The auto industry is a central force in the US economy and is in the midst of a profound global transition from gas-powered to electric vehicles. While public investment is necessary for such a complex and urgent transformation of a major sector of the economy, the government's engagement with the auto sector runs into a major challenge: the shareholder primacy orientation in US corporate governance, which allows companies to use the public funding to increase its payments to shareholders rather than invest in its workforce and production innovations. This article considers how past public policy toward the auto industry has held up the industry without shifting corporate practices, and how industrial policy should include corporate guardrails to maximize its success in the future.
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