Chinese electric car makers flooding Europe with affordable EVs - will they reach the US?

author: FutureCar Staff    

Ford and GM are currently engaged in their own battle over the use of Chinese batteries in their electric vehicles. This comes as Chinese EV maker BYD has surpassed Tesla to become the largest EV brand in the world. When Elon Musk was asked about the threat posed by BYD in 2011, he laughed it off, but now BYD's success has proven him wrong.

BYD, based in Shenzhen and backed by investor Warren Buffet, is on track to produce over two million vehicles in one year, making it the first EV manufacturer to achieve this milestone. The company's success can be attributed to generous subsidies from the Chinese government, which has led to the production of highly affordable and advanced EVs.

The popularity of Chinese EVs has soared in Europe, with nearly 350,000 EVs imported to the continent in the first half of this year alone. However, these vehicles have yet to make a significant impact in North America due to import tariffs and the exclusion from federal tax exemptions.

One of the most popular Chinese electric cars in Europe is the BYD Atto 3, which is priced at around $38,000. In China, the same car sells for just $20,000. Chinese companies exported a record number of EVs to European countries this year, surpassing the total for the entire previous year.

Despite their success in Europe, Chinese EV manufacturers face barriers in the US market. Trade barriers imposed by the Biden administration, such as the Inflation Reduction Act, have made it difficult for Chinese EVs to gain traction in the US. The act excludes vehicles containing battery parts from foreign entities of concern, including China, from the $7,500 tax credit designed to promote EV adoption.

The US market is not currently a consideration for BYD, according to Stella Li, a senior vice president at the company. She believes that the Inflation Reduction Act may hinder EV adoption in the US. President Biden has emphasized the importance of American leadership in the EV industry and reducing reliance on other countries, particularly China.

Chinese EV manufacturers now have a surplus auto capacity of about 10 million vehicles per year, which is equivalent to two-thirds of all North American output in 2022. BYD, as the largest Chinese EV manufacturer, produces a range of vehicles, including the Yangwang U8 luxury SUV and the flagship sedan, Han.

Another Chinese EV company, Nio, has also expressed the need for a more friendly approach from the US towards Chinese industry. Nio's CEO, William Li, believes that Chinese EV companies have a cost advantage over rivals like Tesla due to China's control of supply chains and raw materials.

MG, a British sports car brand now owned by Chinese company Geely, has seen a significant increase in market share in Europe. Their EV models, such as the MG4 and MG ZS EV, have been competitive in the European market, outselling popular models like the Volkswagen ID3.

For now, it remains uncertain when and how Chinese EVs will enter the North American market. US policy moving forward will play a crucial role in determining their future. Ford has been planning to work with Chinese battery-maker Contemporary Amperex Technology, while General Motors executives have advocated for strict interpretation of the "foreign entity of concern" rule to prevent partnerships with Chinese firms.

Chinese EV makers also face challenges in Europe, as the European Commission is considering imposing punitive tariffs on Chinese EV imports to protect EU producers. The flood of cheaper electric cars in global markets, supported by substantial state subsidies, has raised concerns among European leaders.

Overall, the success and expansion of Chinese EV manufacturers have disrupted the global EV market, with Europe being the primary destination for their vehicles. The future of Chinese EVs in North America and Europe will depend on policy decisions, trade barriers, and market demand.

FutureCar Staff