Trump: Instant Chaos Gonna Get You

President-elect Donald Trump has given America the era of the blowhard politician. Under Trump, politicians are blowing harder than ever and it promises a renewal of the chaos of Trump's first term. In fact, the only thing that saved the country from even greater calamity in that first term of border walls, COVID-19, and tariff terrorism was the chaos.

Former new car dealer and newly minted senator from Ohio, Bernie Moreno, is a leader among the emerging agents of chaos. He promises to unleash chaos on the automotive industry in the interest of rewiring and rescuing it. It is hard to conceive of a more perfect scheme to undermine U.S. auto industry competitiveness and finally eliminate home grown domestic manufacturers.

According to the Detroit Free Press, Moreno's declared plans include:

• Repealing the emission standards that, in effect, can only be met through selling electric vehicles.
• Freezing Corporate Average Fuel Economy standards for "at least a decade."
• Prohibiting California from following a separate set of emission standards from the rest of the nation.
• Do away with the $7,500 tax credit for new EV purchases
• Provide tax breaks for companies that build cars in the U.S.
• Oppose impairment detection technology for cars beginning with model year 2026

Detroit Free Press article: https://www.freep.com/story/money/cars/2024/11/08/senator-bernie-moreno-trump-auto-industry-ev-incentive-cafe-freeze/76108589007/

Moreno's ideas for today's automotive industry are not-surprisingly intended to block foreign vehicle imports and domesticate vehicle production. He reserves his harshest words for Chinese car imports. The Free Press quotes Moreno: "The minute that China thinks they can come here with their cheap, fully electric garbage cars … they’re sadly mistaken. These cars will come in here with dramatically high tariffs that will make those cars unsellable. ... We’re not going to be suckers anymore. We’re going to protect American workers and American jobs.”

Moreno sprinkles his comments with caveats regarding President-elect Trump's role in this policy and decision making. He also notes the essential role of both houses of Congress.

All of his policy strictures are delivered in the context of reversing current U.S. policy which he sees as forcing American consumers to buy cars they don't want. As a former car dealer, Moreno believes that he and only he understands how the market works and that the market must be minded in order to unleash the full potential of the American auto industry.

Sadly for Moreno, he apparently learned little from his time as an actual new car dealer. Auto makers - American and otherwise - and their dealers have always been forced into the role of convincing consumers that they want the cars that have already been manufactured. This is why billions of dollars are spent on advertising. The business of making and selling cars has never been about giving the people what they want. This is mythology.

Henry Ford captured this reality best: "Any customer can have a car painted any color that he wants so long as it is black." Simply put, it takes years to design and build a car. Cars have never been made to order - certainly not in the U.S.

And if car makers were left to manufacture only the cars that they want to manufacture, they'd make only the most profitable cars - SUVs and pickup trucks. A more important shift in the market is the growing preference of consumers to buy cars directly.

Direct sales of cars is something consumers are clamoring for - as are multiple EV startups including Tesla, which still faces direct sales limitations in multiple states. Moreno is silent on direct sales and is likely to remain so given his background and the sources of his financial and political support.

Car dealers - individually and collectively (as the National Automobile Dealers Association) - disproportionately supported Republicans in the 2024 election, according to OpenSecrets.org. Auto makers also disproportionately supported Republicans - 80% vs. 20% - in the latest election, though General Motors gave more to Democrats, according to data cited by batterytechonline.com.

Tesla, X, and SpaceX CEO Elon Musk was all-in on President-elect Trump, spending an estimated $200M via his political action committee. Musk's role in automotive regulatory decision making is likely to be more determinative than junior senator Moreno's musings.

Would Musk welcome a rollback of EV targets and tax credits and emissions restrictions? Maybe. Either way he wins. If auto makers lose Federal support for their EV development activities they will lose important assistance in their efforts to compete with Musk's Tesla. Tesla is likely the only player in the market with sufficient profitable momentum to proceed with his EV plans without government help. Domestic manufacturers are weighed down by their internal combustion legacy and slow-footed dealers.

Blocking EVs from China might also be helpful to Tesla, but, again, he is likely the only player in the market capable of going toe-to-toe with the Chinese on price and performance. Moreno's ravings may be more amusing than alarming to Musk.

As the Detroit Free Press article points out, if Moreno is successful in his automotive regulatory rollback campaign, cars made by American auto makers are likely to become even less competitive and less attractive to car buyers in other countries and, more likely than not, unsellable in international markets. Moreno also appears intent on stopping the import of cars designed in America but made overseas from being imported such as the Lincoln Nautilus and Buick Envision. Another blow to domestic makers.

The "give the people what they want" mantra being claimed by Moreno is a dangerous path. It may well be that the American consumer wants cheap Chinese EVs that they can buy directly without the intervention of a dealer. Even Moreno cannot deny the success of BYD which has become one of the largest auto makers in the world - without selling a single car in the U.S.

While Moreno may have set out to "protect" "American" auto makers, he may end up "protecting" Musk's Tesla at the expense of competing domestic car companies. Considering the apparent limitations of his industry insight and intellect, it is no wonder it cost Moreno hundreds of millions of dollars to defeat incumbent Senator Sherrod Brown. Moreno is nothing more than a throwback seeking a rollback - just another blowhard.