crs_reports: R48876

Congressional Research Service reports with summaries, authors, and topic classifications.

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R48876 The U.S. Automotive Industry: Selected Issues 2026-03-05T05:00:00Z 2026-03-07T06:37:58Z Active Reports Naseeb A. Souweidane Highways & Highway Vehicles According to industry estimates, the U.S. automotive manufacturing industry accounts for 4.8% of gross domestic product and employs 10.1 million people through direct and indirect jobs. The federal government has supported this industry through various policies, with Congress passing laws on industry issues such as trade and financial assistance, vehicle powertrain development, vehicle safety, domestic labor, and vehicle costs. There are a variety of policy issues and considerations for Congress related to the industry. Domestic market dynamics. From 1970 to 2024, the automotive industry underwent several changes as automotive manufacturers and suppliers from foreign countries entered the domestic market, new entrants with specialized product offerings emerged, and some traditional U.S. automotive manufacturers and suppliers changed ownership. Additionally, automotive manufacturers and suppliers both rely on international markets for sourcing and selling products, which has cultivated a dynamic environment. Both Congress and the executive branch have created policies—such as trade agreements, financial assistance programs, tariffs, and incentives for manufacturers—to support the viability of the automotive industry and, at points, foster integrated supply chains. Electrification. Electrified vehicles—including electric, hybrid, and fuel cell vehicles—differ from vehicles with internal combustion engines. The automotive industry has developed and introduced electrified powertrains in vehicles, with plug-in hybrid vehicles first becoming commercially available in 2010. The development of vehicles with electrified powertrains was spurred by a variety of factors, including consumer demand, technological advances, environmental concerns, and federal incentives and regulations. Though domestic demand and production of this type of vehicle slowed in 2025, electrified powertrain development continues to change product planning in the industry. These changes may affect investments, labor, and vehicle prices. The federal government has introduced policies to influence powertrain development by offering various incentives and, recently, by repealing programs that the Trump Administration and some Members of Congress consider burdensome on the industry and consumers. Vehicle safety. Vehicle safety remains a focus of Congress and federal regulators, as automotive vehicle-related fatalities are a leading cause of death. Automotive manufacturers have developed and incorporated safety technologies (e.g., seat belts, airbags, and advanced driver assistance systems) to promote vehicle safety. The federal government has standardized some of these safety technologies through regulations. Additionally, vehicle size has influenced vehicle safety, as some research indicates that heavier vehicles may improve passenger safety within that vehicle but increase traffic-related fatalities of passengers in other vehicles, pedestrians, and bicyclists. Federal laws and regulations may influence automotive manufacturers’ decisions to produce heavier vehicles. Domestic labor in the automotive industry. The automotive industry is a major employer in the United States, accounting for a sizeable proportion of the domestic manufacturing sector. Recent changes in the industry, such as a shift in concentration from the Midwest to other regions of the United States, the entrance of foreign automotive manufacturers into the market, and the introduction of new vehicle technologies, have caused fluctuations in domestic employment. Various federal programs and policies have affected the domestic labor base, including those created by Congress to incentivize domestic production of vehicles and components, provide financial assistance to automotive manufacturers, and set federal labor standards. Vehicle costs. Both consumers and automotive manufacturers have been affected by increases in the costs of vehicles and their accompanying parts. Several factors may influence rising vehicle costs, including vehicles becoming more technologically integrated, automotive manufacturers altering their product plans and portfolios, inflation across the supply chain, and changes in vehicle financing. Several federal policies affect costs for manufacturers and consumers. Policymakers typically have considered a policy’s influence on vehicle costs when analyzing its net impact (e.g., potential increase in lives saved, improvements to fuel economy, strengthening of the domestic labor force, or limiting of vehicle emissions). For example, policies such as safety standards, fuel economy regulations, tariffs, and emissions standards may increase vehicle costs. Additionally, Congress has explored several policies, such as financial assistance programs, manufacturing incentives, and consumer tax credits, that have sought to mitigate the high costs faced by the automotive industry and consumers. https://www.congress.gov/crs_external_products/R/PDF/R48876/R48876.1.pdf https://www.congress.gov/crs_external_products/R/HTML/R48876.html

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