The Biden administration’s new tariffs on Chinese electric vehicles will not have a huge immediate impact on U.S. consumers or the auto market because very few such cars are sold in the United States.
But the move reflects deep concern within the U.S. auto industry, which is increasingly worried about China’s ability to produce cheap electric vehicles. U.S. automakers on Tuesday welcomed the Biden administration’s decision to impose a 100% tariff on electric vehicles from China, saying such vehicles would cut into billions of dollars of investment in vehicle factories electrics and batteries 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,” Sen. Gary Peters, Democrat of Michigan, said in a statement. . “This 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 products made in China, including a 25% tariff on steel and aluminum and 50% levies on semiconductors and solar panels. Tariffs on Chinese-made electric vehicles have quadrupled from 25%. Chinese lithium-ion batteries for electric cars will now face tariffs of 25%, up from 7.5%.
The United States imports only a few brands – electric or gasoline – from China. One of them is the Polestar 2, an electric vehicle made in China by a Swedish automaker in which Chinese company Zhejiang Geely has a majority stake. In a statement, Polestar said it was assessing the impact of Mr Biden’s announcement.
“We believe free trade is essential to accelerate the transition to more sustainable mobility through increased adoption of electric vehicles,” the company said.
In the first quarter of this year, Polestar sold only 2,200 vehicles in the United States. However, later this year there are plans to begin producing a new model, the Polestar 3, at a South Carolina factory operated by Geely-owned Volvo Cars.
Volvo sells a Chinese-made plug-in hybrid sedan, the S90 Recharge, in the United States and plans to begin 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 quickly became the best-selling Volvo vehicle in Europe.
Volvo said on Tuesday it was assessing the potential impact of Biden’s new tariffs on its plans.
Internal combustion models made in China and sold in the United States include the Buick Envision SUV made by General Motors and the Lincoln Nautilus from Ford Motors. They are not affected by the prices.
Tesla, GM, 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 lag behind Chinese companies in size, production of raw materials and key technologies.
Contemporary Amperex Technology Company Limited, or CATL, the Chinese manufacturer that is the world’s largest producer of batteries for electric cars, said last month that it had developed a battery capable of recharging enough in 10 minutes to allow a car to travel about 370 miles. a major leap from batteries used by established Western and Asian automakers, including Tesla.
China’s lead in electric vehicles, seen as key to the future of the auto industry, has sparked concerns that Chinese cars could hit the U.S. market at prices with which GM, Ford and other traditional automakers wouldn’t be able to compete.
BYD, a major and growing Chinese car and battery maker, already sells a compact electric car, the Seagull, for less than $15,000 in China. And on Tuesday, it announced it would begin selling a plug-in hybrid pickup truck in Mexico, while adding that it had no plans yet to sell the vehicle in the United States.
Chinese automakers like BYD, Geely and SAIC have increased their car exports to Europe, Latin America and various Asian countries. The European Commission, the executive body of the European Union, is investigating Chinese state subsidies to electric car makers.
Some U.S. auto industry officials said the Chinese government’s support for its automakers has left U.S. factories with the capacity to make far more cars than can be sold domestically.
“They have a major problem with electric vehicle overcapacity,” said John Bozzella, president of the Alliance for Automotive Innovation, the main lobbying arm of U.S. automakers.
“They are building too many electric vehicles – too many heavily subsidized electric vehicles – for the domestic market and have no choice but to look abroad to get rid of these vehicles at budget prices,” added Mr. . “The competitiveness of the U.S. auto industry will be harmed if heavily subsidized Chinese electric vehicles can be sold to U.S. consumers at below-market prices. »
Chinese officials have denied that the country is overproducing electric vehicles, solar panels and other products targeted by the Biden administration. “We hope the United States can take a positive view of China’s development and stop using overcapacity as an excuse for trade protectionism,” Liu Pengyu, a spokesperson for the Chinese Embassy in Washington, said on Tuesday. .
Automakers have already gotten a taste of how price competition can disrupt their electric vehicle plans. Over the past year, Tesla has cut prices on its models several times, reducing the costs of some models by more than 20% in total. These cuts, combined with slowing growth in electric car sales, have made it extremely difficult for GM 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 certain expenses. Ford and GM have slowed production of electric vehicles and delayed the introduction of new models. While GM is losing money on electric cars, the company said it expects those vehicles to start turning a profit later this year.
The Biden administration has sought to support and encourage battery and electric vehicle production in the United States to combat climate change and encourage more domestic manufacturing.
China is not the only obstacle. Americans’ enthusiasm for electric cars has waned over the past year, mainly because these 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 their cars easily and quickly.
In the first quarter of this year, 269,000 electric vehicles were sold in the U.S. market, according to Kelley Blue Book. This represents an increase of just 2.6 percent from the previous year. Total car and light truck sales increased more than 5 percent to 3.8 million vehicles.
“In many ways, purchasing an electric vehicle requires a lifestyle change,” said Jessica Caldwell, executive director of market research at Edmunds. “A lot of people just say, ‘I don’t want the hassle of an electric vehicle.'”
Alan Rappport reports contributed.
News Source : www.nytimes.com
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