U.S. EVs still more expensive than Chinese models after tariff hike

Some China-made EVs will still be cheaper than their American counterparts once the Biden Administration’s tariff hikes take effect later this month.

Driving the news: The White House’s 100% tariff increase on Chinese EV imports was confirmed last Friday and will take effect Sept. 27. However, while the policy change was implemented to address Beijing's “unfair trade practices,” certain Chinese EV models will continue to sell for less than American EVs.

• According to Joe McCabe, CEO of AutoForecast Solutions, the cheapest model made by BYD, China’s biggest EV maker, is only $12,000. A 100% tariff would put the vehicle at $24,000.

• This is still cheaper than competing models from domestic manufacturers. Currently, the only EV retailing under $30,000 in the U.S. is the 2024 Nissan Leaf. In fact, the average transaction price for an EV sold in the U.S. was $56,575 in Aug., reports Cox Automotive, down 1.2% year-over-year but up slightly from July.

Zooming in: The Biden Administration’s EV targets continue to face challenges in the U.S., with the industry dialing back investments into the sector due to weaker-than-expected sales. This is despite government support in the form of subsidies and consumer tax credits.

• One aim of the White House’s EV policies is to reduce American dependence on Chinese EV batteries, which benefit from a strong domestic supply chain. Instead, U.S. imports of China-made lithium batteries have continued to rise, jumping roughly 40% year-over-year in 2023 to $13 billion.

• Batteries account for around 30% of the price to build an EV, but manufacturers are postponing plans to build domestic facilities to lower costs. That includes General Motors, which delayed the opening of its joint venture battery plant, built alongside Samsung SDI, by another year.

Bottom line: Few EVs are currently imported into the U.S. from China, making President Biden’s policies mostly preventative in nature. But without the support of American car makers or a way to lower production costs, tariffs and subsidies will likely have a limited effect on the competition with overseas manufacturers.

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