In the past, what was good for General Motors was best for the country. In 1955, GM, the largest employer in États-Unis, hired about 600,000 people. Today, in the United States, the company employs only 53,000 people. By 1955, GM had a 70% market share. By 2023, this percentage had fallen to 16. 9%. By the late 1950s, GM, Ford, and Chrysler (Chrysler is now owned by Stellantis) had a 96% market share.
Unfortunately, for the shareholders of the Detroit Three and for the country, the long term is very bleak for domestic automakers.
GM, Ford, and Stellantis exist to generate profits for their owners, the shareholders. America’s economic formula is based on flexible market capitalism. Profits drive investment, productivity, and shared prosperity. The U. S. is not focused on statism, the pursuit of political purposes, and, in the case of the Big Three, the provision of “good-paying” jobs for factory workers. The purpose of the auto industry is not to combat climate change. Companies exist to make money.
Under the Biden administration, creating good, well-paying jobs for production staff is a primary purpose. But this purpose is slipping away and will never be achieved. Manufacturing as a task author is a dead end. The purpose of a government policy of above-equilibrium wages will destroy jobs and employers.
This is vital in the sense that the United Auto Workers union is a monopoly with monopoly power. It earns wages above the market equilibrium price. Historical knowledge obviously shows that the UAW is a task destroyer. The UAW’s recent wage agreements between the Detroit Three and the UAW have added up to $900 in prices per vehicle sold.
Non-union domestic plants owned by European brands have a clear tariff advantage. Equally important, cars imported from Mexico, where hard-work prices are about 90% lower than U. S. levels, have a major tariff advantage. edge. The U. S. auto industry is highly cyclical. Today, the domestic automotive market is experiencing strong demand, but recessions are inevitable. When the next recession hits, the Detroit Three will revel in a red hemorrhage.
The fortunes of the domestic auto industry are clouded due to prices related to the government-mandated transition to electric vehicles, which the public, at least for now, is hesitant to adopt due to cost, anxiety, and low trade-in value. .
Autonomous driving is the future; it’s safer. The Detroit Three will lose this battle. Tesla has just won approval from the Chinese government to roll out automated driving across the country. Tesla will create an unprecedented database for safe autonomous driving. Tesla has the balance to buy 50,000 H-100 accelerated computer chips from Nvidia. more than $40,000. The Detroit Three can’t do that.
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Tesla makes money by promoting electric vehicles. GM and Ford lose significant amounts of cash for every electric vehicle sold. Tesla is taking the lead. GM and Ford are far behind. The peak union workload, massive losses from one or both EVs sold, and capital-destroying investments in government-mandated climate replacement projects have the Detroit Three competing with Tesla, the European corporations. with non-union operations in the U. S. , and Chinese automakers that will build factories in Mexico and circumvent U. S. tariff regulations.
Unionization and the Biden administration’s embrace of a statist economy are destroying the Detroit Three, shareholders, and workers. The UAW and Biden are hurting the nation.
James Rogan is a former U. S. Foreign Service officer who worked in finance and law for 30 years. Write a note.