Not China's Fault

The U.S. auto industry faces a structural crisis that cannot be explained away by simply citing foreign competition as a scapegoat. Decades of prioritizing SUVs and pickup trucks left Detroit unprepared for the global pivot to smaller, more efficient vehicles before an even more revolutionary turn towards electrification that paves ways towards future intelligent driving. While Tesla demonstrates that American firms can succeed in electrification, its success is not replicable at scale given its unique global supply chain combination that is no longer feasible in an era of retreat from globalization. For U.S. automakers, the central challenge is not American demand for newer and better cars but capacity: the U.S. lacks the production scale and industrial depth needed to compete with Europe, Japan, Korea, and especially China, which is usually, conveniently, and inaccurately cited as the one to blame for America’s industrial decline.

Policy responses have so far failed to resolve this dilemma. The Biden administration sought to combine the climate-oriented regulation mandate with electrification-oriented infrastructure policy to promote demand for EVs, but without supply-side restructuring these measures accelerated the decline of internal combustion engine (ICE) vehicles without securing a competitive EV base. The Trump administration has emphasized protectionism and industrial reshoring, aiming at revitalizing U.S. industrial productivity. These efforts have not addressed the underlying need for full supply chain upgrading to address demand for innovative products. Both approaches have fallen short— Biden by ignoring industrial capacity, Trump by neglecting electrification as the precondition for intelligent mobility.

America’s enduring advantages lie in technology. The U.S. leads in various sectors of artificial intelligence development – one that is essential to future intelligent driving – including semiconductor design, cloud infrastructure, and autonomous driving. These assets position it strongly in the future of intelligent vehicles. Yet, without scaled auto and battery production, these strengths remain stranded—powerful in theory but underutilized in practice.