As poorly as the first presidential debate of 2024 went for Joe Biden, the consensus seems to be that last night’s debate meant a devastating reversal for Donald Trump. At the hands of Trump’s new opponent, Vice President Kamala Harris, millions of Americans and the rest of the world saw a showdown that words like “heated” and “contentious” don’t adequately cover. And as both candidates offered starkly different visions of America’s economic future, the auto industry and its electric future were very much on the menu. 

That kicks off today’s Critical Materials news roundup. Also on tap: Volkswagen gets ready for layoffs as the European auto crisis deepens in part at the hands of a rising China, which, having conquered the EV sector, now sets its sights on artificial intelligence and autonomous driving. Let’s take a look.

30%: The Auto Industry Gets Caught Up In The Presidential Debate 

I’m not convinced either candidate really brought their A-game in terms of policy substance last night, but Trump’s meltdowns are what dominate the headlines today. Still, we did get a preview of the vastly different ways Harris and Trump will approach the U.S. auto industry as it grapples with the transition to an electric future and the looming threat of competition from China. Here’s The Detroit News with a good recap:

Democratic nominee Kamala Harris, in response to a question about climate change, said that “part of building a clean energy economy includes investing in American-made products, American automobiles.

“It includes growing what we can do around American manufacturing and opening up auto plants, not closing them like happened under Donald Trump,” Harris added.

Harris also touted her endorsement from the Detroit-based United Auto Workers union and its president, Shawn Fain, who has vowed to vigorously support the vice president’s White House bid.

Former President Donald Trump, the Republican nominee, countered by saying the Biden administration “lost 10,000 manufacturing jobs this last month.”

By the way, according to the Bureau of Labor Statistics, it was more than that—about 24,000 jobs. But those were manufacturing jobs, period, not necessarily auto industry jobs. The News puts Michigan autos jobs down about 3,000 between 2021 and this past July. But Trump again suggested that the Harris-Biden policies will lead to the evisceration of the auto industry at the hands of China:

Trump also contended China is building auto plants in Mexico with plans of flooding the U.S. market with cheap vehicles.

“We’ll put tariffs on those cars so they can’t come into our country, because they will kill the United Auto Workers and any auto worker, whether it’s in Detroit or South Carolina or any other place,” the former president said.

Those responses showed a stark contrast between Harris’ affirmative plans to continue subsidizing American manufacturing and the auto industry as it shifts towards electric vehicles and Trump’s focus on stoking fears that such a shift could cost blue-collar jobs. The exchange didn’t occur until about 90 minutes into the debate, but it highlighted one of the most important topics for voters in the industrial Midwest.

Never mind that Trump once alluded to China’s automakers coming here, or the fact that Biden’s Bipartisan Infrastructure Law and Inflation Reduction Act are driving significant auto industry investments—including EV plants in states like Georgia. Trump has been fairly inconsistent on the issue, once threatening to do away entirely with EV subsidies but expressing a bit more fondness for them now that he’s pals with Elon Musk.

But as the News notes (they did a good job with this story) Harris has really avoided much mention of EVs so far, in contrast to noted “car guy” Biden, who was once seen zooming around in a GMC Hummer EV. There’s probably a reason for that: 

Harris herself has avoided discussing EVs since launching her campaign in July. The emerging technology remains unpopular among Michigan consumers and unprofitable for Detroit automakers Ford Motor Co., Stellantis NV and GM.

Republicans have made it a point to hammer that issue in Michigan. Trump and others repeatedly attacked “EV mandates,” a common GOP refrain referring to the web of incentives and punitive regulations from the Biden-Harris administration that push the auto industry toward electrification of more cars, trucks and vans.

Republican surrogates for Trump have said that EV “mandates” in America—which in itself is a false and misleading term—will kill the industry. And one Michigan Democrat backing Harris called shenanigans: 

Democratic U.S. Rep. Haley Stevens, of Birmingham, called out Trump on Tuesday night for his debate remarks and past comments about EVs. Stevens said his message on the topic amounts to “fearmongering” over job losses and that the former president is “talking out both sides of his mouth.”

