Few Chinese Electric Cars Are Sold in U.S.
,
but Industry Fears a Flood
https://www.nytimes.com/2024/05/15/business/economy/china-electric-vehicles-biden-
tariffs.html
Automakers in the United States and their supporters welcomed President Biden’s tariffs,
saying they would protect domestic manufacturing and jobs from cheap Chinese vehicles.
Only a few vehicles — electric or gasoline — are imported to the United States from China.
One of those is the Polestar 2.Credit...Aly Song/Reuters
By Neal E. Boudette
May 15, 2024, 12:00 a.m. ET
The Biden administration’s new tariffs on Chinese electric vehicles won’t have a huge
immediate impact on American consumers or the car market because very few such cars are
sold in the United States.
But the decision reflects deep concern within the American automotive industry, which has
grown increasingly worried about China’s ability to churn out cheap electric vehicles.
American automakers welcomed the decision by the Biden administration on Tuesday to
impose a 100 percent tariff on electric vehicles from China, saying those vehicles would
undercut billions of dollars of investment in electric vehicle and battery factories in the
United States.
“Today’s announcement is a necessary response to combat the Chinese government’s unfair
trade practices that endanger the future of our auto industry,” Senator Gary Peters, a
Michigan Democrat, said in a statement. “It will help level the playing field, keep our auto
industry competitive and support good-paying, union jobs here at home.”
On Tuesday, President Biden announced a series of new and increased tariffs on certain
Chinese-made goods, including a 25 percent duty on steel and aluminum and 50 percent
levies on semiconductors and solar panels. The tariff on electric vehicles made in China was
quadrupled from 25 percent. Chinese lithium-ion batteries for electric cars will now face a 25
percent tariff, up from 7.5 percent.
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The United States imports only a few makes — electric or gasoline — from China. One is the
Polestar 2, an electric vehicle made in China by a Swedish automaker in which the Chinese
company Zhejiang Geely has a controlling stake. In a statement, Polestar said it was
evaluating the impact of Mr. Biden’s announcement.
“We believe that free trade is essential to speed up the transition to more sustainable mobility
through increased E.V. adoption,” the company said.
In the first quarter of this year, Polestar sold just 2,200 vehicles in the United States. Later
this year, however, it is scheduled to start producing a new model, the Polestar 3, at a South
Carolina plant operated by Volvo Cars, which Geely owns.
Volvo sells a Chinese-made plug-in hybrid sedan, the S90 Recharge, in the United States, and
plans to start importing a new small sport utility vehicle, the EX30, to the United States from
China this year. The car is expected to start at $35,000, making it one of the most affordable
battery-powered models available in the country. The model has quickly become Volvo’s
top-selling vehicle in Europe.
Volvo said on Tuesday that it was evaluating the potential impact of Mr. Biden’s new tariffs
on its plans.
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Internal combustion models that are made in China and sold in the United States include the
Buick Envision S.U.V. made by General Motors, and Ford Motors’ Lincoln Nautilus. They
are unaffected by the tariffs.
Tesla, G.M., Ford, Volkswagen, Hyundai and several other automakers have invested tens of
billions of dollars in battery and electric vehicle factories in the United States. But with the
exception of Tesla, automakers in the United States, Europe and Japan trail Chinese
companies in scale, raw materials production and key technologies.
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Contemporary Amperex Technology Company Limited, or CATL, the Chinese manufacturer
that is the world’s largest producer of electric car batteries, said last month that it had
developed a battery that could charge up enough in 10 minutes to allow a car to travel about
370 miles — a major leap compared with the batteries used by established Western and Asian
automakers, including Tesla.
China’s lead in electric vehicles, which are seen as central to the auto industry’s future, has
spurred concerns that Chinese cars could hit the U.S. market at prices that G.M., Ford and
other traditional automakers wouldn’t be able to compete with.
BYD, a leading and fast-growing Chinese car and battery company, already sells a compact
electric car, the Seagull, for less than $15,000 in China. And on Tuesday, it said it would
begin selling a plug-in hybrid pickup truck in Mexico, although it added that it did not yet
plan to sell the vehicle in the United States.
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Chinese automakers like BYD, Geely and SAIC have been increasing car exports to Europe,
Latin America and various Asian countries. The European Commission, the executive arm of
the European Union, is investigating Chinese state subsidies to electric carmakers.
Some representatives of the U.S. auto industry have said the Chinese government’s support
of its automakers has left factories there with the capacity to make vastly more cars than can
be sold in the country.
“They’ve got a major E.V. overcapacity problem,” said John Bozzella, president of the
Alliance for Automotive Innovation, the main lobbying arm for U.S. automakers.
“They’re building too many E.V.s — too many heavily subsidized E.V.s — for the domestic
market and have no choice but to look abroad to offload those vehicles at budget prices,” Mr.
Bozzella added. “The competitiveness of the auto industry in the U.S. will be harmed if
heavily subsidized Chinese E.V.s can be sold at below-market prices to U.S. consumers”
Chinese officials have denied that the country is overproducing electric vehicles, solar panels
and other products targeted by the Biden administration. “We hope the U.S. can take a
positive view of China’s development and stop using overcapacity as an excuse for trade
protectionism,” a spokesman for the Chinese Embassy in Washington, Liu Pengyu, said on
Tuesday.
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Automakers have already had a taste of how price competition can disrupt their electric
vehicle plans. Over the last year, Tesla has cut prices on its models several times, reducing
the costs of some models by more than 20 percent in total. Those cuts, combined with a
slowdown in the growth of electric car sales, have made it extremely hard for G.M. and Ford
to make money on battery-powered models.
In the first three months of the year, Ford’s electric vehicle division lost $1.3 billion before
taking into account some expenses. Both Ford and G.M. have slowed electric vehicle
production and delayed the introduction of new models. While G.M. is losing money on
electric cars, the company has said it expects those vehicles to begin generating profits later
this year.
The Biden administration has sought to support and encourage the production of batteries and
electric vehicles in the United States to address climate change and encourage more domestic
manufacturing.
China isn’t the only obstacle in the way. Americans’ enthusiasm for electric cars has waned
over the past year, mainly because such vehicles sell for relatively high prices. Some buyers
are also reluctant to buy because they are not sure there will be enough places to charge those
cars easily and quickly.
In the first quarter of this year, 269,000 E.V.s were sold in the U.S. market, according to
Kelley Blue Book. That was an increase of just 2.6 percent from a year earlier. Total sales of
cars and light trucks grew more than 5 percent to 3.8 million vehicles.
“In a lot of ways, buying an E.V. requires a lifestyle change,” said Jessica Caldwell,
executive director of insights at Edmunds, a market researcher. “A lot of people just say, ‘I
don’t want the hassle of an E.V.’”
Alan Rappeport contributed reporting.
Neal E. Boudette is based in Michigan and has been covering the auto industry for two
decades. He joined The New York Times in 2016 after more than 15 years at The Wall Street
Journal. More about Neal E. Boudette
See more on: U.S. Politics, President Joe Biden
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