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Illustration: Sarah Grillo/Axios

Car companies aren’t just big business, they’re national champions. And sovereign governments are increasingly driving the evolution of the industry.

Why it matters: Carmakers are pooling resources to make expensive bets on electrification, automated vehicles and shared mobility. But with jobs and a reputation for innovation at stake, every country wants to see their homegrown industry lead the way into the future.

Driving the news: Fiat Chrysler (FCA) is proposing a 50-50 merger with France's Renault, creating the world's third-largest automaker, behind Volkswagen and Toyota.

  • The new company would combine Renault's expertise in electric cars with FCA's partnerships in self-driving vehicles, including Waymo and Mobileye.
  • By combining vehicle platforms and other engineering efforts, the companies could save 5 billion euros annually ($5.6 billion), FCA projects.
  • There's minimal overlap between the two companies: Renault is strong in Europe, whereas FCA is strong in the U.S. and Latin America. And together, they'll be better positioned to grow in China.

Political considerations were obvious in the merger proposal from FCA, which signaled it wasn't going to close plants or lay off workers, even though many plants in Europe aren't running at full capacity.

  • The French government, whose 15% stake in Renault would be cut in half under a merger, would never go along without that commitment.

The trend: The U.S. government sold Chrysler to Fiat. The Japanese government removed Carlos Ghosn as chairman of Nissan (which helped topple him as CEO of Renault, too). The Italian and French governments have encouraged the proposed merger between FCA and Renault.

And the Chinese government, which brokered the takeover of Volvo, is now dictating an electric future.

  • "China's ambition - and it is impossible to separate companies from the government - is to not only be the largest automotive industry but to accumulate the greatest leverage," says China auto industry specialist Michael Dunne, CEO of ZoZoGo.
  • That means setting the global standards for future vehicles. "If you would like access to our market, the world's largest, here are the new rules. Take them or leave them." 

The bottom line: There are undeniable economic imperatives driving the consolidation of the auto industry. But the hands on the wheel don’t belong to shareholders.

Go deeper

Tech scrambles to derail inauguration threats

Illustration: Sarah Grillo/Axios

Tech companies are sharing more information with law enforcement in a frantic effort to prevent violence around the inauguration, after the government was caught flat-footed by the Capitol siege.

Between the lines: Tech knows it will be held accountable for any further violence that turns out to have been planned online if it doesn't act to stop it.

Dave Lawler, author of World
2 hours ago - World

Uganda's election: Museveni declared winner, Wine claims fraud

Wine rejected the official results of the election. Photo: Sumy Sadruni/AFP via Getty

Yoweri Museveni was declared the winner of a sixth presidential term on Saturday, with official results giving him 59% to 35% for Bobi Wine, the singer-turned-opposition leader.

Why it matters: This announcement was predictable, as the election was neither free nor fair and Museveni had no intention of surrendering power after 35 years. But Wine — who posed a strong challenged to Museveni, particularly in urban areas, and was beaten and arrested during the campaign — has said he will present evidence of fraud. The big question is whether he will mobilize mass resistance in the streets.

Off the Rails

Episode 1: A premeditated lie lit the fire

Photo illustration: Sarah Grillo/Axios. Photo: Chip Somodevilla/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. Axios takes you inside the collapse of a president with a special series.

Episode 1: Trump’s refusal to believe the election results was premeditated. He had heard about the “red mirage” — the likelihood that early vote counts would tip more Republican than the final tallies — and he decided to exploit it.

"Jared, you call the Murdochs! Jason, you call Sammon and Hemmer!”