Joe Biden could destroy our auto industry

The looming possibility of a UAW strike put a spotlight on Joe Biden's vocal, misguided push for electric vehicles

We don't want to see a strike, but we're prepared to strike if we have to: Jim Farley

Ford CEO Jim Farley discusses ongoing talks between the UAW and the Big Three automakers as a potential strike looms on 'Special Report.'

Joe Biden’s climate push is undermining our auto industry and inviting even more reliance on China, and not just for batteries or raw materials. That’s bad for our economy, bad for workers and bad for Democrats.

The United Auto Workers threaten to strike – possibly all Big Three car companies -- if an agreement is not reached by midnight this Thursday. Shawn Fain, UAW president, has made almost impossible demands, including a pay hike of 46% over four years, a new 32-hour workweek, and generous cost-of-living adjustments and pensions. Though he has moderated his stance a bit just recently, a strike looks likely.

The battle between the auto companies and the UAW is a lose-lose for Biden. A strike would be an embarrassment for the president, an avowed ally of Big Labor, who just recently told reporters he did not think a strike was going to happen. It would damage Michigan’s economy, hurting Democrat prospects in a swing state that went for Donald Trump in 2016 but voted for Joe Biden in 2020. At the same time, a hefty settlement that avoids a work stoppage could raise concerns about higher wages and inflation just as the Federal Reserve is expected to pause further rate hikes.

BIDEN DOESN’T THINK AUTOWORKERS WILL STRIKE, AS DEADLINE LOOMS

But Biden’s biggest problem is that the negotiations shine a spotlight on Joe Biden’s ill-considered push for electric vehicles. This past spring, the president proposed emissions standards effectively requiring that 67% of all cars sold in the U.S. be electric by 2032 (an unexpected upgrade to his earlier mandate that 50% of all cars sold by 2030 be all-electric). 

Here’s what Joe Biden hasn’t told the American public: China dominates the EV industry. China is now the world’s largest electric vehicle market, accounting for 60% of global sales.

The UAW knows that shifting to electric vehicles could lead to layoffs and shrink their union; Ford Motor has acknowledged that producing EVs will require 40% less labor than a traditional internal combustion engine. The UAW now wants carmakers to make them whole, by raising wages. They are spoiling for a fight.  

Meanwhile, automakers fear that UAW demands will crush their profitability, already under pressure as they gear up to comply with the president’s Green Dream. They are also concerned that raising pay for union workers will make them even less capable of competing with cheap EVs made outside the U.S., and especially in China.

Last spring, when Biden issued the new mileage efficiency standards, U.S.-based automakers described the rules as "neither reasonable nor achievable in the time frame covered in this proposal." They further said the draconian measure "can be met without substantially increasing the cost of vehicles, reducing consumer choice, and disadvantaging major portions of the United States population and territory." Remember that only about 7% of new cars sold today in the U.S. are all-electric. 

Meanwhile, demand for EVs in the U.S. has been disappointing. Sales are increasing, but not as quickly as enthusiasts had expected. Inventories have risen and some makers, like Tesla, have cut prices or offered increased incentives to move cars off the lots. 

At the end of June, inventories of EVs were 92,000, up 350% from the same period a year earlier. According to a recent Cox Automotive Survey, affordability remains the top reason consumers aren’t buying EVs. Even with hefty subsidies and tax credits, most Americans cannot afford all-electric vehicles that cost on average about $55,000.    

The second-biggest problem is a lack of charging stations. We are way behind what the industry requires to satisfy growing demand.

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A strike would devastate the car industry, even as the economics of shifting to EVs are already a substantial headwind. Though auto firms have been recording hefty profits of late, the e-businesses for some remain in the red, with gas-powered cars subsidizing their EV expansion. Paying union members substantially more would undermine their profitability and make them even more vulnerable to Tesla, which is non-union, and also to cheap Chinese imports.  

That threat is real. Here’s what Joe Biden hasn’t told the American public: China dominates the EV industry. China is now the world’s largest electric vehicle market, accounting for 60% of global sales. 

As that market has grown, Chinese companies have ramped up production and secured supply chains of necessary products like battery components. Because of government subsidies and an early start, China has a number of successful companies that are competing not only at home but also globally. China’s BYD, for instance, is the global leader, selling nearly two million electric vehicles last year, more than Tesla, which made 1.3 million. 

  • joe biden could destroy our auto industry

    President Joe Biden speaks about electric vehicles during a visit to the Detroit Auto Show, Wednesday, Sept. 14, 2022, in Detroit. (AP Photo/Evan Vucci) (Associated Press)

  • joe biden could destroy our auto industry

    The Dodge Charger Daytona SRT Concept offers a glimpse at the brand’s electric future through a vehicle that drives like a Dodge, looks like a Dodge and sounds like Dodge. (Dodge)

  • joe biden could destroy our auto industry

    President Joe Biden makes his entrance on November 17, 2021 at General Motors' Factory ZERO electric vehicle assembly plant in Detroit, Michigan. (Nic Antaya/Getty Images)

  • joe biden could destroy our auto industry

    Ram 1500 Revolution Battery-electric Vehicle (BEV) Concept front three-quarters (Ram)

  • joe biden could destroy our auto industry

    FILE -- Tesla automobile plugged in and charging a Supercharger rapid battery charging station for the electric vehicle company Tesla Motors, in the Silicon Valley town of Mountain View, California, August 24, 2016.  (Smith Collection/Gado/Getty Images)

In Europe, a 2035 ban on gas-powered cars looms, requiring a shift to EVs. Exports of China-made vehicles are pouring into Europe; by 2025, some 20% of Europe’s EV sales are expected to come from China. European automakers are scrambling to maintain their market share. 

Just recently, the head of BMW warned that European carmakers, and especially producers of lower-priced cars, were being pushed into a price war with Chinese imports – a war they were unlikely to win. 

Carmakers in the U.S. could soon face the same increased competition. Allowing Chinese imports to flood the U.S. market would help Biden achieve his emissions targets, but would be at odds with his administration’s goal of reducing U.S. reliance on China. Already, industry experts warn that the U.S. will have to increase imports of critical materials and minerals from China to satisfy the EV build-out.

The U.S. auto industry is our largest manufacturing sector, accounting for roughly 3% of GDP. It is capable and resilient, but it isn’t magical. If costs go through the roof, it will either be less profitable or shrink, losing out to China. The White House – and the country -- cannot afford to let that happen.  

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Authored by Liz Peek via FoxNews September 12th 2023