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Automakers retool existing plants to sidestep tariffs; are

not

building new factories

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EV commitments decline as automakers focus on gas-powered

production

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Canadian auto industry disputes Trump's claims of factory

relocations

By Jarrett Renshaw

Sept 29 (Reuters) - President Donald Trump frequently

describes a booming U.S. auto industry, fueled by new factories

from Canada, Mexico and Europe that he says will soon be

producing American-made vehicles for global markets - from Tokyo

to Paris.

"We have so many car company factories under construction or

being designed right now. And they're coming from China. They're

coming from Mexico," Trump said at a White House event earlier

this month. A few days later, he lamented the loss of U.S. car

production over the years, and proclaimed: "Car factories are

coming back."

But there is little evidence of a construction binge of new U.S.

car factories. Instead, auto companies are making tactical moves

at existing plants as they adapt to the two pillars of Trump's

second-term business agenda: tariffs, and policies hostile

toward electric vehicles.

To sidestep tariffs, some automakers are retooling existing,

idle factory space in the U.S. to build vehicles that they have

been importing, and which now face levies.

For example, Nissan ( NSANF ) has said it plans to make more

Rogue SUVs and other vehicles at its plants in Tennessee and

Mississippi, while reducing imports from Japan. Japanese

vehicles face levies of 15% under a tentative deal with the

Trump administration.

"We're seeing underutilized plants being filled with

products that were previously imported. There is no boom in new

builds," said Sam Fiorani, vice president at research firm

AutoForecast Solutions.

PIVOT BACK TO GAS CARS SPURS INVESTMENT

Meanwhile, many car companies are pulling back from EV

commitments they made earlier in the decade, and leaning in to

production of gasoline-powered vehicles. Much of the capital

investment touted by companies in recent months amounts to an

unwinding of EV projects that they had trumpeted during the

administration of former President Joe Biden.

For example, General Motors ( GM ) in June said it would retool

a factory in suburban Detroit to build gas-powered pickup trucks

and the Cadillac Escalade SUV. The move partially reverses a

multibillion-dollar plan announced in 2022 to make the factory

GM's hub of EV-truck production.

The industry's huge collective bet on EVs that began late

this past decade drove a sharp increase in factory spending

during the Biden administration, figures compiled by consultancy

AlixPartners show. The company tracked capital investments in

the U.S. by the traditional Detroit car companies - GM, Ford

, and Chrysler-parent Stellantis ( STLA ) - as well as

EV-only players Tesla, Rivian and Lucid

.

On average, those companies spent about $21 billion annually

from 2017 through 2020 - the same period as Trump's first term.

During the next four years, with Biden in office, their spending

averaged about $38 billion per year, most of it related to EV

and battery production, AlixPartners said.

Automakers already had been walking back EV plans even

before Trump won the 2024 election, citing weaker-than-expected

demand. Car executives expect the Trump administration's

policies to further cool interest in battery-powered cars.

ADMINISTRATION SEES BOOM IN VEHICLE OUTPUT, EXPORTS

Trump has made the economy the cornerstone of his political

brand, including tariffs, deregulation and promises of

industrial revitalization. A White House spokesman said his

trade and energy policies have already fueled historic

investments in U.S. automaking and shaved off billions in

regulatory costs.

"As these policies and President Trump's unprecedented trade

deals with the EU, Japan, and others take effect, cars will soon

roll off Detroit assembly lines to showrooms in Tokyo, Frankfurt

and Paris," spokesman Kush Desai said.

The White House notes that imports of automotive vehicles,

engines and parts have fallen by about 10% from the first

quarter of this year, to $421.4 billion.

So far, U.S. vehicle production has ticked higher by about

4% this year, but recent figures are tracking below the average

of the past decade, Federal Reserve data shows.

David Adams, president of Global Automakers of Canada,

disputed Trump's claims that automakers are leaving Canada for

U.S. plants, and said jobs are holding steady.

"The notion that everybody is vacating Canada to produce in

the U.S. doesn't jibe with reality on the ground," he said.

Adams said Trump's aggressive tariffs could eventually

reshape North American auto production, but added, "We're not

there yet."