Last week, President Biden announced a new round of tariffs on Chinese products, including electric vehicles, semiconductors, and many more.
In particular, Biden chose to quadruple the tariffs on Chinese electric vehicles, which have been performing well domestically and abroad, amidst struggling US EV sales.
Quadrupling Tariffs
The tariffs announced by Biden brought the 25% tariff on Chinese EVs up to 100%. The motivation behind these tariffs is to stop Chinese competitors from being able to threaten US jobs and undercut US EV companies.
In a White House event, Biden celebrated the action. “I’m determined that the future of electric vehicles be made in America, by union workers, period,” Biden said.
Call for a Ban
Some politicians, including Senator Sherrod Brown of Ohio, are insisting this move doesn’t go far enough, wanting a complete ban on Chinese EVs due to security concerns.
“Chinese-made connected vehicles and technology have the power to transmit Americans’ personal data and information to the Chinese Communist Party — a clear national security threat,” Brown told CBS News in a statement. “The Biden administration must ban Chinese connected vehicles and Chinese smart vehicle tech and fight back against China’s push to infiltrate the American auto supply chain.”
Giving China Our Data
Democrat Representative Elissa Slotkin from Michigan agrees with this sentiment, fearing the consequences of allowing China to import such advanced vehicles into the United States.
“Thousands of Chinese-made, connected vehicles coming into the country would give [the Chinese] a huge amount of data — high-fidelity data on things like U.S. military bases, key infrastructure facilities, like bridges and electric grid nodes, secretive locations, individual leaders,” Slotkin said earlier this month.
Election Year Ploy
The action to increase tariffs so dramatically on China is being described as a move by Biden to shore up support ahead of his November election contest. Biden has previously criticized Trump’s rhetoric and actions against China but has turned on this criticism to create his own anti-China policies.
“It’s a classic election year ploy,” said Ed O’Keefe on X.
Fraction of the Cost
In recent years, China has had meteoric success with its electric vehicle industry. Chinese EVS are designed, built, and sold at a fraction of the price compared to what US firms are currently able to do.
Chinese automaker BYD released the Seagull model EV last year, which sells for only around $12,000, nearly three times less than the cost of a US-made electric vehicle. These latest tariffs are meant as a way to dissuade Americans from purchasing them.
China’s Success
The Chinese market for EVs has taken off, with recent numbers showing over 50% of the automobile market share in China controlled by electric vehicle makers.
In 2022, sales of new Chinese EVs increased by 82%, and Chinese EVs account for 60% of the total global EV purchases.
America’s EV Struggles
China has managed to take advantage of its ability to produce entry-level electric vehicles to great success. In the United States, there was an initial surge of excitement around electric vehicles, but demand has been suffering recently.
Q1 of this year saw a 7.3% decrease in total new-vehicle EV sales. Tesla, America’s leading EV company, saw its sales fall a recent record of 9%. Chinese company BYD recently dethroned Tesla to become the world’s biggest EV company in 2023.
Price is Important
Surveys have shown that American customers have a number of concerns about adopting EVs, but one that consistently remains a high priority is price.
In addition to a high upfront cost, EV customers also have to invest in a home charging station and pay a monthly fee for the ability to charge their vehicle.
Tesla Trying to Keep Up
After a disappointing Q1 earnings report, Tesla CEO Elon Musk announced that it will speed up the development of a line of more affordable EV models to be released by early 2025.
After the announcement, Tesla’s stock shot up 12% in anticipation.
Cutting Prices
While Musk is promising more affordable EVs, Tesla has also been trying to cut prices in the meantime to try to appeal to more customers.
In April, Tesla cut the price of three of its five models in the United States by $2,000. Cutting prices is tricky since it means amidst a disappointing earnings report, the company is also potentially reducing its profit on vehicles.
Why the Price Cuts?
Tesla Fans Schweiz
Tesla is hoping that by cutting prices in the US, China, and Europe it can recapture and reinvigorate some of the lost demand and enthusiasm around its EV models.
The company has been cutting prices over the past 12 months as it faces stiff competition from EV companies.
