It is expected that on May 14, President Joe Biden will impose a 100% tax on industrial products, including electric vehicles, imported from China — in response to numerous calls from local car manufacturers and unions.
Why are Chinese electric vehicles so cheap?
For some time now, the Chinese government has been providing significant subsidies to local "green" car manufacturers, which far exceed those in America and Europe. Companies like BYD are making billions annually from this, in addition to tax benefits for electric vehicle buyers, stimulating sales of "eco-friendly cars."
BYD and similar brands focus on cheapening car production — for example, using only one windshield wiper instead of two, and implementing vertical integration. US car manufacturers (except Tesla), Europe, Japan, and Korea, on the other hand, rely on multiple levels of suppliers, most of which supply parts to several manufacturers.
Chinese manufacturers, like other brands, also add video surveillance systems and connected online services to their cars, raising questions about potential tracking — currently, the US Department of Commerce is investigating whether imported cars from China threaten national security. For the same reason, the Chinese government restricted Tesla's access to certain organizations (especially military) in the country.
Currently, Chinese companies are selling electric vehicles on foreign markets at prices that few can compete with, undermining local industry Looking at the numbers in Europe, where BYD and MG have opened representative offices, last year 1 out of 5 electric cars sold was produced in China — by 2024, according to forecasts, the figures will increase to 1 out of 4.
How is the EU and the US reacting to this?
Last year, the European Union began investigating the anticompetitive behavior of Chinese manufacturers, and it is expected that in the coming weeks there will also be high tariffs imposed on Chinese electric vehicles.
“Without trade barriers, they will destroy most other car companies worldwide,” said Tesla CEO Elon Musk in January.
In the US, 25% tariffs are already imposed on imported Chinese cars, in addition to the standard 2.5% applied to any vehicle imported into the states. Today, Biden can impose new tariffs of 102.5% — specifically for Polestar and Lotus, which produce their electric vehicles for the US market in China.
Source: Ars Technica
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