Chinese EV Tariffs Mocked by EV Giant CEO
4 mins read

Chinese EV Tariffs Mocked by EV Giant CEO

China’s new tariffs on electric vehicles are a horrible idea for several reasons. Some of which I have arranged here.

But now they are just embarrassing.

Chinese electric vehicle prices

Last week, BYD (OTCBB: BYDDY) CEO Wang Chuanfu suggested that the US government was “afraid” of Chinese electric vehicles. And at an industry event he said…

“If you’re not strong enough, they won’t be afraid of you.”

He is right.

When it comes to providing “affordable” electric cars, the United States simply cannot compete with Chinese electric vehicle manufacturers. In fact, BYD is now selling a new electric car called the Seagull for just $12,000. Granted, such a vehicle would likely cost upwards of $25,000 in the United States, if BYD were allowed to sell it here. This is mainly due to strict and costly regulatory requirements associated with a base tariff (Japan pays around 2.5% compared to the 100% tariff Biden wants to impose on Chinese electric vehicles).

But even at $25,000, the Seagull would probably sell quite well in the United States given that it would be the most affordable electric vehicle on the market, with a range of at least 250 miles.

China’s EV Tariffs Won’t Stop China’s EV Dominance

In fairness, part of China’s competitive advantage can be attributed to currency manipulation, massive government subsidies, and intellectual property abuse. But it also goes back to the Middle Kingdom’s decision to support the development of its electric vehicle industry, while the United States ignored and mocked the decision.

The truth is that the United States could easily have dominated the global electric vehicle market if traditional automakers had spent more time investing in the transition away from internal combustion, instead of criticizing it. Today, they are trying to catch up with the Chinese.

Of course they will. Eventually.

In fact, according to a new report from Bloomberglong-range electric vehicles now cost less than the average new car in the United States. Find out…

A stricter definition of price parity is the point at which the average electric vehicle costs the same as the average internal combustion engine, excluding gas savings and government subsidies. This initial affordability is essential for later stages of widespread adoption.

American car buyers demand greater range from electric vehicles than drivers in any other country. THE the average EV now has around 300 miles, and with a few of these models selling for less than the average car, others are sure to follow. The IEA estimates that price parity will become the norm by 2030.

evparity

Price parity is important. But so is affordability.

The average price of a new car in the United States today is about $47,000. Clearly, “average” is still too high for many car buyers. So imagine a $25,000 electric vehicle shows up at the dealership. A car, by the way, that would probably save drivers at least $2,000 a year in fuel costs.

Most American drivers keep their new car for about 8 years before getting a new one. So if we assume a savings of $2,000 per year in fuel costs (which is conservative, since I’ve saved about $2,000 in fuel costs in the last six months alone), you’re looking at a savings total of approximately $16,000. Deduct that from the $25,000 retail price, and this car ends up costing you around $9,000.

It doesn’t take a genius to understand why traditional automakers would defend these high Chinese tariffs for electric vehicles. But these customs duties only apply to the United States. The world is a big place and don’t think for a second that China won’t do everything in its power to dominate the global electric vehicle market. So keep a close eye on BYD, as well as some of the other big Chinese EV makers. While I’m not particularly bullish on any Chinese EV maker, other than BYD, it’s still worth keeping the bigger players on your radar. These include, but are not limited to..

  • Li Auto (NASDAQ:LI)
  • XPeng (NYSE: XPEV)
  • NIO (NYSE:NIO)