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Biden would offer stable, tech-focused future for auto industry – experts

A Joe Biden presidency would give the auto industry a more stable future focused on forward-looking technology like electrification and autonomous driving, while a continuation of the Donald Trump presidency would push for more traditional car manufacturing in the U.S., experts say.

As Democratic presidential nominee Biden and incumbent Trump head toward Election Day on Nov. 3, Biden has rolled out goals for the auto industry that focus on creating jobs, implementing standardized regulations, and investing in electric vehicles and infrastructure. Biden's campaign promises include adding 1 million jobs in the auto industry, supporting strong labor standards for auto workers, enforcing trade rules with China and investing in 500,000 EV-charging stations.

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The Trump administration has focused on domestic auto manufacturing and sourcing. It has also proposed eliminating the federal EV tax credit that gives consumers up to $7,500 to buy a new electric car and revoked California's authority to set its own vehicle emissions standards. Trump also imposed U.S. tariffs on billions of dollars' worth of goods from China, including auto components.

In January, Trump signed the new United States-Mexico-Canada Agreement trade deal, which replaced the North American Free Trade Agreement. Before the coronavirus pandemic spurred a steep drop in car sales and widespread factory shutdowns, the U.S. trade representative claimed that the new deal would create 76,000 jobs for the auto industry over five years and generate $34 billion in U.S. auto manufacturing investments.

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Diverging views on jobs, industry

Although both presidential candidates support increasing the number of auto jobs, Trump would push for autoworkers in traditional manufacturing roles. In contrast, Biden is looking to a future of advanced technology, according to experts.

Trump would want to have jobs "doing old-fashioned things," said Mark Rom, associate professor of government and public policy at Georgetown University. In terms of Trump's ideal world, Rom said, people would be driving cars with V8 engines, and there would be few mileage restrictions on vehicles.

"Biden is different, saying he wants to have a million new jobs, but those jobs aren't going to be making Chevy Camaros unless those Camaros are going to be running on electricity," Rom said. "So it's much, much, much more future-looking."

Jason Jolley, professor of economic development at Ohio University, said the auto industry is ripe for disruption as it moves toward ride-sharing, autonomous vehicles and the infrastructure to support that. Biden's platform is more supportive of those concepts, he said.

"I think having a stable environment for those automotive companies to collaborate with tech companies and regulators will be important as we move forward in that space," he said.

Trump delivered on his promise to put America first and bring manufacturing jobs back to the U.S., a spokesperson for the Trump campaign said.

"For nearly 50 years, Joe Biden has prioritized China over American workers, shipping manufacturing jobs overseas and implementing trade deals that killed American jobs," Samantha Zager said in an email to S&P Global Market Intelligence.

Trump's new USMCA trade deal requires vehicles produced in the U.S., Mexico or Canada to have 75% of their manufacturing take place in North America, while the North American Free Trade Agreement had a lower threshold of 62%. Several automakers, including General Motors Co., have cited the USMCA as a reason to invest in U.S. manufacturing projects.

The Biden campaign did not respond to a request for comment.

Both Trump and Biden will protect and support the auto industry, according to Erik Gordon, a professor at the University of Michigan's Ross School of Business. Democrats were traditionally big supporters of globalization and free trade, which hurt employment in the auto industry, he said, adding that he does not think anyone who gets elected expects to do so on a globalization platform now.

"They're not going to risk being swept out of office by allowing jobs to go to Mexico or anywhere else," Gordon said.

Trump has focused on domestic manufacturing and jobs and initiated a trade war with China to put tariffs on goods imported from the country.

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Forward-looking policies

U.S. automakers are spending billions of dollars to pivot their company strategies toward a future of electric and autonomous vehicles, and EV-related policies could help their plans. Biden will use purchasing power, research and development, tax, trade and investment policies to "position America to be the global leader" in manufacturing EVs, according to his campaign website.

Knowing the government is committed to an electric future would boost automakers' confidence in focusing on EVs — especially when it comes to charging infrastructure, according to Georgetown's Rom.