“On one hand, he’s saying that EVs are never going to succeed, and on the other he’s saying that China is going to flood our market with cheap electric vehicles, and everyone’s going to buy them. So which one is it?” the three-term congresswoman said in a post-debate interview with The Detroit News.

Anyway, don’t expect this issue to go away anytime soon. But Harris is probably going to try and duck the EV issue entirely rather than hand Trump a weapon to use against her since cars that run on batteries have become so heavily politicized here in America. Even if they shouldn’t be.

60%: Volkswagen Braces For Layoffs As Europe’s Auto Industry Gets Hammered

Volkswagen ID.3 GTX (2024)

Here’s the thing, though: I see what’s happening in Europe as a preview of what could happen if America’s auto industry (which includes the foreign automakers that operate and employ Americans here) fails to adequately prepare to battle China in the global EV race. China’s automakers are never going to “play fair” on labor costs, sure. But if America doesn’t beef up its battery and software game it doesn’t stand a chance. 

Just ask Volkswagen. Via Reuters:

Volkswagen said on Tuesday it was scrapping a range of labor agreements including a guarantee of jobs until 2029 at six German plants, raising the prospect of redundancies from next year that worker representatives have vowed to resist.

Europe’s top carmaker is canceling the decades-old employment guarantees as part of a cost-cutting drive that has triggered a showdown with workers as Volkswagen struggles to compete against cheaper Asian rivals.

Volkswagen’s move follows a threat that it could shut plants on German soil for the first time in its 87-year history, which sent shockwaves through the global autos sector and prompted high-level German government concern.

“We must enable Volkswagen AG to reduce costs in Germany to a competitive level in order to invest in new technologies and new products with our own resources,” the company’s Labour Director Gunnar Kilian said in a statement. 

Tariffs alone won’t keep that from happening here.

90%: China Targets The Autonomy Sector Next

This is only just starting to change, but for now, China has a pretty iron grip on the EV battery supply chain. Now it’s targeting the next big thing: autonomous driving through AI, according to a new Wall Street Journal report. We’ve covered that before here, but it shows just how much the race is accelerating: 

Competition is intensifying in driver-assistance software—one pathway to full autonomous driving—among startups such as XPeng and national technology champions including Huawei. To speed up innovation and drive down costs, they are using artificial-intelligence techniques to mimic human driving patterns and navigate cars through many traffic situations, although the latest models still require a human driver to stay alert and at times take control of the car.

Compared with the U.S., where Tesla has been at the forefront of driver-assistance technology in cars sold to consumers, China offers some advantages for companies that could accelerate progress. 

About half of new cars sold in the country are electric vehicles or plug-in hybrids. Advanced driving technology consumes electricity because of the sophisticated computers on board making split-second calculations, and electrified vehicles provide a more stable power supply than lead-acid batteries in gasoline-powered cars, industry analysts say.

And China’s tech-savvy consumers, many of them relatively new to driving, are more open to ceding vehicle controls to a computer. In a survey last year by PwC, 85% of Chinese consumers said they were comfortable with autonomous driving that doesn’t require human action or supervision compared with 39% of American consumers.

Companies are looking at both driving-assistance systems in consumer cars and robotaxis as steps toward full self-driving. Ministries in Beijing and local governments have been introducing guidelines aimed at developing the self-driving car industry.

The part about Chinese motorists being largely new to driving and thus, more open to autonomy is an angle I hadn’t thought of. After all, it’s not like they have decades of precedent for motorsports or even fun backroad driving or road trips like we do here. 

The story also notes that Chinese automakers seem to be developing similar “end-to-end” systems that use “a single AI model to absorb input from sensors and decide how to drive rather than splitting the tasks among separate programs.” But as that story notes, even China’s best are no full match for a human driver, and perhaps they never will be.

100%: What’s America’s Best-Case Scenario To Keep Up With Chinese EV Tech? 

InsideEVs

My take: Keep building up battery plants here, partnerships with Chinese automakers with guardrails built-in (so we can take their tech instead of the other way around for a change) and assume tariffs have a good five years max to keep out companies like BYD. By then, Ford and General Motors and the rest had better be ready for the ultimate street fight.

What do you think? 

Contact the author: patrick.george@insideevs.com