AI, China, 'Dark Factories' and the Future of the US Auto Industry

Economist Mary Lovely has dismissed claims that getting automakers to produce more cars in America is proof that tariffs work, warning instead that the US could end up building more auto plants but employing even fewer workers due to automation.

Her cautionary perspective comes as the concept of fully automated "dark factories" — facilities that operate without human workers — moves from science fiction toward reality. With China leading the charge in such manufacturing, and automation increasingly reshaping American production floors, the future of US auto jobs hangs in the balance.

What are "dark factories"?

Dark factories, also known as lights-out factories, are manufacturing facilities that rely so heavily on robotics and artificial intelligence that they require minimal human input to function. These plants can operate 24 hours a day without lighting, with robots performing assembly tasks that were traditionally done by human workers.

Chinese electric automaker Zeekr, for example, has 820 robots in its manufacturing facility, and China currently has more manufacturing robots per 10,000 workers than America. The goal of these automated factories is to improve quality while reducing manufacturing costs.

The US automation push

While the United States doesn't yet have a fully automated automotive plant, the industry is aggressively moving in that direction. Lear Corporation, a major seating and electronics supplier, is opening an advanced manufacturing centre in Michigan designed to demonstrate what lights-out production looks like when human labour is no longer part of the process.

"The goal of that facility is to highlight what lights-out manufacturing looks like, and the progress has been amazing," said Frank Orsini, executive vice president of Lear's seating business. The company has acquired eight robotics and automation firms over the past seven years and is using Palantir's data systems to digitise its operations.

Hyundai's Metaplant America in Georgia already features more than 850 robots and almost 300 automated guided vehicles. Tesla, meanwhile, is building Optimus humanoid robots on a limited scale in California, with Elon Musk envisioning a robot army to help out at Tesla factories.

Why tariffs won't bring jobs back

The fundamental problem, as Lovely and other economists argue, is that automation cancels out the employment benefits tariffs might otherwise deliver. As Viet Nguyen-Tien of the London School of Economics explains, decades of US policy have favoured capital over labour through tax incentives like accelerated depreciation, encouraging firms to automate rather than hire.

US automakers installed nearly 10.7% more robots in 2024 than in 2023. Commerce Secretary Howard Lutnick has celebrated robotics as key to a new "manufacturing renaissance". As MIT economist Daron Acemoglu told TIME: "If tariffs persist, firms will have no choice but to bring some of their supply chains back home – but they will do it via AI and robots".

Research supports this view. One study found that while car-only tariffs could create approximately 68,700 new assembly jobs, the welfare cost per job created was $167,700 per year — far exceeding the average annual compensation in the automotive sector of about $75,000. When tariffs extend to parts, the cost per job rises to $875,900.

"Automation will take undesirable jobs and improve ergonomics" while making production more efficient, Lear executives have argued. But the consequences for workers are stark: Lear's global revenue has remained relatively flat while its headcount dropped sharply, with 15,000 jobs cut last year and further reductions expected.

The deeper threat to the development model

Beyond American jobs, the rise of automation in wealthy countries threatens the export-led industrialisation model that lifted hundreds of millions out of poverty in developing nations. As robots become capable of producing goods at costs comparable to low-wage countries, the economic case for offshoring weakens.

"For developing countries, automation's rise in high-income economies like the United States is not just a technological concern it directly threatens the export-led industrialisation model that fuelled East Asia's economic miracles," Nguyen-Tien warns.

Paradoxically, China the main target of US tariffs is among the least likely to suffer from this trend. It has already transitioned away from labour-intensive production and is now a leader in AI and automation. For other developing countries still reliant on low-skill, labour-intensive exports, the path to development is narrowing.

A future with fewer workers

A recent Pew survey found that only 16% of Americans think AI's impact on society over the next 20 years will be positive. In the auto industry, that scepticism appears well-founded. While the US might see new factories built on American soil, the jobs that come with them may be far fewer than in the past if they exist at all.