Chinese EV makers flooding Europe with affordable electric vehicles - will US be next?

author: FutureCar Staff    

Ford and GM are currently engaged in their own battle over the use of Chinese batteries. This comes as Chinese EV maker BYD surpassed Tesla this year to become the largest EV brand in the world. Back in 2011, Elon Musk laughed off the idea that BYD posed a threat to Tesla, but now the tables have turned.

Thanks to generous subsidies from the Chinese government, China is now producing more EVs than they know what to do with. These EVs are not only highly affordable but also increasingly advanced, which has led to a surge in European purchases. However, import tariffs and the exclusion from a popular federal tax exemption have prevented them from entering the North American market.

Chinese companies have exported nearly 350,000 EVs to nine European countries in the first half of this year, surpassing the total for all of 2022. The popular BYD Atto 3, priced at $38,000 in Europe and $20,000 in China, is among the Chinese electric cars making waves in the European market.

Trade barriers imposed by the Biden administration, such as the Inflation Reduction Act, have become a deal breaker for Chinese EV manufacturers like BYD. The act excludes vehicles containing battery parts from "a foreign entity of concern" from the $7,500 tax credit in the US, which includes China. Meanwhile, Europe has been more welcoming to Chinese manufacturers with lower tariffs.

Chinese EV manufacturers currently have an excess auto capacity of about 10 million vehicles a year, which is around two-thirds of all North American output in 2022. BYD, the largest Chinese EV brand, produces a range of cars including the Yangwang U8 luxury SUV and the Han flagship sedan.

The CEO of Chinese EV company Nio, William Li, has called for the US to be more friendly to Chinese industry and stop politicizing business. Chinese-owned MG, once a British sports car brand, has also seen a significant increase in market share in Europe.

It remains uncertain when and how Chinese EVs will enter the North American market, as US policy will play a crucial role. Ford has plans to work with Chinese battery-maker Contemporary Amperex Technology, while General Motors executives are advocating for a strict interpretation of the "foreign entity of concern" rule.

Chinese EV makers also face challenges in the European market, with the European Commission considering imposing punitive tariffs to protect EU producers against cheaper Chinese EV imports. The focus for Chinese auto executives will be on ensuring the survival of their cars in the European market.

FutureCar Staff