On Dec. 18, MichAuto held its quarterly investor briefing, which included insights from BCG Detroit Partner and Managing Director Jonathan Nipper and BCG Chicago Partner and Managing Director Nathan Niese on the new Trump administration’s priorities and the latest developments in the EV market.
Nipper began by providing an overview of the EV market, noting a shift towards a more cautious and realistic outlook due to inflation, supply chain challenges, and changes in consumer interest. He highlighted that the new Trump administration is expected to further slow the EV transition, with potential changes to federal regulations and incentives, like tailpipe emissions, consumer tax credits, production and investment tax credits, and tariffs.
“… there are many federal rules and invectives that we think will be under sharp scrutiny and will likely change,” Nipper said. “We do believe manufacturing incentives are likely to remain in place just given that you know there is a continued focus on supply chain localization, and that is a less-partisan issue.”
Niese also presented a scenario analysis on the impact of tariffs on the U.S. cost stack and revenue effect for countries like Mexico, China, Japan, and Canada, which could add significant costs to the U.S. market but could also have a more substantial impact on the targeted countries.
“Depending on which lens you take here, you could say it is worth having the added cost on the U.S. to be able to achieve [what] tariff is looking [to do] and to allow for localization,” Niese said. “There are other, perhaps even more critical [policies] like the LTCS policies that are in place that would make it more difficult for certain countries to participate in the U.S. vehicle market.”
The discussion then shifted to the importance of California Air Resources Board (CARB) states, which represent a significant portion of the EV market and could continue to support EV policies even if federal regulations are relaxed. Niese also suggested the need for regional strategies, supply chain localization, and managing different competitive dynamics across regions to compete with China.
“…how does the U.S. remain competitive if the EV market scales back and continues to fall further and further behind some of the other markets that are being accelerated?” Niese asked. “If U.S. players want to continue to access the full $85 million vehicle market, there’s going to have to be regional strategy put in place.”
Ending the conversation, Niese provided strategic recommendations for automakers and suppliers, like rebalancing portfolios, restructuring, rewriting strategic plans, and rethinking collaboration. He stressed the importance of speed and innovation in developing new products and reacting to market changes to navigate the evolving landscape successfully.
“Some of the new entrant OEMs, particularly out of China, have proven the speed at which they’re able to develop new products and react to the market; that speed and innovation continue to demonstrate itself as a competitive advantage driver,” Neise said. “While not easy to inject within organizations, [BCG sees] it as an essential … to give thought to as we forward into the upcoming years.”
