Texas Sen. Ted Cruz wants to know why new cars cost so doggone much, so in his capacity as the Chairman of the Senate Committee on Commerce, Science, and Transportation he has “invited” the CEOs of GM, Ford, and Stellantis to explore the issue next January. The CEO of Tesla has not been invited; that slot will be filled by Lars Moravy, Tesla’s VP of Vehicle Engineering. It’s entirely possible that Mary Barra, Jim Farley, and Antonio Filosa have never heard of him, either.
This is from the Republican Senator’s announcement:
[Cruz] will convene a full committee hearing titled “Pedal to the Policy: The Views of the American Auto Industry on the Upcoming Surface Transportation Reauthorization” [on January 14]. This hearing will examine how radical global warming regulations and mandated technologies have driven up the cost of vehicles for American consumers.
Cruz himself said, “[T]he average price of a car has more than doubled in the past decade” and that recent legislation has sought to “drive costs down with the repeal of the EV mandate and CAFE standards, but we must do more.” Apparently Cruz thinks taking money away from consumers and drastically changing the goals for automakers over night was supposed to lower prices. Okay then. Presumably, the three CEOs and one not-CEO in attendance will be compelled to fill in the “more” blank while desperately avoiding social-media humiliation.
Letting Elon off the hook
The Big Three CEOs haven’t been summoned to Washington as a group since the financial crisis in 2008. Back then, Stellantis was just Chrysler, and Tesla wasn’t yet a public company (it was only five years old). Elon Musk is such a controversial figure and so tangled up with the Trump administration that might actually be a good thing that he’s not on the witness list; after all, Democrats get to ask questions, too.
For Filosa, Barra, and Farley, the experience is likely to be grueling, as Cruz & Co. slam them for being tree-huggers trying to foist unwanted tech on cash-strapped Americans. (Barra might still be dealing with PTSD from her testimony in 2014, when she was newly appointed and immediately hit with GM’s massive ignition-switch recall.) Who knows what Moravy will have to say about prices – his job is to build cars, not sell them. The politics here are all about Cruz giving the GOP a shot at grabbing the “affordability” banner while blaming Democrats. “The average price of a car has more than doubled in the past decade, driven up by onerous government-mandated technologies and radical environmental regulations,” he said.
But why are new cars so expensive?
The senator noted that the average price of a new car is now more than $50,000 (basically true – although it’s lately dipped below that mark, according to Automotive News), while back in 2000, it was just over 20 grand. Simple inflation math suggests the 2025 price should be more like $38,000. But “global warming regulations” and a fictional “EV mandate” haven’t caused the difference. The truth is more complicated. For one thing, GM, Ford, and Stellantis all shifted away from cheap passenger cars toward big pickups and SUVs thanks to a regulation from the 1960s that allowed them to define more vehicles as off-roading capable and thus avoid more stringent fuel-economy standards. That’s also why many crossovers and SUVs all share the same turtle-shaped design. And for not for nothing, large trucks and SUVs are much more profitable, and many automakers have now locked in a supply chain that’s optimized to build them. Add all the latest and greatest cameras and safety features and you’ve got one expensive ride.
Very low interest rates also drove up prices (borrowers could afford more), and pandemic-related shortages of technology and materials made cars more expensive. It’s worth pointing out that by January, automakers might start passing along more costs related to Trump’s tariffs, further hiking prices. Of course, nobody at the hearing except Tesla sells directly to consumers. Dealers ultimately set transaction prices for the Big Three’s vehicles. And you know...one can still find a new car for much less than $50,000–even from U.S. automakers. If all the executives show up, expect this hearing to be either quite awkward or full of heavily rehearsed talking points and thus quite dull. And probably completely exhausting for everyone involved.
