American-Made Car
In a push to bring manufacturing back to American soil, former President Donald Trump and other political leaders have advocated for aggressive tariffs and economic incentives aimed at reshoring industries — with the U.S. auto sector at the center of this effort. The goal? To make, build, and assemble cars entirely within the United States. But while patriotic in spirit, the idea of a 100% American-made car clashes with the economic and logistical realities of the globalized supply chain.
Even the “most American” cars today — such as the Honda Passport, Tesla Model Y, and Chevrolet Corvette — rely on a significant number of foreign-sourced components. According to the National Highway Traffic Safety Administration’s (NHTSA) annual American Automobile Labeling Act (AALA) report, the most domestically assembled vehicles still have around 25–30% of their parts sourced from outside the U.S., and some critical components may never be feasibly produced here.
This begs the question: Why isn’t a fully American-made car possible? And what would it cost to try?
The Global Web of Auto Manufacturing
To understand the impossibility of a 100% American-made car, one must first appreciate the complexity of modern auto manufacturing. A single vehicle is composed of roughly 30,000 parts — ranging from large metal components like engines and transmissions, to tiny electronic sensors and semiconductors.
These parts are sourced from a web of suppliers scattered across the globe, and this is not by accident. It’s the result of decades of specialization, free trade agreements, and cost optimization strategies. For example:
-
Electronics and semiconductors often come from Taiwan, South Korea, Japan, and increasingly from China. The U.S. has limited capacity to produce the kind of high-volume, affordable chips used in cars.
-
Rare earth minerals used in EV motors and batteries are mined and refined primarily in China and Africa.
-
Transmission systems and fuel injectors are often produced in Germany, Japan, or Mexico, thanks to highly specialized manufacturing facilities.
-
Rubber, plastics, and wiring harnesses might come from Thailand, Vietnam, or the Philippines, where labor costs are lower and environmental restrictions looser.
Even American automakers like Ford and GM depend heavily on this global supply chain. According to the Center for Automotive Research (CAR), roughly 45–50% of the value of a vehicle built in the U.S. may still come from foreign-sourced parts.
Why Can’t We Just Make It All Here?
There are three main barriers to building a fully American-made car:
-
Lack of Infrastructure and Expertise: The U.S. has hollowed out entire sectors of its industrial base. It no longer has the capacity or skilled labor to manufacture every type of part needed, especially in electronics and precision components.
-
Economic Inefficiency: Even if it were technically possible, reshoring every aspect of auto manufacturing would be prohibitively expensive. It would require reestablishing domestic supply chains, retraining labor, building new facilities, and absorbing much higher labor and environmental compliance costs.
-
Trade Agreements and Supply Chain Integration: The North American Free Trade Agreement (NAFTA), now replaced by the USMCA, was designed to integrate U.S., Canadian, and Mexican auto manufacturing. Modern vehicles are assembled with parts that cross borders dozens of times before final assembly.
How “American-Made” Are Cars Today?
The American-Made Index by Cars.com ranks vehicles each year based on factors like U.S. parts content, engine and transmission sourcing, and assembly location. As of 2024, the Tesla Model Y tops the list with an estimated 70–75% domestic parts content. The Honda Passport and Volkswagen ID.4, both assembled in the U.S., also rank high.
But even in these cases, parts like infotainment systems, chips, or battery cells are imported. In many instances, automakers are assembling cars in the U.S., but with drivetrains, electronics, and safety systems sourced abroad.
The Cost of Reshoring: 80%, 90%, or 100% U.S. Parts?
Let’s imagine we tried to build a car using 80%, 90%, or 100% American parts. What would that mean for consumers?
At 80% U.S. Content:
-
Estimated cost increase: $4,000–$6,000 per vehicle.
-
Key changes: Some outsourcing of microchips, rubber components, and minor electronics could remain. But critical systems would need to be built in the U.S.
-
Challenges: Increased production costs due to higher wages and stricter environmental rules.
At 90% U.S. Content:
-
Estimated cost increase: $7,000–$10,000 per vehicle.
-
Key changes: Would require domestic chip production at scale, domestic EV battery materials, and large-scale onshoring of tier-2 and tier-3 suppliers.
-
Challenges: Significant delays in production readiness and a spike in capital investment needed.
At 100% U.S. Content:
-
Estimated cost increase: $12,000–$20,000 per vehicle.
-
Key changes: Full localization of all parts and raw materials, from rare earth mining to semiconductor fabrication.
-
Challenges: Currently impossible due to lack of domestic sources for certain minerals and components.
In short, a vehicle that currently retails for $40,000 could climb to $60,000 or more in a fully American-made scenario.
Political Push vs. Market Reality
President Trump’s push for more American manufacturing through tariffs and “Buy American” policies has support in certain industries. It appeals to economic nationalism, job creation, and reducing dependence on geopolitical rivals like China.
But the auto industry — perhaps more than any other — is deeply embedded in global supply chains. Even tariffs intended to encourage domestic production have often led to price increases rather than a return of jobs. For example, the steel and aluminum tariffs imposed during Trump’s first term raised material costs by $1 billion for automakers without significantly increasing U.S. steel production.
Moreover, modern cars are no longer just steel boxes with engines. They’re mobile computers on wheels, loaded with sensors, chips, and software. The U.S. simply does not have the domestic infrastructure to supply this tech at the volume and cost demanded by consumers.
Can the U.S. Improve Its Auto Manufacturing Independence?
Yes — to an extent. There’s room for growth in certain sectors:
-
The CHIPS Act aims to boost domestic semiconductor production.
-
Battery factories are being built across the U.S. with investment from automakers and the federal government.
-
Advanced manufacturing hubs in states like Michigan, Tennessee, and Texas are drawing more foreign automakers to build plants locally.
However, full independence is not only economically impractical — it’s strategically unnecessary. A better model may be “friendshoring” — strengthening trade and production partnerships with allied nations to reduce reliance on adversarial countries, while maintaining the efficiency of a global supply chain.
Conclusion: Redefining “American-Made”
The idea of a 100% American-made car is more of a political ideal than an industrial possibility. While the auto industry can and should invest in domestic capabilities, complete reshoring would come at great cost — both to companies and consumers.
Rather than chasing an unreachable purity standard, the U.S. might be better off focusing on strategic autonomy: securing critical parts of the supply chain while maintaining international cooperation where it makes economic sense. In an interconnected world, American strength might lie not in isolation, but in resilience and smart alliances.
