Domestic production is good but sometimes big companies need to taste failure. We should lower the level of protection they're getting, at least for a while.
The key piece I think is missing here is reciprocity.
We can’t have “China subsidies its industries until they are super competitive and then they get to sell in our market but we don’t get to sell in theirs”. Europe does a little of the same with regulatory lawfare.
The problem with lowering the level of protectionism is that it doesn’t really serve anyone’s best interest besides Chinese automakers. American companies lose out, American workers lose out, and we wind up in a worse position than before.
The big US car companies don't need subsidies. They can afford plenty of development costs but they don't want to advance into the cheaper electric space, they want to extract as much value as they can by pushing car prices as high as possible.
The problem with keeping this level of protectionism is that it encourages them to keep doing the same thing. The companies don't lose out but everyone in the US that needs to buy a car loses out. We need something to motivate them, and dropping their protection from "infinite" to "medium" or "medium-high" might do the trick.
I think it's fine that cars are expensive and getting more expensive. More people should be walking or using alternative means anyway because we spend way too much money and are dealing with a number of negative externalities from our car-only infrastructure. Having competition in terms of method of transportation itself can solve many of our problems, no artificially cheap Chinese cars required.
I drive an EV and generally prefer that to ICE vehicles but we have to acknowledge that there are still emissions that go in to EV manufacturing and mining rare earths, which China created a strong monopoly on the processing of so we'll have to do more ICE to compensate, sucks. There seems to be a desire to push cheaper EVs on to the American market, but it's even cheaper to build sidewalks and live closer to your place of employment or where you do the majority of your daily activities. It's better for the environment too.
So if we can't build EVs in a way that is advantageous to us and on our terms, we should avoid it and just walk and build transit and keep the ICE going.
Either way artificially cheaper cars from China doesn’t solve our problems in the long term. Obviously once your country loses its ability to build cars they just raise the prices and you’re back to where you started except now you have lost union jobs and manufacturing ability and know how.