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As auto sales slow down, electrification could bring Detroit automakers a chance to catch up

Daniel Howes
Detroit News

Whoever thinks consumers are driving the market for electric cars isn’t paying attention.

Countries are driving it, and investors know it. The latest? France, which said this week it plans to ban the sale of all gas and diesel-powered cars by 2040. Yes, all.

The government of French President Emmanuel Macron joins a growing list of nations prepared to use mandates to achieve what stubborn consumers operating in open markets will not. And that’s to drive what regulators and environmental activists think they should.

It’s all so Big Brother.

Remember, a big chunk of Europe spent the past several decades driving diesel-powered cars because government rules and tax policy made it financially attractive to do so. Now that those engines are proving to be the dirty machines Americans always thought they were, governments are changing their proverbial tune. And they’re all singing electric.

The future of the global auto industry, and of Detroit’s meaningful slice of it, is trending electric because a growing number of governments are decreeing it will. It’s not because consumers from Boise to Beijing are clamoring for it. Or because gas prices are sky-high, which they decidedly are not.

Smart people from Wall Street to Silicon Valley are betting the trend cannot be reversed. It doesn’t matter what buyers want or how the sweeping change will affect people in the industrial heartland.

That includes Michigan, the state that builds more cars and trucks than any in the nation.

Most of the elites -- clustered on the coasts, far from the auto states -- probably don’t care. Automakers here get American taxpayers to subsidize the sale of electric vehicles. Investors get capitals from Washington to Beijing to use government fiat to limit consumer choice and enrich their investments. Urban centers force their transportation preferences on the poor slobs in the hinterlands driving gas-guzzling pickups they’re told they don’t need.

A caricature? Not if you’ve been paying attention.

Into this mess steps Detroit’s automakers, the Rodney Dangerfields of the global auto industry. They get no respect. And they have the stock prices and market capitalization to prove it.

Their business is as much about the present as it is about the future. In the rush to prove New Detroit is smarter and more disciplined than Old Detroit, the domestic auto industry needs to maximize profits selling pickups and SUVs as sales begin to slow. They need to exit businesses, even countries, which do nothing but consume capital in exchange for much smaller returns. They need to balance it all against the inevitable march to electrification that interests only a small sliver of customers.

It gives new meaning to the old phrase, “I’m from the government, and I’m here to help.”         

Detroit has something to prove: That it learned from its many mistakes of the past. That it can harness its technical capability and redeploy it for an electrified world. That it can change and innovate as quickly as its new rivals from Silicon Valley.

They don’t have much choice. And it won’t get any easier either.

Daniel Howes is a columnist with The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.

Daniel Howes is columnist and associate business editor of The Detroit News. A former European correspondent for The News, he has reported from nearly 25 countries on three continents and in the Middle East. Before heading to Europe in 1999, Howes was senior automotive writer and a business projects writer. He is a frequent contributor to NewsTalk 760-WJR in Detroit and a weekly contributor to Michigan Radio in Ann Arbor.
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