by Jennifer Mapes-Christ
May 15, 2024
While the tariffs on Chinese-made EVs are attention-grabbing politically, they currently affect a limited number of products available in the US market.
May 15, 2024 — The US government’s recent announcement of tariffs on Chinese imports of electric vehicles (EVs) and EV batteries has sparked significant interest and debate within the automotive industry and those interested in green development.
Elliott Woo, Global Equipment Analyst for The Freedonia Group notes, “The battery tariffs are the component that could be more immediately impactful, as Chinese imports still account for a large share of the market. However, it’s also kind of ‘more of the same,’ since these batteries have been facing tariffs already. There could be some short-term pricing shock from the hike, but it doesn’t seem like it changes much for overall industry strategy.”
He further noted that US automakers with EV offerings were already making substantial investments in domestic EV battery manufacturing, spurred in part by the Inflation Reduction Act, which was signed into law in August 2022. In 2019, there were only two EV battery production facilities operating in the US, but as of late 2023 nearly 30 EV production facilities were either in operation in the US, under construction, or in development, along with a number of supporting materials and component plants as well. These investments are expected to come online in the next several years, bolstering domestic supply chains.
Chinese EV battery manufacturers have already been exploring alternative strategies to mitigate the impact of tariffs. One notable approach is setting up offshore manufacturing facilities in third-party countries where they won’t be subject to US tariffs.
According to Woo, “The huge tariffs on Chinese-made EVs are interesting, but don’t affect many products that actually exist right now. There just aren’t a lot of exports of Chinese EVs to the US.”
While the tariffs on Chinese-made EVs are attention-grabbing politically, they currently affect a limited number of products available in the US market. For instance, while Tesla produces a significant number of EVs in China, these are not exported to the US. The impact is likely to be forward-looking instead as the competitive landscape is evolving rapidly.
Woo called this development a timely subject as “there are a bunch of up-and-coming Chinese automakers that are rapidly growing EV production. These companies seem to be quickly expanding into export markets in Southeast Asia, and exports to high-income Western nations are on the horizon. BYD announced plans for something for the European market just last week.”
In summary, while the current tariffs may not significantly impact existing sales, they address a potential shift for the future. As Chinese automakers expand their export footprint, the dynamics of the industry could change.
For more information, please see The Freedonia Group’s Automotive & Transport reports, including Global Hybrid & Electric Vehicles, Global Automotive Batteries, Global Electric Vehicle Charging Stations, Global Hybrid & Electric Vehicle Sensors, Global E-Bikes, and Global Motor Vehicle Outlook 2023.
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The Freedonia Group, a division of MarketResearch.com, is a premier international business research company, providing clients with product analyses, market forecasts, industry trends, and market share information. From one-person consulting firms to global conglomerates, our analysts provide companies with unbiased, reliable industry market research and analysis to help them make important business decisions. The Freedonia Group’s brands also include Packaged Facts, a trusted provider of consumer market research on food & beverage, pet products and services, demographics, and financial services, and Simba Information, the leading authority for market intelligence and forecasts on the education and professional publishing industries. Find off-the-shelf studies at https://www.freedoniagroup.com/ or contact us for custom research: +1 440.842.2400.
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