New Tariffs on EVs Made in China Impact Non-Chinese Brands, Too
The Biden administration hopes to “level the playing field,” but the tariffs are holding some EVs from established brands back.
Chinese-built vehicles come with a financial advantage over one built in a country with higher pay standards. Their far cheaper production costs is why we’re seeing even some U.S. and European manufacturers try to build vehicles in China and other Asian countries to export back to their home nations. The cost savings—and proximity to the potentially lucrative Chinese market itself—make manufacturing there almost irresistible. Almost.
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There are tariffs to consider, taxes on imports that level the playing field somewhat by raising the costs on a good. The Biden administration's newest tariffs on Chinese-made EVs, specifically, are intended to keep Chinese automakers from flooding the U.S. market with cheap electric cars with the potential to wreck domestic automakers' EV plans, as it'd take them years if not decades to reduce costs drastically enough to be competitive. But those same tariffs are having side effects on non-Chinese companies, too—including those who set up manufacturing in China hoping to take advantage of cost savings.
Chinese Cars Aren't Sold Here, Yet (Sort Of)
The Biden administration is looking to get ahead of potential Chinese incursions into the U.S. car market, but right now, there are (technically) no Chinese manufacturers selling cars in the U.S., as we see in Europe and Mexico. The caveat is that Volvo, Polestar, and Lotus are all owned by the Geely conglomerate that is based in China, but those individual manufacturers are based in European countries. Regardless, we do get vehicles made by those and other European and American manufacturers that have plants in China, Chinese-built vehicles that are then imported into the U.S. Those include EVs.
Is It Really Leveling The Playing Field?
The new Biden Administration tariffs only target EVs, their batteries, and the minerals related to manufacturing those batteries and the motors that power them. This means that Buick can import the Chinese-built 2024 Envision and Lincoln can do the same with its Chinese-manufactured 2024 Nautilus SUV without worrying about a 102.5-percent duty on those vehicles when they land on shore, because neither is an electric vehicle. That duty, of course, would be passed on to the consumer—if Buick or Lincoln were on the hook for it; you can see why such a tariff would discourage Chinese automakers, as it'd effectively double the cost of their vehicle.
On the flip side, any automaker manufacturing EVs in China for sale in the U.S. will be impacted as much as any Chinese domestic market brand might. Volvo just announced that the upcoming EX30, which is to be built in China for sale here, will be delayed and sources within Volvo say that’s due to the cost of the tariffs. For now, Polestar says the delay of the Polestar 3 is due to a software issue on the SPA2 platform, but with its plant being in Chengdu, China, we can’t help but wonder if the delay could be extended for the same reasons the EX30, at least until its Ridgeville, South Carolina, plant opens for full production capability by the “middle of 2024.”
Mini was due to bring its all-electric, China-built 2025 Cooper E on the new J01 platform by this time, but that timeframe has also changed. By contrast, the upcoming 2025 Mini Countryman EV (to be built a German BMW plant) will be arriving to the U.S. on time. For now, these are the only vehicles official known to be delayed, but don't be surprised to hear about more new EVs delayed due to their manufacturing being located in China.
For now, the tariffs have only delayed a few China-sourced EVs from coming to U.S. shores officially. Is this really leveling the playing field or simply protectionism in an ever-hotter political climate? Perhaps the thinking is that internal-combustion Chinese cars, even really cheap ones, wouldn't be the same threat to American brands, as their prices wouldn't necessarily be substantially lower. When it comes to EVs, on the other hand, domestic automakers have few "cheap" options, and even those still cost more than $30,000; imagine a Chinese company selling a passable EV for half that. Stir in the Biden administration's interest in seeing the continued electrification of cars sold in America—and the moves make sense; after all, the administration wants to see more EVs, but not at American automakers' expense.
Having experience in many forms of the automotive industry, Justin Banner has done more than just write about cars. For more than 15 years, he's had experience working as an automotive service technician—including a stint as a Virginia State Inspector—service advisor, parts sales, and aftermarket parts technical advisor (a fancy way of saying he helped you on the phone when you had trouble fitting your brakes over your aftermarket wheels and the like). Prior to his tenure as a full-time editor, Justin worked as a freelance writer and photographer for various publications and as an automotive content creator on YouTube. He’s also covered multiple forms of motorsports ranging from Formula Drift, drag racing, and time attack, to NASCAR, short course off-roading, and open desert racing. He's best known for breaking down complex technical concepts so a layperson can more easily understand why technologies, repairs, and parts should matter to them. At MotorTrend, Justin is part of the news team covering breaking news and topics while also working as a judge for MotorTrend Of the Year events and other major comparison tests.
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