Automakers in the United States and their supporters welcomed President Biden’s tariffs, saying they would protect domestic manufacturing and jobs from cheap Chinese vehicles.
Only a few vehicles — electric or gasoline — are imported to the United States from China. One of those is the Polestar 2.Credit…Aly Song/Reuters
The Biden administration’s new tariffs on Chinese electric vehicles won’t have a huge immediate impact on American consumers or the car market because very few such cars are sold in the United States.
But the decision reflects deep concern within the American automotive industry, which has grown increasingly worried about China’s ability to churn out cheap electric vehicles. American automakers welcomed the decision by the Biden administration on Tuesday to impose a 100 percent tariff on electric vehicles from China, saying those vehicles would undercut billions of dollars of investment in electric vehicle and battery factories in the United States.
“Today’s announcement is a necessary response to combat the Chinese government’s unfair trade practices that endanger the future of our auto industry,” Senator Gary Peters, a Michigan Democrat, said in a statement. “It will help level the playing field, keep our auto industry competitive and support good-paying, union jobs here at home.”
On Tuesday, President Biden announced a series of new and increased tariffs on certain Chinese-made goods, including a 25 percent duty on steel and aluminum and 50 percent levies on semiconductors and solar panels. The tariff on electric vehicles made in China was quadrupled from 25 percent. Chinese lithium-ion batteries for electric cars will now face a 25 percent tariff, up from 7.5 percent.
The United States imports only a few makes — electric or gasoline — from China. One is the Polestar 2, an electric vehicle made in China by a Swedish automaker in which the Chinese company Zhejiang Geely has a controlling stake. In a statement, Polestar said it was evaluating the impact of Mr. Biden’s announcement.
“We believe that free trade is essential to speed up the transition to more sustainable mobility through increased E.V. adoption,” the company said.
In the first quarter of this year, Polestar sold just 2,200 vehicles in the United States. Later this year, however, it is scheduled to start producing a new model, the Polestar 3, at a South Carolina plant operated by Volvo Cars, which Geely owns.
Volvo sells a Chinese-made plug-in hybrid sedan, the S90 Recharge, in the United States, and plans to start importing a new small sport utility vehicle, the EX30, to the United States from China this year. The car is expected to start at $35,000, making it one of the most affordable battery-powered models available in the country. The model has quickly become Volvo’s top-selling vehicle in Europe.
Volvo said on Tuesday that it was evaluating the potential impact of Mr. Biden’s new tariffs on its plans.
Internal combustion models that are made in China and sold in the United States include the Buick Envision S.U.V. made by General Motors, and Ford Motors’ Lincoln Nautilus. They are unaffected by the tariffs.
Tesla, G.M., Ford, Volkswagen, Hyundai and several other automakers have invested tens of billions of dollars in battery and electric vehicle factories in the United States. But with the exception of Tesla, automakers in the United States, Europe and Japan trail Chinese companies in scale, raw materials production and key technologies.
Contemporary Amperex Technology Company Limited, or CATL, the Chinese manufacturer that is the world’s largest producer of electric car batteries, said last month that it had developed a battery that could charge up enough in 10 minutes to allow a car to travel about 370 miles — a major leap compared with the batteries used by established Western and Asian automakers, including Tesla.
China’s lead in electric vehicles, which are seen as central to the auto industry’s future, has spurred concerns that Chinese cars could hit the U.S. market at prices that G.M., Ford and other traditional automakers wouldn’t be able to compete with.
BYD, a leading and fast-growing Chinese car and battery company, already sells a compact electric car, the Seagull, for less than $15,000 in China. And on Tuesday, it said it would begin selling a plug-in hybrid pickup truck in Mexico, although it added that it did not yet plan to sell the vehicle in the United States.
Chinese automakers like BYD, Geely and SAIC have been increasing car exports to Europe, Latin America and various Asian countries. The European Commission, the executive arm of the European Union, is investigating Chinese state subsidies to electric carmakers.
Some representatives of the U.S. auto industry have said the Chinese government’s support of its automakers has left factories there with the capacity to make vastly more cars than can be sold in the country.
“They’ve got a major E.V. overcapacity problem,” said John Bozzella, president of the Alliance for Automotive Innovation, the main lobbying arm for U.S. automakers.
“They’re building too many E.V.s — too many heavily subsidized E.V.s — for the domestic market and have no choice but to look abroad to offload those vehicles at budget prices,” Mr. Bozzella added. “The competitiveness of the auto industry in the U.S. will be harmed if heavily subsidized Chinese E.V.s can be sold at below-market prices to U.S. consumers”
Chinese officials have denied that the country is overproducing electric vehicles, solar panels and other products targeted by the Biden administration. “We hope the U.S. can take a positive view of China’s development and stop using overcapacity as an excuse for trade protectionism,” a spokesman for the Chinese Embassy in Washington, Liu Pengyu, said on Tuesday.
Automakers have already had a taste of how price competition can disrupt their electric vehicle plans. Over the last year, Tesla has cut prices on its models several times, reducing the costs of some models by more than 20 percent in total. Those cuts, combined with a slowdown in the growth of electric car sales, have made it extremely hard for G.M. and Ford to make money on battery-powered models.
In the first three months of the year, Ford’s electric vehicle division lost $1.3 billion before taking into account some expenses. Both Ford and G.M. have slowed electric vehicle production and delayed the introduction of new models. While G.M. is losing money on electric cars, the company has said it expects those vehicles to begin generating profits later this year.
The Biden administration has sought to support and encourage the production of batteries and electric vehicles in the United States to address climate change and encourage more domestic manufacturing.
China isn’t the only obstacle in the way. Americans’ enthusiasm for electric cars has waned over the past year, mainly because such vehicles sell for relatively high prices. Some buyers are also reluctant to buy because they are not sure there will be enough places to charge those cars easily and quickly.
In the first quarter of this year, 269,000 E.V.s were sold in the U.S. market, according to Kelley Blue Book. That was an increase of just 2.6 percent from a year earlier. Total sales of cars and light trucks grew more than 5 percent to 3.8 million vehicles.
“In a lot of ways, buying an E.V. requires a lifestyle change,” said Jessica Caldwell, executive director of insights at Edmunds, a market researcher. “A lot of people just say, ‘I don’t want the hassle of an E.V.’”
