The Biden administration's new tariffs on Chinese electric vehicles won't have much of an immediate impact on American consumers or the auto market because so few of those vehicles are sold in the United States.
But the decision 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 welcomed the Biden administration's decision Tuesday to impose a 100 percent tariff on electric vehicles from China, saying those vehicles would undermine billions of dollars of investment in electric vehicle and battery factories. in 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, D-Mich., 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 products made in China, including a 25 percent tariff on steel and aluminum and 50 percent levies on semiconductors and solar panels. The tariff on electric vehicles made in China quadrupled from 25 percent. Chinese lithium-ion batteries for electric cars will now face a 25 percent tariff, up from 7.5 percent.
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 the Chinese company Zhejiang Geely has a majority stake. In a statement, Polestar said it was assessing the impact of Biden's announcement.
“We believe that free trade is essential to accelerate the transition to more sustainable mobility through greater 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, a new model, the Polestar 3, is scheduled to begin production later this year at a South Carolina plant 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 has quickly become The best-selling Volvo vehicle in Europe.
Volvo said 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 made by Ford Motors. They are not affected by tariffs.
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 scale, raw material production and key technologies.
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 enough in 10 minutes to allow a car to travel approximately 370 miles. . a big jump compared to batteries used by established Western and Asian automakers, including Tesla.
China's leadership in electric vehicles, which are seen as critical to the future of the auto industry, has raised concerns that Chinese cars could reach the U.S. market at prices that GM, Ford and other traditional automakers would not be able to compete with. .
BYD, a leading and fast-growing Chinese automobile and battery company, already sells a compact electric car, the Seagull, for less than $15,000 in China. And on Tuesday he said he would begin selling a plug-in hybrid pickup truck in Mexico, although he added that he did not yet plan to sell the vehicle in the United States.
Chinese automakers such as BYD, Geely and SAIC have increased auto exports to Europe, Latin America and several Asian countries. The European Commission, the executive arm of the European Union, is investigating Chinese state subsidies to electric car makers.
Some representatives of the American auto industry have said that the Chinese government's support for its automakers has left factories there with the capacity to make many, many more cars than can be sold in the country.
“They have a major electric vehicle overcapacity problem,” said John Bozzella, president of the Alliance for Automotive Innovation, the main lobbying arm of U.S. automakers.
“They are making too many electric vehicles (too many heavily subsidized electric vehicles) for the domestic market and they have no choice but to look abroad to get rid of those vehicles at affordable prices,” Bozzella added. “The competitiveness of the auto industry in the United States will be harmed if heavily subsidized Chinese electric vehicles can be sold at below-market prices to American 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 United States can take a positive view of China's development and stop using excess capacity as an excuse for trade protectionism,” Chinese embassy spokesman in Washington Liu Pengyu said on Tuesday.
Automakers have already tested how price competition can disrupt their electric vehicle plans. Over the past year, Tesla has reduced the prices of its models several times, reducing the costs of some models by more than 20 percent in total. Those cuts, combined with a slowdown in electric car sales growth, 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 without taking into account some expenses. Both 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 has 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 address climate change and encourage greater domestic manufacturing.
China is not the only obstacle in the way. Americans' enthusiasm for electric cars has waned over the past year, mainly because those vehicles sell at 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 electric vehicles were sold in the US market, according to Kelley Blue Book. That was an increase of just 2.6 percent from the previous year. Total car and truck sales grew more than 5 percent to 3.8 million vehicles.
“In many ways, buying an electric vehicle 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 electric vehicle.'”
Alan Rappeport contributed reports.
