President-elect Trump understands the U.S. auto industry better now than he did during his first term, says Ford chairman Bill Ford, who's hopeful that Tesla CEO Elon Musk will use his close relationship with Trump to advocate for all automakers.
Why it matters: Trump had a fraught relationship with Detroit carmakers during his first term, and the companies often sparred with the president over labor, trade, tariffs and regulations.
But this time around, he's keenly aware of the competitive threats they face, especially from heavily subsidized Chinese rivals.
Driving the news: Ford said Trump called him "out of the blue" recently and the two men spoke for "a long, long time" about what U.S. automakers need to succeed.
"He's very tuned into the importance of a strong American industry. He wants to not only keep it strong, but actually strengthen it from here," Ford told reporters on the sidelines of a product announcement at the Detroit Auto Show.
"It's very clear what his intent is."
Ford also said he wasn't too worried that Musk will use his close relationship with Trump to get an advantage over Tesla's rivals.
"We are aligned on a lot of different things," he said of Musk.
And given that Trump has his number, Ford said, "I feel very confident that, going forward, Ford will have a voice, and a seat at the table."
Between the lines: Ford said affordability is the key to facing the "crucible" of Chinese competition on electric vehicles.
"It's not matching the technology. It's not matching how the vehicles are put together. It's really not even matching the battery itself. But it really is the affordability to the customer that becomes, sort of the crucible, whether this is going to succeed or not. We're working really hard on that."
Regardless of how President-elect Trump changes the Biden administration's long-term climate policies, automakers are already panicking about state-level electric vehicle mandates just around the corner.
In California and 11 other blue states that follow its lead, 35% of new cars must be electric starting with 2026 models — some of which will be in showrooms as early as next spring.
Why it matters: Carmakers are not even close to meeting those requirements.
In many states. they would need to double or triple their EV sales in just one year — an unrealistic goal given the average $57,000 price of an EV and the lack of charging infrastructure, companies tell Axios.
It's all likely to come down to a bitter fight between Trump and California's Democratic Gov. Gavin Newsom, who has presidential ambitions of his own.
The stakes are enormous — not just for automakers and car dealers, but also for consumers.
Funneling more EVs into markets that don't want them is "unnatural" and will "distort" the business, says Jack Hollis, president of Toyota Motor North America.
"It's going to limit a customer's choice of the vehicles they want," he told reporters Friday.
Automakers, meanwhile, fear they'll have to choose between swallowing bigger losses on EVs or sacrificing profits on gasoline vehicles — neither of which is palatable.
State of play: The 1967 Clean Air Act gave California a waiver to set its own greenhouse gas emissions standards, which typically outpace federal standards set by the Environmental Protection Agency.
The law allows other states to choose whether to adopt California's standards or stick with the federal rules.
In 2022, California's Air Resources Board (CARB) adopted the strictest rules yet, ratcheting up the percentage of zero-emission vehicles from 35% for the 2026 model year to 100% by 2035, effectively eliminating gasoline cars.
Eleven states, plus Washington, D.C., have adopted California's latest rules, representing nearly 40% of the nation's vehicle market.
Where it stands: EV sales have been growing steadily, but currently make up only about 9% of U.S. auto sales.
In California, EVs account for nearly 26% of new car sales — putting that 35% goal by 2026 potentially within reach.
Many of its blue-state allies, however, lag far behind, according to the Alliance for Automotive Innovation.
Washington, Colorado and D.C. are around 19% EV share, while others, including Massachusetts, Vermont and Maryland are closer to 11%.
Of all the CARB-following states, New York is farthest off the pace at less than 10% EVs.
Alarm bells are ringing across the industry as each automaker calculates its own compliance risk.
Between the lines: Automakers basically have three options, none of them good for business:
They can dump more discounted EVs into those 11 states to lure buyers. But that would just widen their billion-dollar losses on EVs.
They could instead throttle back sales of gasoline trucks and SUVs in the affected states to make the EV sales ratio easier to meet. But that would choke off badly needed profits to fund their EV investments.
They could buy compliance credits from Tesla, a pure-play EV manufacturer. But as the rules tighten, demand for those credits will increase, making them more expensive.
What to watch: The situation between Trump and Newsom.
In 2019, Trump revoked California's waiver to set its own emissions standards, triggering a chaotic legal battle which ended when Biden later reinstated the waiver.
This time around, California has taken steps to "Trump-proof" its clean air strategies, including voluntary agreements with industry, Politico reported.
Other states, which adopted California's tailpipe standard without enacting other policies to support EV growth, might opt to revert to the federal standards.
While new rules set by the EPA under Biden would also compel carmakers to sharply accelerate EV sales in the coming years, industry leaders expect Trump to ease those requirements.
The bottom line: John Bozzella, CEO of the Alliance for Automotive Innovation, tells Axios: "You can't get ahead of the customer; the customer is in charge."
