General Motors, Ford, and other established automakers risk becoming relics if they fail to catch up with Chinese automakers and tech companies in electric vehicles and self-driving cars. Writes the NYT.
GENERAL MOTORS AND OTHERS CHASING CERTAINTY?
Perhaps no other industry needs certainty more than the automotive industry. It usually takes at least four years to design a new model and bring it to market, and automakers must anticipate what buyers will like when the vehicles hit showrooms.
Yet, industry veterans say they don’t recall a time when the biggest automakers faced as much uncertainty as today. They have been overwhelmed by tariffs. Chinese automakers are breathing down their necks worldwide. Autonomous taxi companies like Waymo are changing the very nature of transportation. Software has replaced power as the main selling point. Sales are stagnant almost everywhere and profits are declining.
How U.S. automakers navigate this critical moment will determine whether they survive as global players or slip into irrelevance, becoming niche producers of pickups and SUVs bought only by Americans.
The early signs are not promising. Many established automakers, both American and European, have been blocked by electric vehicles at nearly every turn. First, Tesla’s meteoric rise caught them by surprise. They responded by investing in new plants, but now they are backtracking after the U.S. government repealed tax credits and other subsidies for those cars.
THE TRUMP UNCERTAINTY AND INVESTMENTS
In particular, U.S. automakers face tough choices. President Trump guaranteed them short-term gains by dismantling clean air regulations and fuel efficiency standards, making it easier to sell highly profitable pickups and SUVs.
Should they take advantage of this measure to please Wall Street and make as much money as possible? Or should they continue investing in new technologies?
Industry experts say traditional companies risk becoming obsolete if they don’t learn to produce appealing and profitable electric vehicles, which most executives expect will eventually replace gasoline cars, despite the Trump administration’s efforts to promote fossil fuels. Improvements in electric vehicle technology mean that within a few years, they will be cheaper to buy and recharge in 15 minutes or less. One of the biggest problems for established manufacturers is that many of the electric models they sell have performed poorly compared to Tesla’s and other newer companies’ cars.
TESLA AND BYD SURPASS GENERAL MOTORS AND OTHERS
Tesla and Chinese automakers like BYD have a substantial advantage in battery technology and software. Western automakers tend to lose money on electric vehicles and, for the most part, are also behind in self-driving cars. Again, the Chinese have an edge, as do Tesla and Waymo, a division of Google’s parent company that operates autonomous taxis in 10 U.S. cities and is rapidly expanding.
[…]The health of the automotive industry has huge economic implications. About three million Americans work for vehicle and parts manufacturers and dealers. About eight times as many jobs in car washes, advertising agencies, restaurants, and other businesses depend on spending by automakers, their employees, or car owners.
U.S. CARS LEAVE WORKERS STRANDED
According to the Bureau of Labor Statistics, over the past year in the United States, vehicle and parts manufacturers lost about 21,000 jobs, despite tariffs designed to force them to produce at a national level. Automakers have been a major source of industrial innovation since Henry Ford perfected the moving assembly line in the early 1900s. They are crucial to the manufacturing revival politicians claim to want. Production techniques developed by automakers, such as the use of robots, are widely copied by other sectors.
The challenges faced by automakers in the U.S. and Europe come after a tough year. Ford, General Motors, and Stellantis, the Euro-American company owning Chrysler, Fiat, Jeep, and Peugeot, posted multibillion-dollar losses at the end of 2025, having delayed and canceled investments in electric vehicles.
THE CRISIS AFFECTS (ALMOST) EVERYONE
Even automakers that posted profits last year, like the German luxury brand Mercedes-Benz, recorded much lower results. Among major automakers, only Japanese Toyota managed to register a significant sales increase in 2025. Analysts predict that sector-wide sales will stabilize in 2026. (Ford saw a 1% sales increase over the year).
Automakers say the situation is not as bad as it seems. Many have cash reserves accumulated during the pandemic, when supply shortages allowed them to raise car prices. GM felt confident enough financially to spend $6 billion last year buying back its own shares, a way to return money to investors.
The company allocated a similar amount for 2026. Ford also returned money to shareholders through dividends. Such payments generate confidence on Wall Street and could help companies raise capital in the future, said John Paul MacDuffie, a professor at the Wharton School of the University of Pennsylvania. However, he noted that the money might be better spent on new products and technologies.
[…]HAS THE PUSH FOR ELECTRIC LOST STEAM?
Automakers say they continue to invest in electric vehicles, batteries, and self-driving cars, although the pace has slowed. GM has a dozen electric models, including battery versions of the Chevrolet Equinox, Chevrolet Blazer, and Cadillac Escalade IQ.
[…]The Chinese are also moving at a surprising speed: some Chinese companies can develop new models in just 14 months, said Mark Wakefield, CEO of AlixPartners, a consulting firm specializing in the automotive sector.
Chinese companies make decisions faster, use virtual simulations for testing, and are willing to take risks that Western automakers would not, Wakefield said.
U.S. automakers realize they need to become faster and more innovative, he said. But it is unclear whether they will be able to renew their organizations quickly enough.
(Excerpt from the foreign press review curated by eprcomunicazione)
