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In a letter to President Biden this week, US Senator Sherrod Brown (D-OH) argued that Chinese EV imports, backed by the Chinese government, threaten the US auto industry. Insisting that such “cheating” poses severe risks to the US auto industry and its workers, Brown asked the President to ban these vehicles — “now.”
“Chinese electric vehicles are an existential threat to the American auto industry. Ohio knows all too well how China illegally subsidizes its companies, putting our workers out of jobs and undermining entire industries, from steel to solar manufacturing. We cannot allow China to bring its government-backed cheating to the American auto industry. The US must ban Chinese electric vehicles now and stop a flood of Chinese government-subsidized cars that threaten Ohio auto jobs, and our national and economic security.”
William Li, Nio’s founder, spoke at an event at Harvard University on Saturday and said rapid EV growth in China resulted from an “open and competitive” market where “all products are welcome regardless of their brands or origins.” The China Association of Automobile Manufacturers supports Li’s analysis of the effects of competition, noting that it expects sales growth to slow to 3% in 2024 as exports continue to drive gains. The domestic market, it states, remains locked in fierce competition that may lead to industry consolidation or even the elimination of some producers in 2025 and 2026.
Senator Brown doubts such conclusions and warns that Chinese automakers are controlled and subsidized by the Chinese government.
“Chinese electric vehicles (EVs) threaten our economic and national security, and the entire American auto industry. Allowing these automobiles into the United States would harm American manufacturing, American workers, American consumers, and American security. Chinese EVs, highly subsidized by the Chinese government, could decimate our domestic automakers, harm American workers — many of whom are represented by the United Autoworkers (UAW) — and give China access to sensitive personal data.”
Inside sources told Reuters in March that BYD has set a 3.6-million-unit sales target for 2024, a jump of 20% from its record-breaking sales last year. Brown recognizes the link between anticipated BYD profitability and its low priced EVs and hopes to see a ban on BYD and other Chinese EV imports to the US.
“Chinese automaker BYD, now the world’s largest producer of electric cars, sells an electric hatchback named the ‘Seagull’ for the equivalent of less than $10,000 USD. In addition to China’s heavily-subsidized, artificially low vehicle pricing, Chinese automakers are finding new ways to cheat by establishing factories in Mexico.”
BYD’s Seagull hatchback features angular styling, a two-tone dashboard shaped like a seagull’s wing, 6 airbags, and a 10-inch rotating infotainment touchscreen. BYD’s company slogan, “Build Your Dreams,” is embossed on the rear of the vehicle. With a list price of $9,698, the Seagull costs around $50,000 less than any US electric vehicle.
Li has said Nio was also studying the feasibility of selling into the US on a quarterly basis. In the Chinese market, with a lineup priced from 298,000 yuan ($42,000) for the premium segment, the automaker sold 30,053 EVs in the first 3 months, compared to 132,420 vehicles sold by Tesla.
With the backdrop of such appealing pricing, Chinese auto manufacturers are pushing US automakers away from more profitable premium EVs and to mass produced, lower priced EVs that will appeal to the masses. It’s not just the US that anticipates upheavals if Chinese EV imports are permitted. About 19.5% of electric vehicles sold in Europe last year were made in China, and data indicates that Chinese automakers are on track to reach the 25% threshold in 2024.
Not coincidentally, BYD is one of the Chinese EVs that the European Union is investigating. The others are Geely and SAIC. The process could lead to European tariffs to offset the Chinese government EV subsidies. US Senator Brown is not convinced that tariffs will make enough difference to US automakers.
“The level of subsidization and resulting sale price differential between an EV produced by a Chinese entity and those manufactured in the US using union labor presents extreme challenges to enforcing a level playing field. Currently, Chinese-built cars are subject to an extra 25% tariff on top of the regular 2.5 percent% duty that generally applies to imported vehicles.”
In November, 2023, the UAW ratified contracts with the Big Three US automakers. UAW President Shawn Fain said at the time that the contracts will ensure protections for electric vehicle and battery plant workers.
“This contract is a huge step in bringing that work back in — and not just the battery workers, it’s the electric drive motors and different parts of that industry. I’ve never been opposed to [the EV transition]. We just want it to be a just transition, and we don’t want workers left behind. That’s it.”
Brown anticipates significant turmoil for his autoworker constituents and the communities in which they reside if Chinese EV imports find their way to the US. The automotive sector is undergoing rapid, dramatic changes, he noted, saying that US companies have the potential and wherewithal to innovate and lead in the technologies of the future as market- and technology-driven changes arise.
“There are currently no Chinese EVs for sale in the United States, and we must keep it that way. I implore you to take bold, aggressive action and to permanently ban EVs produced by Chinese companies or whatever subsidiaries they establish to conceal their origins. Further, I urge you to work with our allies to address these concerns in a holistic manner that supports American jobs and innovation.”
Last month, the Biden-Harris administration announced it was opening an investigation into whether Chinese vehicle imports pose national security risks, leaving open the possibility of imposing restrictions due to concerns about connected car technology. The US Commerce Department probe is because Chinese assembled smart vehicles could collect sensitive data about US citizens and infrastructure and send the data to China. Recognizing that a dynamic auto industry is vital to the US economy, President Biden issued a statement about the confluence of possible Chinese EV imports, US auto workers, and national security.
“China is determined to dominate the future of the auto market, including by using unfair practices. China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch.”
Brown’s concerns about national security mirror the President’s.
“Allowing Chinese EVs on our roads could pose risks to our national security. The technology in EVs includes apps, sensors, and cameras. China should not have access to the data these technologies can collect — whether it be information about traffic patterns, critical infrastructure, or the lives of Americans. China does not allow American-made electric vehicles near their official buildings.”
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