What Obama’s Re-Election Means For the Car Business

Last night, when my wife balked at the notion of me commandeering the remote for the next four or five hours to keep the TV tuned to CNN, rather than clearing out the DVR of our backlog of shows, I set up “election HQ” in my home office.  I had my laptop screen open on my left flank to check state-by-state results, and my iPad streaming CNN’s election coverage on my right flank.  [N.B. – John King is amazing.  Wolf Blitzer really has a strange speaking style with his random pauses and breaths mid-sentence.]  Front and center, I had WordPress open in a futile attempt to create some content amid myriad distractions.

Once President Obama’s victory was clinched, I hung around for a while to possibly hear Romney’s concession and the president’s victory speech, but I waved the white flag at 1:00 a.m. EST.

One topic throughout the night caught my attention every time it came up (and it came up often):  the auto bailouts.  Politically unpopular among conservatives, but reasonably popular overall and even more popular in rust-belt states that benefited most from them (such as Michigan and Ohio), it’s quite likely that the assistance and government-sponsored bankruptcies of GM and Chrysler clinched Michigan and Ohio for the president.  The message to me on this was clear:  voters are kind of OK with government intervention if it helps them.  Of course, it doesn’t always help:  just ask Solyndra or A123 Systems.

So, with the election mercifully in our rearview mirrors, what is the car industry likely to see over the four years that span a second Obama administration?

Continued Investment in Alternative Energy

Not just in cars, of course, but since the U.S. consumes a large portion of its energy on transportation, it’s a ripe target for a liberal administration that feels that government has a role in nurturing new technologies that may not yet (or possibly ever) be commercially viable on their own.  So expect incentives for solar, wind, electricity, hybrids, hydrogen, natural gas, wave power – you name it.  Eventually, oil will become so expensive that we have no choice but to embrace alternative energy sources.  The question is when that will happen – five years, ten years, twenty years?  If we wait for the market to solve this problem on its own, the transition may be bumpier when it inevitably occurs, so it might make sense to “grease the skids” by investing in research and infrastructure now.  The bloom seems to have come off the ethanol rose, but hopefully it’s allowed to remain at no more than 10% of the mix for normal unleaded gasoline, rather than the 15% blend that the ethanol lobby is pushing for.

More Electric Vehicles

Obama’s goal of having 1 million electric cars on the roads by 2015 is still sitting out there – but it’s looking less and less likely that it will happen, at least by then.  Giving him the benefit of the doubt and stretching the deadline to December 31, 2015, that’s still just three years to hit a number that is far, far from where we are today.  One thing that may get us closer to that goal would be increasing the $7,500 per vehicle tax credit to $10,000 – a move that the president proposed in February 2012.  However, with belt tightening inevitable in Washington over the next two months as the fiscal cliff called sequestration looms, that may not happen.

More Regulation

The Obama administration’s regulatory tentacles have touched the auto industry over the past few years with strict new fuel-economy requirements and additional mandatory safety equipment, such as backup cameras required in all cars beginning in 2014.  These regulations aren’t free (the fuel-economy rules will cost billions, which will be passed on to consumers, though the counter argument is that they will save drivers a lot of money at the pump.  Eventually.

Labor Relations

The bankruptcies of GM and Chrysler were seen by many as catering to the president’s union supporters, since pensions and benefits basically survived the bankruptcies, while investors lost billions.  (Left unsaid by those who point out the “favoritism” is the fact that tens of thousands of union members lost their jobs before and during the bankruptcies, and union membership is still near all-time lows, despite a few gains as the auto market has improved.)

“Card check” is a controversial and very union-friendly concept that the president favors.  It would abolish secret ballot elections for union certification, which would make it much easier for unions to gain a foothold at a company.  Obama’s allies tried and failed to push it through Congress in his first term, but no doubt they’ll try again.

Treasury Ownership of GM Shares

The U.S. Treasury still owns about a third of GM, and would love to get rid of it.  GM would love for Treasury to get rid of it.  The problem is that if the shares are sold today, Treasury will lock in the losses on GM’s bailout that it’s looking at only on paper today.  Mitt Romney said that he would sell the shares immediately, but now that the election is behind him, the president may have the political cover he needs to unload the shares without worrying about another election.  That’s basically why Romney was willing to lock in the losses – they weren’t his doing, so might as well draw a line and say they were caused by the other guys.

Despite immersing myself in watching political coverage for five hours last night, believe it or not, I’m not a major political junkie.  My family donated less than $30 this year to political campaigns and you’ll note that I have not said who I voted for, or even given strong hints.  The reason?  There really are only very narrow differences between the mainstream parties’ positions, and with a divided Congress, no extremely conservative or extremely liberal policies are likely to see the light of day.  So, whether your guy won last night or not, know that it really probably did not make a huge difference in the whole scheme of things.

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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1 Comment

  1. imho re: electrics
    everyone needs to learn that we can’t legislate technological advancements.
    state of the art batteries aren’t yet up to meeting the wants of the state of the union
    and may not be for years & years, if ever

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