"Automakers don't want to build the charging units, but if the government does that, if it's part of our infrastructure, that would make it much more attractive to the auto companies," Rom added.

The auto industry must invest in battery technology to truly become a global leader in electrification, University of Michigan's Gordon said.

"Technology today cannot replace the internal combustion engine," he said, adding that the U.S. does not want China to have the best battery technologies.

Biden aims to accelerate research on battery technology and support the development of domestic production capabilities, according to his campaign site.

"I think you want to develop and own the technology that's going to make electric vehicles become the vehicle of choice without government subsidies," Gordon added.

Tom Devall, director of manufacturing initiatives at Auburn University, echoed that the federal government needs a cohesive plan for the auto industry.

"If our auto industry becomes a victim of not acting due to short-term focus or lack of support from the federal government around a national strategy, we are at risk of losing opportunity to develop and produce the next generation of technology in the U.S.," Devall said in an email.

Trump leading Biden in fundraising among auto industry

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Trump, however, is leading Biden in political contributions by individuals associated with Ford Motor Co., General Motors and Fiat Chrysler Automobiles NV, according to OpenSecrets.org.

The president's "strong rhetoric against moving production to Mexico and closing U.S. assembly plants is more appealing to auto workers," according to Gordon, compared with Biden's claim that former President Barack Obama saved the auto industry during the 2008 financial crisis and that Biden should get credit for that. In 2008, the U.S. government provided bailouts for GM and Chrysler, with GM receiving about $50 billion and Chrysler receiving $12 billion.

Ohio University's Jolley also noted that contributions to Democrats were spread around a crowded field of candidates, whereas all contributions to the Republican side were directed at Trump. OpenSecrets tracks political contributions made during the 2020 cycle and does not break out the timing in further detail.

General Motors, Ford and Fiat Chrysler declined to comment on the candidates' policies.

A stable industry

Both Biden and Trump support the auto industry, but the former vice president's policies would bring more stability to automakers, experts said.

The Trump administration has put the industry in a tough spot at times, however, by pushing back on regulatory requirements and incentives from the Obama administration that automakers invested in, according to Jolley. These include improved fuel standards and a push toward electric or hybrid vehicles.

"President Trump will sometimes put people on blast on Twitter, and he's done that to some automotive companies and automotive supply companies at times," Jolley said, adding that the companies try to walk a delicate line. "So I think what Biden will provide is some stability."

Gordon said automakers need a stable regulatory climate because they need to plan their technology and manufacturing paths.

"So what they would like is stable regulations with respect to things like safety, emissions, fuel economy, so that they can know, all right, if I invest, I won't have the rug pulled out from under me," he said. "And I won't be at a disadvantage halfway down the road after I have gone first and made a big investment and you loosen the regulation and I've wasted my money."

California and the Trump administration have been at odds over fuel-economy and emissions standards, with automakers split on whom to support. Ford, Honda Motor Co. Ltd., Volkswagen AG and Bayerische Motoren Werke AG sided with California's own standards, set independently with a waiver under the Clean Air Act. Under the agreement with California, the four car companies will increase their vehicle-emission and fuel-economy standards in the state through their 2026 models.

GM, Fiat Chrysler and Toyota Motor Corp. have backed Trump's plan, which would freeze fuel-economy standards at 37 miles per gallon for six years instead of increasing to 54.5 mpg by 2025, as Obama's administration planned.

The automotive supply base also faces uncertainty under the Trump administration as the president threatens foreign suppliers with prohibitive taxes for exporting to the U.S., according to Auburn's Devall.

"This uncertainty is disruptive and creates great risk to both the [original equipment manufacturers] receiving parts and the suppliers supplying," he said. "If material from any one supplier is lost, the cost of disruption to the OEM is tremendous."

The United Auto Workers endorsed Biden in April, saying the U.S. "needs a president who will demonstrate clear, stable leadership, less partisan acrimony and more balance to the rights and protections of working Americans."

In July, the union said Biden's plans for the auto industry "is a win-win for American manufacturing, auto industry jobs, new technology and a cleaner environment."