America Needs an Industrial Strategy for Motor Vehicles U.S. automotive competitiveness has severely faltered. The federal government needs a comprehensive national strategy to revitalize the industry’s competitiveness, especially in the face of Chinese EVs. KEY TAKEAWAYS Key Takeaways Contents Key Issues for Consideration. 3 Strengthen Key Industry Inputs, Including Agglomeration Economies and Skills 16 Introduction The competitiveness of the U.S. auto industry—American and foreign manufacturers and suppliers producing domestically—has faltered in recent years, as Information Technology and Innovation Foundation (ITIF) reports have documented.[1] America’s share of global automobile production fell from 46 percent in 1965 to 20 percent in 1990 to just 14.7 percent today. The Big Three—Chrysler, Ford, and GM—automakers’ share of the U.S. auto market has fallen from 92 percent in 1965 to 38 percent today. From 1963 to 2023, the accumulated U.S. motor vehicles trade deficit reached $3.3 trillion in 2023 dollars. And the United States’ location quotient (LQ)—which assesses how much an industry contributes to a nation’s gross domestic product (GDP) relative to how much it contributes to the global economy—was only 0.54 in 2022 (just 60 percent of the 1995 level), meaning the U.S. auto industry today is 46 percent smaller than the global average.[2] Awareness of the competitive challenges facing the industry is not new.[3] In the 1970s and 1980s, with the rising competition from Japan and Europe, Congress and various administrations were focused on the industry. But after many of the foreign automakers opened plants in the United States, the issue largely disappeared from policymakers’ radar. Now with the rapid rise of the Chinese electric vehicle (EV) industry and China’s goal of dominating the global auto sector, the issue has once again attracted the attention of at least some policymakers. It’s past time for the United States to articulate a comprehensive auto industry