Industrial Policy Job Losers: Stellantis and Intel

Auto makers use profits from gas-powered cars to finance EV production. But consumers are balking at paying more for cars after the run-up in inflation and the higher interest rates to reduce it. Demand for EVs has also fallen, forcing automakers to slash their prices. Ford lost an astonishing $47,585 for every EV sold in the second quarter.

Auto makers are trying to get leaner, which for Stellantis means slashing jobs. The Biden Administration is trying to mitigate EV-caused job losses with taxpayer largesse. The Energy Department in July announced $1.7 billion in grants to convert 11 “shuttered or at-risk” auto plants for EV production. Stellantis is in line for $585 million.

But what the Administration giveth in subsidies, it taketh in the higher costs imposed by its EV mandate. New emissions standards will effectively require companies to produce one to two electric trucks for every gas-powered truck in 2027 and nearly four to one by 2032. It’s hard to imagine how this will be financially sustainable.

In other bad industrial policy news, Bloomberg reported this week that Intel is planning to cut thousands of additional jobs. This would be the chip maker’s third large workforce reduction since Congress passed the $280 billion chips subsidy bill that CEO Patrick Gelsinger lobbied for. Intel has been awarded $8.5 billion in grants and up to $11 billion in loans to expand U.S. manufacturing production.

While chasing subsidies, Intel missed out on the AI boom, which has cost it dearly as competitors surge ahead. Now it’s playing catch-up. When government steers capital, companies sometimes get distracted and drive into a cul-de-sac. Donald Trump might take note, lest he reprise such industrial policy mistakes if he wins a second term.