The push to phase out gasoline-powered cars and trucks in the United States and Europe has created an opening for China — and Western countries are deeply divided on how to respond, write David Ferris and Joshua Posaner. The U.S. is trying to keep China out of its emerging EV market, while Europe has created a welcoming environment for Chinese carmakers with lower tariffs and subsidies for battery-powered imports. On both sides of the Atlantic, the threat of China cornering yet another global market is at the center of policy debates about trade, jobs and the climate fight. China has become a true rival for Western auto giants, with the manufacturing capacity to lock up market share for electric cars around the world. Or, as Ford CEO Jim Farley put it at a recent finance summit, “The Chinese are going to be the powerhouse.” As of last year, 5.4 million electric vehicles — two-thirds of the world total — were registered in China. BYD, a Chinese maker of both clean cars and the battery cells that power them, sold nearly 2 million cars in 2022, far more than the 1.3 million that Tesla reported. A growing foothold in the West Chinese companies are gaining ground even in the U.S., despite Washington’s trade barriers — though not under their own brand names. The Chinese carmaker Geely, for example, owns the Swedish automobile manufacturer Volvo and its luxury EV affiliate Polestar, which is building a factory in South Carolina. Still, U.S. tariffs have made the country almost three times more expensive for China-built vehicles than the EU market. European bind In contrast, the European Union’s comparative openness is stirring fears about how a flood of inexpensive imports from China would affect the bloc’s economy, as well as a rift between France and Germany on whether to explore potential tariffs against Chinese-made EVs. Cars are Europe’s largest industry and biggest employer, accounting for 10 percent of manufacturing activity. China’s advantages, including its huge domestic market and mastery of battery cell technology, will be hard to overcome. “[Chinese companies] are leveraging their specific product know-how over incumbent European brands that employ a lot of people to make engines,” one automotive manager told David and Joshua. To match that kind of efficiency, the manager said, “VW would have to lay off half of its staff.”
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