Western governments love EVs. The European Union and the U.S. do everything possible to promote them to consumers. But you know who loves EVs even more? China.
Henry Ford invented the automobile and Elon Musk popularized battery-powered cars, but the Chinese will come to dominate the post-gas automotive market the West created. The support China gives to this segment of the auto market means domestic manufacturers there have the incentives to flood the zone with product.
Americans will find it hard to compete with that kind of capacity. As imports rise, the native auto industry will whither at a time when a new auto industry is being born.
Call it an opportunity lost.
Good luck building a Ford F-150 Lighting, or even some Teslas, without a Chinese battery powering it. There is no such thing as an American EV battery company. Tesla‘s home-grown 4680 battery is not produced at scale yet. And unless a U.S. company can invent a better, longer lasting battery that charges fast in freezing weather, there will never be an American EV battery maker that comes close to the market share of the top 10 Chinese companies. At this rate, it will be a Chinese company that invents the batteries of the future.
For now, China’s foray into the EV world here is mainly through batteries. They compete with rivals from Japan and South Korea. But cars are next.
The chassis and batteries of an electric car designed by GTECH Shanghai, on display at the Shanghai Auto Show in Shanghai.
In a 2021, billionaire Zeng “Robin” Yuqun, founder of the world’s leading EV battery company, Contemporary Amperex Technology (CATL), interviewed Neil Shen, the famed venture capitalist from China’s Sequoia Capital who said he envisioned 10 big EV companies worldwide. “Seventy percent of them will be from China,” he told Yuqun. With the exception of Tesla, the top 10 EVs sold worldwide are Chinese. (Fun fact: CATL is a portfolio company of BHR Partners, the Chinese private equity firm that Hunter Biden once worked for, and Ford’s EV battery partner.)
The Chinese EV sector is bursting at the seams. Elon Musk said in a recent investor call that, if not for trade barriers, China EVs would “demolish” the competition.
You’d be wrong.
Despite 27 percent tariffs, China’s EV sedan Polestar, which targets potential Tesla buyers, sold 12,240 cars in 2023, up 29 percent from 2022. That’s way less than Tesla’s 654,000 cars last year, but Polestar sold more than double what Arizona-based newcomer Lucid Motors sold.
Moreover, the 27 percent tariff has been muted by the Biden Administration’s decision to offer the $7,500 tax credit under the Inflation Reduction Act if consumers opt to lease a Polestar. Global EV sales are 22 percent of the auto market today, up from 13 percent in January 2023. They accounted for 7.6 percent of U.S. car sales last year, up from 5 percent in 2022 and 3 percent in 2021. EVs are expected to be more than half of all cars sold here by 2030.
The EV is China’s Trojan Horse into the global auto market. In Latin America, they already beat American brands.
China has 40 percent of the Brazilian battery-powered car market and is building name brand recognition and trust, while Mexico is China’s beach head into the U.S. There, two of the top five EVs sold are Chinese. The United Autoworkers Union sees the future. It’s not bright. They sent a letter to the United States Trade Representative on Jan. 17 expressing their disdain for EVs coming in from Mexico.
But it’s probably too late. For years, Beijing listened to Brussels and Washington talk about climate change. They heard the U.S. and Europe wanted to build a post-fossil fuel economy. China went along with it, not to help lower greenhouse gas emissions but to be the go-to manufacturer for all things “green.”
Just as the Koreans did in the 90s, and the Japanese before that, the Chinese know that a native auto industry is the stuff that makes countries rich. The EV and its supply chains are their foray into the U.S. auto market. As it is, the U.S. can barely make an EV without them.