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Illustration: Rebecca Zisser/Axios

The mood in Detroit is gloomy on the eve of next week's North American International Auto Show, and — for once — it has (almost) nothing to do with Michigan weather.

The big picture: Automakers are bracing for a cyclical downturn, exacerbated by the Trump administration's trade policies, rising interest rates and consumer rejection of 4-door sedans. While tightening their belts, they're still trying to fund massive investments in electric and self-driving cars they say are needed to secure their long-term survival.

Why it matters: The auto industry is undergoing an awkward transition, caught between the decline of trusted business models and the lure of an uncertain future in which cars run on electrons (not gasoline), are shared (not owned) — and where driving is optional.

  • The pressure has already resulted in GM plant closings and layoffs in North America and Ford cutbacks in Europe, with more bad news likely as the industry grapples with excess factory capacity worldwide.
  • Some companies are pooling their efforts on AVs and electric vehicles, like GM and Honda. Ford and Volkswagen are expected to announce such an alliance next week.
  • But that future isn't getting any closer. Bold predictions by Tesla and others that cars would be able to drive themselves by now have evaporated in the face of technology challenges and market realities.
  • The timeframe for commercializing driverless cars is now said to be 2020–2021, but even that is unclear.
  • "It seems like we’re kind of stuck where we are," says Eric Paul Dennis, who's been tracking AV promises made — and broken — since 2013 as a senior transportation systems analyst at the Center for Automotive Research.

Investors don't like uncertainty, which helps explain why GM, Ford and Fiat Chrysler stocks are down substantially. And for the time being, Wall Street is likely to focus on troubles confronting their core business (Auto 1.0), not the sexy stuff (Auto 2.0).

"Autonomous vehicles will take time and investors may need to rein in their enthusiasm in 2019/2020."
— Adam Jonas, automotive analyst, Morgan Stanley

What’s happening: The annual Detroit auto show is looking to be the quietest since the depths of the 2009 recession, with fewer exhibitors and a shorter media preview.

  • European luxury carmakers Audi, BMW and Mercedes-Benz aren't even showing up, following Jaguar-Land Rover and Porsche, which pulled out years ago.
  • Audi and Mercedes had splashy car reveals last week in Las Vegas at CES, the tech show that has been siphoning attention away from Detroit for years.
  • That competition — and the lousy weather in January — prompted show organizers to move the event to June starting in 2020. That lame duck status may be contributing to this year's blah-ness.

Yes, but: There will still be some notable vehicle debuts in Detroit next week, including new sports cars like the Toyota Supra and Mustang GT500, and crossover SUVs including the new Cadillac XT6, Kia Telluride and Ford Explorer.

  • Future mobility tech is still relegated to the basement of Detroit's Cobo Center, where the Automobili-D conference and exhibition will be held for the third year.
  • 65 startups from 10 countries — 20% more than last year — will participate, showing tech on everything from AVs to smart cities.

Go deeper

Updated 8 mins ago - World

Death toll mounts as fighting between Israel and Hamas intensifies

Palestinian Muslims exchange wishes for Eid al-Fitr, marking the end of the fasting month of Ramadan, near a razed building in the northern Gaza Strip town of Beit Lahia, on May 13. Photo: Majdi Fathi/NurPhoto via Getty Images

At least 109 Palestinians and seven people in Israel have been killed since recent fighting between Israel's military and Hamas began Monday.

The big picture: Israel began massing troops on its border with Gaza on Thursday, launching attacks from the air and ground as Hamas continued to fire rockets into Israel.

By the numbers: Where the earmarks are wanted

Expand chart
Data: House Committee on Appropriations; Chart: Danielle Alberti/Axios

The Dallas-Fort Worth area is being targeted for the largest collective earmark request in the country, according to a detailed breakdown of overall requests released by the House Appropriations Committee.

Why it matters: House appropriators are trying to balance bipartisan momentum for infrastructure investment with "pork-barrel" spending's checkered political history. The data dump is an effort to provide transparency for what are now termed "community project funding" requests.

Democrats open to user fees for infrastructure deal

President Biden sits Thursday with Sen. Shelley Moore Capito (R-W.Va.) as they discuss his $2.3 trillion infrastructure proposal. Photo: T.J. Kirkpatrick/The New York Times/Bloomberg via Getty Images

Some Senate Democrats are open to paying for a compromise infrastructure package by imposing user fees, including increasing the gas tax and raising money from electric car drivers through a vehicle-miles-traveled charge.

Why it matters: By inching toward the Republican position on pay-fors, some Democrats are bucking President Biden's push to offset his proposed $2.3 trillion plan by focusing only on raising taxes on corporations and the wealthy.