RJ Scaringe wants to build more cars in America. Of course he does. Every legacy executive and electric vehicle founder sings the exact same hymn every time a microphone is shoved in their face. It sounds patriotic. It sounds protective. It sounds like safe corporate theater designed to keep Capitol Hill lobbyists happy and supply chain managers from jumping off factory roofs.
It is also entirely backward. If you liked this piece, you might want to check out: this related article.
I have watched founders flush tens of millions of dollars down the drain trying to replicate mid-century assembly lines in high-cost labor markets simply because it looks good on a press release. The lazy consensus of the automotive industry says that proximity to domestic soil equals salvation. If you stamp the metal in Illinois or Michigan, you win. If you do not, you are vulnerable.
That logic belongs in a museum. For another look on this story, see the recent update from Reuters Business.
Manufacturing physical objects inside high-cost borders while software, silicon, and global trade dynamics dictate actual vehicle margins is a masterclass in missing the point. The debate over domestic production volume treats the symptoms of a dying economic model while ignoring the disease.
The Domestic Manufacturing Delusion
Let us define what an automotive assembly plant actually is today. It is not an engine of national wealth. It is a massive, capital-intensive assembly puzzle that ties up billions of dollars in fixed assets, union negotiations, and localized supply chain dependencies.
Scaringe and his peers talk about American car production as if volume cures all wounds. Build more units, dilute the fixed costs, and profitability will magically follow. I have seen companies blow fortunes chasing that exact scale illusion. High volume on low-margin or negative-margin hardware only accelerates the rate at which you burn cash. If a vehicle costs eighty thousand dollars to build and sells for seventy-five thousand, building twice as many in Ohio does not fix your business model. It just bankrupts you twice as fast.
The obsession with domestic brick-and-mortar stems from a deep-seated fear of disruption. Executives love talking about factories because factories are tangible. You can tour them. Politicians can stand in front of them with hard hats and wave at cameras. You cannot hold a line of code or a localized supply chain resiliency metric in your hand for a photo op.
The real constraint in the American automotive sector is not a lack of square footage or assembly capacity. The constraint is an inability to accept that the car has ceased to be a mechanical appliance. It is a rolling computer node. Treating it like a tractor is why legacy manufacturers keep stumbling into the same brick wall.
The Margin Trap Nobody Wants to Talk About
Look at the unit economics. Domestic labor is expensive. Regulatory compliance is expensive. Plant retooling cycles eat capital like a furnace. When a company funnels its primary strategic energy into making more cars domestically, it starves the actual profit centers of the future.
What are those profit centers? Software architecture, battery cell chemistry integration, energy storage monetization, and autonomous compute pipelines. None of those require a sprawling ten-acre stamping press in the Midwest to function effectively.
If you ask people why domestic plants are necessary, the standard response involves supply chain security. People worry about geopolitical shocks cutting off parts supply. That is a valid concern, but localizing final assembly does not solve it. Final assembly is just the tip of a massive global iceberg. Your microchips come from Taiwan. Your lithium carbonate processing relies on complex global refining networks. Your rare earth minerals pass through half a dozen international ports before they ever touch an American loading dock.
Pretending that bolting those components together in Normal, Illinois, makes a vehicle authentically domestic is a marketing trick. It protects the ego of the boardroom, not the balance sheet of the enterprise.
The Counter-Intuitive Truth About Scale
The contrarian reality is this: building fewer, better-engineered, software-defined platforms with globally distributed manufacturing partnerships yields higher enterprise value than brute-forcing domestic volume.
Look at consumer electronics. Apple does not obsess over building every iPhone inside domestic borders. They own the design, the silicon architecture, the ecosystem lock-in, and the software margins. They let specialized manufacturing ecosystems handle the heavy lifting of physical assembly while they capture the lion's share of global wealth.
Automotive executives look at Apple with envy while continuing to repeat the industrial-age dogma of Henry Ford. They believe they have to own every square foot of the physical production pipeline. It is an ego trip disguised as strategy.
Admitting this truth comes with a heavy downside. Pushing for a asset-light, globally distributed framework alienates protectionist politicians and triggers panicked headlines about domestic job retention. It requires thick skin and an unwavering focus on gross margins rather than unit counts. But running a business to appease local headline writers is a slow suicide pact.
How to Fix the Playbook
If you want to build a resilient American automotive sector, stop subsidizing square footage. Stop rewarding companies for headcount and factory footprints.
First, decouple vehicle valuation from unit volume. Wall Street needs to stop punishing companies that trim production to protect cash flow and margin health. The metric of success should not be how many thousands of units rolled off a line this quarter, but how efficiently capital was deployed to generate sustainable cash.
Second, pivot engineering talent away from mechanical tolerances and toward systems integration and proprietary software stacks. A vehicle should improve exponentially after it leaves the lot. If your primary competitive advantage is how straight your body panels align, you are competing in a commoditized market where margins go to die.
Third, embrace modular global sourcing without apology. Acknowledge that the planet is an interconnected workshop. Build redundancy into your supply chains through cryptographic verification and multi-source vendor agreements, not through sentimental nationalism.
The era of measuring automotive greatness by the sheer tonnage of steel processed on domestic soil is over. Clinging to it is a choice to become a dinosaur.
Stop trying to make more cars. Start making better decisions.
