Government Response to COVID-Crisis: United States

Abstract:

This presentation is part of two joint sessions based on the VW foundation supported project "Strategic response to COVID-crisis in the automotive industry: comparing European and global approaches".

The ongoing COVID-crisis will have significant implications for the future trajectory of the global automotive industry. Multiple disruptions of cross-border supply chains since the outbreak of the pandemic have revealed the fragility of the sector’s geographically stretched just-in-time production systems. The huge demand-side crisis in the year 2020 – and now extending to 2021 – has put significant pressures on the automotive producers dependent on such key developed markets as the EU, the US, or Japan. But perhaps most importantly: the COVID- crisis comes at a very difficult moment for the automotive industry, in which the sector is entering the entirely new technological paths of electromobility and digital driving systems. While already before the pandemic, these technological changes were perceived as serious challenges for incumbent producers and established national industries, the COVID-crisis will likely accelerate the disruptive change and create additional windows of opportunity for new firms and new global competitors. Against this background, the general goal of the present research project is to explore the emerging structural implications of the COVID-crisis for the global automotive industry by studying the long-term response strategies of automotive producers and national governments in different countries. In doing so, our analysis focuses on the production of passenger vehicles from the conceptual perspective of global production networks embedded in national and regional political economies. Regarding case selection, the project analyses the strategic reactions by firms and public actors from the following five key car-producing countries: Germany and France, as two European high-wage economies that are home to important multinational producers and host significant automotive production bases; Japan and the United States, as two other members of the traditional automotive “Triad” (in addition to the EU); and finally: China as probably the single most important newcomer within the global automotive sector, which is likely to strongly benefit from the new windows of opportunity created by the electrification and digitalization of the car.