Chinese car manufacturers are prepared to take over the United States electric vehicle market due to a variety of reasons. After many years of talking about setting up shops throughout the United States, the Chinese companies are just about ready to move to the U.S.. These Chinese companies have already eliminated the American car manufacturers in China, offering better quality and even less expensive electric vehicles for their customers. They have even started to export a few of their brands to Europe as well.
Some of the biggest companies within the Chinese car industry like Nio and Geely raise the question as to whether they are able to overcome the political frictions, and even if American buyers would invest in these foreign vehicles. Based on the Shanghai auto show, Martin French, managing director at the consultancy Berylls, the Chinese companies pose a very real threat to major United States companies like Ford and GM. The Chinese electric vehicle industry had increased exponentially in the past few years. In 2022 alone, the United States EV sales had hit a new high of 800,000, which led the Chinese market to snap up five million all electric passenger vehicles. Tesla had a monopoly on the electric car market, until the recent emergence of Chinese company, BYD.
Japanese car companies like Toyota and Honda had invested in affordable and fuel efficient vehicles during the 1970s that had U.S. carmakers on their heels. Korean brands like Hyundai and Kia have recently been increasing in sales in the SUV market. Based on past history, China is poised to take the electric vehicle market by storm based on the lower price point.
However, one major problem still persists, political tension. This is an issue that both Japanese or Korean companies did not have to face in the past. In addition to the traditional anxiety from consumers who are less likely to support a Chinese brand, lawmakers are also likely to apply more scrutiny to a Chinese company planning to operate in the United States.
One major issue is an import tariff of 27.5% established during the Trump administration. However, the Biden administration tax credits for electric vehicle purchases are partial towards vehicles built in North America, particularly those that have battery components that are not from China.
Many United States car companies have been publicizing a long-range electric vehicle that is priced at or below $30,000 – to the consumers dismay, this has yet to happen. However, Chinese brands are simply unrivaled in affordability throughout China and in Europe. One of the most popular electric vehicle in China’s market is the Wuling Hong Guang Mini, which is a small city car, priced at the equivalent of $5,000. BYD had also launched the Seagull with 190 miles of range, and it priced less than $11,000. Even while the cars are priced lower than many electric vehicles on the market, the Chinese vehicles aren’t skimping on the quality of the vehicles.
The Chinese companies are planning to come to America soon, but domination won’t be immediate. Companies will more than likely test the market with low-volume launches, and will study the market before fully investing in the market. The car makers most likely to break through are Geely and BYD. Furthermore, Polestar, which is a Swedish EV brand owned by Geely and Volvo imports from China. Nio, which is currently a startup, will enter the United States market by 2025.
Overall, there are a number of reasons as to why the Chinese electric vehicle companies will be able to enter the United States auto market as a force to be reckoned with. The companies offer a cheaper electric vehicle that also performs at a higher level compared to companies like Ford and GM.
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