls as he did during his first term; renewing a battle between California and other states that set their own standards; and potentially implement funding changes to the Biden administration’s flagship Inflation Reduction Act of 2022.

Officials said it would be difficult for Trump to completely undermine the IRA, but he could eliminate or limit EV subsidies through executive orders or other policy actions.

Automakers, suppliers and other auto-related companies are preparing for both outcomes and a rift in Congress, insiders said.

“There is no perfect scenario. Both candidates present a number of opportunities and challenges,” said a leading lobbyist and public policy expert for a major automaker. “Everyone in our company needs to look at the range of scenarios.”

Some Wall Street analysts are speculating about legacy automakers – particularly the “Detroit” companies General engines, Ford engine and Chrysler parent Stellantis – would benefit most from Trump and Republican control of Congress.

EV startups like Rivian car industry And Clear group would benefit more from a Democratic victory, largely due to expected plans regarding electric vehicles and fuel economy requirements. That’s despite Tesla CEO Elon Muskcontinued support for Trump.

Emission regulations

The most pressing issues for automakers are fuel economy and emissions regulations, especially regarding the 2026 model year regulations for California and several states that follow them, such as Washington, Oregon and New York.

Current requirements under the “Advanced Clean Cars II” The 2022 regulations require that 35% of model year 2026 vehicles, which will go on sale next year, be zero-emission vehicles. Battery electric, fuel cell and, to some extent, plug-in hybrid electric vehicles qualify as zero-emission vehicles.

The California Air Resources Board reports 12 states and Washington, DC, have adopted the rules; However, about half will have them from model year 2027. They are part of CARB’s Advanced Clean Cars regulations, which, among other things, mandates 100% of new vehicle sales zero-emission models by 2035.

According to the report, only 11 states and the District of Columbia had an EV market share above 10% at the beginning of this year. Alliance for Automotive Innovation, a trade association and lobbying group representing most major automakers operating in the US

Officials said that regardless of who wins the White House, many automakers will push for a delay in the CARB mandates. They would also expect Trump to roll back or freeze the Corporate Average Fuel Economy (CAFE). standards for model years 2027-2031.

Several auto insiders said they expect Harris would work with automakers on such a standard, just as Biden has done to some extent.

EVs, IRA

Electric vehicles and the U.S. policies that support them, such as the Inflation Reduction Act, are top priorities for auto industry executives and lobbyists. There could be major changes to regulations and incentives for electric cars if Trump regains power, leaving the industry in a temporary no man’s land.

“Depending on the US elections, we may have mandates; Maybe not,” Pablo Di Si, CEO of the Volkswagen Group of America, said at an Automotive News event on September 24. “Am I going to make decisions now about future investments? Of course not. We’ll wait and see.”

Electric vehicles have transformed from a popular vehicle talking point for Democrats four years ago to a call for Republicans.

Republicans, led by Trump, have largely condemned electric cars, saying they are being forced on consumers and will ruin the U.S. auto industry. Trump has promised to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency and incentives to promote production and adoption of the vehicles.

In contrast, Democrats, including Harris, have historically supported electric cars and related incentives.

Harris has not been as vocal about supporting electric cars lately, due to slower-than-expected consumer acceptance of the cars and consumer backlash. She has said she does not support an EV mandate like the ECHR Zero Emission Vehicles Act 2019that she co-sponsored during her time as a senator, would have required automakers to sell only electrified vehicles by 2040.

Clear group CEO Peter Rawlinson told CNBC on Monday that regardless of which presidential candidate wins the election, he believes the U.S. EV industry is still in its infancy and should continue to be “nurtured.”

Rawlinson, whose company has the most efficient electric vehicles on the market, also argues that the IRA should not only prioritize the size of a battery, as is currently the case, but also the efficiency of the vehicles.

“That effectively encourages electron-guzzling electric cars,” he said. “It actually incentivized putting more batteries in and being less efficient.”

Trade/tariffs and China

Led by fears that China’s auto industry will expand globally, both Trump and Harris have expressed intentions to revise the U.S. North American Trade Agreement, formally known as the United States-Mexico-Canada Agreement.

The deal, which replaced the North American Free Trade Agreement (NAFTA), was negotiated during Trump’s first term in office and went into effect in 2020. However, the former president and Democrats have said it needs to be improved to better support U.S. auto production.

While Trump praised the deal when it was renegotiated, Harris was one of 10 U.S. senators to do so voted against USMCA at the time.

GM CEO Mary Barra said last week that the automaker is “paying careful attention” to the election, including how potential changes in trade and tariffs could affect the company.

“We have been constructively involved in the policy-making process and will continue to do so regardless of the election outcome. “If you look at the number of jobs that are created in the U.S., even if some vehicles are produced abroad, from an alliance perspective, many of them are with our partners,” she said. “It is a very complex situation.”

Tariffs are central to Trump’s plan for the auto industry. He has said he would be willing to dramatically raise tariffs to prevent Chinese automakers from importing cars into the U.S. from factories in Mexico.

Chinese automakers do not currently do this, but are expected to try to use this import method in the coming years because they expand sales and build local production plants in the country.

Harris reportedly mentioned Trump’s tariff to suggest “a sales tax for the American people.” The vice president has not outlined any specific changes she would make to the current tariff structure if elected, including on Biden’s announcement to raise the rate on EVs imported from China from 25% to 100%.

Non-US automakers, which together account for 48% of US production and 52% of USMCA production, appear to benefit more positively from Harris’ victory, according to Jefferies.

Work

Of the many issues affecting the auto industry, officials who spoke to CNBC were almost unanimous on the labor market: They are concerned that a Harris victory would continue to mean greater power for organized labor.

Biden, followed by Harris, gave the United Auto Workers and Fain – the union’s president – ​​more attention than any previous president in modern times, including a speech at the Democratic National Convention.

The UAW arguably has more political influence than at any time in a generation, led by Fain and his top advisers he brought in from outside the union’s ranks. But there are divisions within the UAW and other unions over the historically Democratic-backed organizations and their members.

While the Teamsters declined to endorse a candidate due to a division within the union, UAW leaders didn’t just support Harris but have been a driving force behind her election campaign in Michigan and other states.

The UAW said last week Internal polling showed “increasingly strong support for Kamala Harris over Donald Trump, with Harris’ lead over Trump increasing dramatically over the past month.”

Meanwhile, Trump and Fain have done the same constantly criticized each other last year, as the union tried to organize as many auto plants as possible after the big contract win achieved last year in negotiations with traditional automakers in Detroit.

Workers such as UAW members were seen as crucial supporters for Trump’s first presidential election over Democratic candidate Hillary Clinton in 2016.

-CNBCs Michael Bloom contributed to this report.