$1.2 trillion, trade group says

Living in Michigan, it would be hard not to have a sense of the impact of the auto industry, with so many of us working directly for automakers or the companies that supply them, or knowing a friend or relative who does.

But the industry’s not just a big part of Michigan’s economy, it’s also a significant driver of economic development across the country.

A new study by the Alliance for Automotive Innovation, the industry’s main U.S. trade group, seeks to make the case that it’s an essential piece, too, coming as the Trump administration considers tariffs and other policy changes that would affect the industry. John Bozzella, the alliance’s president and CEO, said in a news release that “automaking is absolutely fundamental to the country’s global competitiveness.”

Here are some specific points pulled directly from the study:

How much impact does the industry deliver?

The study says the industry drives more than $1.2 trillion into the U.S. economy each year, with 15.2 million new vehicles sold in 2023 and total sales that year of $643 billion. It notes every $1 added to the economy by motor vehicle manufacturing leads to the creation of $4.23 in economic value.

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“If the U.S. auto industry were a country, its economic contribution would rank No. 17 on the list of largest countries by (gross domestic product),” according to the study, citing the World Bank.

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Which state is tops for auto employment?

That’s a mixed picture actually. Michigan has the most auto manufacturing jobs with 206,178, but California claims the most auto industry employment at 841,986 (Michigan is No. 4 with 409,220). Across the country, “every direct job in vehicle manufacturing supports another nine American jobs.” In addition, 10.1 million jobs supported by the auto ecosystem represent almost 5% of total U.S. employment and more than $732 billion in payroll compensation every year.

What does that mean for taxes?

The auto industry generated at least $181 billion in federal tax revenue and almost $90 billion in state government revenue in 2022 (6% of all state tax revenue collected). It’s worth noting that $90 billion is more than Michigan state government’s budget (that’s $82.5 billion). States received almost $36 billion on the sale of new vehicles and $20 billion on the sale of used vehicles in 2023.

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How does the US rank in overall auto manufacturing?

The United States is second in production, with almost the same number of vehicles built as in all of Western Europe. China is now tops, however.

“Only two decades ago, the U.S. was the largest producer of vehicles in the world, however, since 2005, the U.S. has lost its top position. The U.S. still accounts for about 12% of global vehicle production (down from nearly 19% in 2004), however, China (which has seen huge growth in domestic demand for vehicles over the period) now produces nearly 3 times as many vehicles as the U.S.,” the study says.

Are EVs a major piece of the picture in the US yet?

More than 98% of light-duty vehicles on U.S. roads are powered by an internal combustion engine, but EVs are growing in importance. More than 4.3 million EVs were in operation in the United States in 2023. All those EVs mean a need for battery manufacturing, too, and a lot of that is happening domestically. “At least 33 new battery plants have been announced — nearly five times the existing battery plant footprint that exists today,” with “more than $90 billion committed to EV battery production and creating more than 65,000 new jobs (from 2019-September 2024).”

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