By Jon Sindreu

Attempts to build a global auto empire hark back to the 1910s and 1920s, when Henry Ford set up factories in Britain and Germany for the Model T, and General Motors responded by buying foreign carmakers. A century later, this ambition remains at risk of being run off the road.

Tesla is in some ways the 21st century Ford. It has a first-mover advantage involving a disruptive new technology, a charismatic leader -- Elon Musk -- and the aim to manufacture globally. While it only opened its first Chinese and German plants in 2019 and 2022, respectively, it managed to split its revenues 50% in North America, 30% in Asia-Pacific and 13% in Europe last year, FactSet estimates show.

This still isn't as diversified as luxury car brands such as BMW, but isn't far from Toyota, the closest claimant to being a world-spanning auto leader. Given Tesla's aim to venture closer to the mass market, these are good numbers.

Yet, over the past three months, Tesla stock has nearly halved, partly because Musk's role in the Trump administration -- echoing Henry Ford's own political forays -- has created consumer backlash at home and abroad, leading European sales in particular to tank.

What threatens to send the already imperiled dream of a globalized carmaker to the scrapyard, however, are two deeper trends.

One is protectionism. In China, such policies have long propped up domestic vehicles at the expense of Western manufacturers, in turn generating an outcry to have U.S. and European officials bar them access to their own markets. Now President Trump is even threatening to place tariffs on the supply chains that American and European carmakers have spread across Canada and Mexico.

At the same time, it has become clear the pace of electric-vehicle adoption will be vastly different between countries, making it even harder to simultaneously cater to different markets.

Indeed, investors are starting to wonder if regional players once seen as too small to compete may actually have an edge. France's Renault has gained 25% in the stock market in six months, on the back of a turnaround plan based on partnerships rather than size. Executives have externalized battery production and localized supply chains, while still pooling research and manufacturing costs with longtime ally Nissan. They also are using Chinese partners to make leaps in the budget segment: The coming Renault Twingo is set to be one of the world's cheapest EVs at under 20,000 euros, equivalent to $21,810.

Meanwhile, shares in Stellantis have dropped 16%. The megaconglomerate was created in 2021 by merging Fiat Chrysler with Renault's old domestic rival, PSA Group, to internalize the economies of scale from its 14 brands.

While cost-cutting initially exceeded expectations, sales of key models floundered in 2024: Jeeps and Ram pickup trucks piled up at dealerships as a result of steep price tags. In December, shortly after Chief Executive Carlos Tavares was ousted, the launch of the all-electric Ram 1500 REV was pushed to 2026, even as the Ford F-150 Lightning gained ground.

If Tesla's strategy of selling a single brand globally is reminiscent of the original Ford, Stellantis's approach of expanding through multiple local manufacturers traces back to GM's Alfred P. Sloan in the 1920s.

History suggests the latter is even harder to make work. GM's first attempt, which included acquiring Vauxhall in the U.K. and Opel in Germany, was foiled by protectionism and the Great Depression. It tried again in the 1980s and 1990s, buying Saab and designing a common platform, the "J-body," that could be sold across multiple regions -- the Chevrolet Cavalier, Opel Ascona and Isuzu Aska were all variations of it. Ford tried something similar with the Mondeo, while scooping up Jaguar, Volvo and Aston Martin.

In the end, the extra brands proved hard to manage, the J-body was panned for poor performance and the Mondeo only thrived in Europe. Today, Ford and GM have a much smaller European footprint.

The problem is that maintaining and updating a big product line is a daunting task, especially with consumer tastes varying widely across geographies. For Stellantis, some brands like Lancia and Maserati may take too much effort to revitalize, while some like Chrysler have become relics of the past, and others can't grow without cannibalizing the rest. Fiat's strength, for example, is mostly down to the 500 line, which is a chic car for European city dwellers.

To be sure, shared modular platforms have become standard in the auto industry, and are behind a few transnational successes.

Toyota is first among them, combining a focus on a single affordable brand with a reputation for reliability, a localized manufacturing approach and a few common, hybrid-compatible architectures. This made it able, for instance, to easily switch to making the subcompact Yaris only for the European market, while sticking to the larger Corolla in the U.S.

Despite its recent troubles, Germany's Volkswagen is a paradigm of how this can be done across brands, too, with the quality of materials essentially determining whether a car built on the same platform is a cheap Skoda, a premium Audi or an in-between Volkswagen.

But even these companies, which have a continuity of product that Stellantis lacks, haven't managed to be everything for everyone everywhere. U.S. buyers like Volkswagen's Tiguan and Atlas SUVs and the Jetta sedan, but eschew its more affordable models.

Toyota has a relatively small European market share and has struggled in China, in part due to its attachment to hybrid offerings. After seeing its once-troubled bZ4X electric model topping sales charts in Norway, the Japanese company is finally pivoting to battery-electric cars.

But ultimately, the fact that EV sales have surpassed expectations in China and Scandinavia, disappointed in the rest of Europe and lost out to hybrids in the U.S. is a massive headache for manufacturers who want to be in all of these countries while maintaining commonalities and a consistent performance. This is especially the case because the industry is shifting from platforms that can accommodate electric and combustion versions of the same car -- as many Peugeot, Citroën and Opel models do -- to using dedicated architectures.

Investors long saw electrification creating a few global winners. Instead, it may be another historical force favoring more regionalized champions.

Write to Jon Sindreu at jon.sindreu@wsj.com

(END) Dow Jones Newswires

March 21, 2025 05:30 ET (09:30 GMT)

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