- The Biden administration has not rescinded the Trump administration’s Chinese tariffs that impose an extra 25% on top of a 2.5% import tariff for vehicles.
- But Chinese electric vehicles are making their way into global markets (including Mexico) and soon will practically surround the United States and Canada, according to an AutoForecast Solutions special report.
- ZoZoGo CEO and Asian auto market expert Michael Dunne expects Chinese-branded models (beside Chevrolets, Buicks, Dodges, Volvos, and Polestars built there) to come to the US market no earlier than 2025.
January 2019 marked the last time Chinese automakers were on the brink of importing passenger vehicles under their own brand names into the United States.
For about a decade at that point, various Chinese automakers had displayed cars and concepts at the North American International Auto Show in Detroit, when there were still major auto shows.
In 2019, Chinese giant GAC Motor displayed its “bullet-inspired” Entranze 3+2+2 EV concept (pictured above) from a prime spot inside Detroit’s convention center. GAC also flew in a group of foreign auto journalists and a small fleet of production models: the GA4 sedan and the GS3, GS4, GS5, and GS8 SUVs, along with the GE3 battery-electric vehicle.
GAC said at the ’19 show it would begin importing its Toyota Highlander-like GS8 to the US by the first half of 2020, but that already was pushed back from an earlier goal of late 2019, thanks to the Trump administration’s new hardline tariffs.
GAC executives also attended the National Auto Dealers Association annual meeting in San Francisco later that January to line up dealers.
As the coronavirus shut down much of the globe in the first half of 2020, GAC was largely forgotten here. Similarly, Geely’s ambitious upmarket youth brand aimed in part at the US, Lynk & Co., a line of EVs designed in Sweden and to be built in China. But that plan was canceled, and the brand name was relegated to electric scooters.
When the Inflation Reduction Act became law in 2022, its expansive environmental component included strict local sourcing and manufacturing requirements that place imported electric vehicles at a great disadvantage: They would not be eligible for tax credits that could reduce an EV’s sticker price by as much as $7500.
On top of that, the Biden administration has not rescinded the Trump administration’s Chinese tariffs that impose an extra 25% on top of a 2.5% import tariff.
So the United States won’t see Chinese-branded EVs any time in this decade, right? IRA tax incentives run up through 2030 and depending on the political climate by then, could be extended for years.
But Chinese electric vehicles are making their way into global markets and soon will practically surround the United States and Canada, according to an AutoForecast Solutions special report in September, “Cars from China are Coming.”
Global Vehicle Forecasting Vice President Sam Fiorani writes that under the country’s Belt and Road initiative, Chinese automakers first began exports to countries in South America, Africa, and southeast Asia.
“As the vehicle quality improved, these OEMs branched out into Eastern Europe, India, and Mexico. Success has been swift and primary markets in Western Europe are the next great target.”
AutoPacific’s president and chief analyst, Ed Kim, says he spots Chinese cars with Mexican plates from around his Southern California office all the time.
Mexican policy “has increasingly favored Chinese imports,” Kim says, and not just automobiles, “to help fight the effects of inflation.”
Chinese brands broke into the Mexican market in 2017, according AFS. Vehicles built in China, mostly sold under the Chevrolet, Dodge, and Ford brands, have reached 18.5% market share there, “but the Chinese brands are growing quickly. In just its third year on the market, (SAIC’s) MG has grown to 4.1% with the support of the MG5, MG GT, and MG ZS. Privately held Chery launched this year and took 3% of the market thanks to the Omoda 5, Tiggo 4, and Tiggo 7 crossovers.”
Chinese-built 2023 XPeng P7 EV.
Kim notes that the Chery brand is called “Chirey” in Mexico because Malcolm Bricklin owns the name Chery in North America. Bricklin’s Visionary Vehicles signed a deal in 2005 with Chery to sell its cars here, but the deal had soured by 2008.
“Given Chinese automakers’ global ambitions and also because the Chinese economy is flattening out, expansion has an existential purpose and will be important to their continued growth and survival,” Kim says via email. “Through whatever means, Chinese automakers will eventually sell in the US market.”
ZoZoGo CEO and Asian auto market expert Michael Dunne expects Chinese-branded models (beside Chevrolets, Buicks, Dodges, Volvos, and Polestars built there) to come to the US market no earlier than 2025. But that first Chinese vehicle in the US would almost certainly have to be an ICE model.
From the outside looking in, the Chinese auto industry seems to have moved on to EVs, with “at least” 40 of the country’s 138 automakers building only battery-electrics, according to the Chinese Association of Automobile Manufacturers.
The trade group says China purchased 6.8 million EVs in 2022, which is 6 million more EVs than were sold in the US last year.
China’s EV market is so advanced that obsolete electric vehicles are rusting on large fields outside big cities there, Bloomberg reports.
“Given the insane amount of innovation happening in Chinese EVs right now, and because many global automakers remain somewhat blissfully unaware of just how ahead of the game many of these new Chinese EVs are, we could be looking at a repeat of the Japanese automakers’ arrival in the 1970s and 1980s,” AutoPacific’s Kim says.
Just as Hyundai and Kia built factories in the US despite their cost disadvantage versus South Korea, Chinese automakers could consider constructing factories in Mexico, where their business is growing quickly, to build cars for the US market without the high tariffs.
“It will be tough, but not impossible, for a company like BYD or GAC to enter the US market,” AFS’ Fiorani says. “They’re already selling in good numbers in Mexico. Once they get those volumes high enough, they’ll open a local plant. With local content, they can get around the 25% tariff. JAC already assembles locally, but their products are not competitive enough to tap into the US market. BYD and Great Wall Motors are far more likely to work in the US.”
As an EV shopper, are you ready to consider a Chinese-brand vehicle? Please comment below.
Contributing Editor
As a kid growing up in Metro Milwaukee, Todd Lassa impressed childhood friends with his ability to identify cars on the street by year, make, and model. But when American automakers put an end to yearly sheetmetal changes, Lassa turned his attention toward underpowered British sports cars with built-in oil leaks. After a varied early journalism career, he joined Autoweek, then worked in Motor Trend’s and Automobile’s Detroit bureaus, before escaping for Mountain Maryland with his wife, three dogs, three sports cars (only one of them British), and three bicycles. Lassa is founding editor of thehustings.news, which has nothing to do with cars.
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