Strong Resistance

White House Policy

Recently, the White House issued a statement announcing a significant increase in tariffs on a range of Chinese imported products, including electric vehicles, chips, and medical products. Among these adjustments, the most notable and closely watched is in the field of electric vehicles – following the adjustment, import tariffs on Chinese electric vehicles will rise from 27.5% to 102.5%.

Bring Little Effect

102.5%, nearly triple the tariff increase, this number is shocking, but from the market itself, the actual impact of the United States’ imposition of tariffs on Chinese electric vehicles is not significant. Data shows that China’s total exports of electric vehicles in 2023 increased by 70% compared to the previous year, reaching $34.1 billion. Among them, exports to the United States accounted for only $368 million – a mere 1.08%.

Advantages of Chinese EVs

Lower costs

Interestingly, a US company previously dismantled a BYD ‘Seagull’ and American automotive engineers discovered that an American electric vehicle with comparable performance costs three times as much as the ‘Seagull’ from China! It’s worth noting that the US provides a discriminatory subsidy of up to $7,500 per vehicle for domestic electric cars, which Chinese-made electric vehicles are unable to enjoy.

However, even after excluding the subsidy and 27.5% import tariff, this car remains more competitive than equivalent American electric vehicles in terms of performance. This may also be one of the reasons why the US views BYD as a formidable competitor.

Concerns of Chinese car companies

Why haven’t Chinese electric car brands entered the US market on a large scale? In fact, compared to tariff barriers, Chinese car companies are more concerned about the business environment in the United States. For a car brand to enter a country’s market, it needs to simultaneously establish its own distribution and after-sales channels, which means significant investment. Given the current challenging situation in the United States, Chinese car companies naturally won’t venture into the American market. BYD has explicitly stated that its passenger vehicle business has no plans to enter the US market. Instead, BYD will focus more on other potentially huge overseas markets.

Without considering the US

Interestingly, a US company previously dismantled a BYD ‘Seagull’ and American automotive engineers discovered that an American electric vehicle with comparable performance costs three times as much as the ‘Seagull’ from China! It’s worth noting that the US provides a discriminatory subsidy of up to $7,500 per vehicle for domestic electric cars, which Chinese-made electric vehicles are unable to enjoy.

However, even after excluding the subsidy and 27.5% import tariff, this car remains more competitive than equivalent American electric vehicles in terms of performance. This may also be one of the reasons why the US views BYD as a formidable competitor.

Still Far Ahead

The imposition of tariffs on Chinese electric vehicles by the United States has had no impact. In the first four months of this year, China’s exports of new energy vehicles broke records again, ranking first globally, with BYD leading the way. Currently, Chinese brand new energy vehicles have a strong presence in overseas markets, mainly concentrated in Europe, South America, the Middle East, and Russia. The enthusiasm for Chinese new energy vehicles is also growing in Southeast Asian countries such as Thailand and Indonesia. It can be said that as long as trade protectionism and suppression policies continue to exist, the United States can be ignored in China’s outbound market for automotive companies; Chinese new energy vehicles will still thrive in international markets.