Tesla remains the world’s global leader on EV sales, but such is the competitiveness of China’s EV industry that CEO Elon Musk has called for import tariffs to protect the remaining global car industry.
“Chinese car companies are the most competitive car companies in the world,” Musk said on Tesla's fourth quarter earnings call. “Frankly, I think if there aren't trade barriers established, they will pretty much demolish most other car companies.”
Both the US and the EU are investigating whether to apply further tariffs beyond those already imposed on cars imported from China.
However, the UK's standpoint is less clear, as it grapples with the need to both protect its car makers and encourage the sale of cheaper EVs to boost their appeal to less affluent private buyers.
The US needs to do more to protect its car industry from the dominance of China in EVs, the country's trade representative, Katherine Tai, said earlier this month.
Her comments – which suggest the US is thinking of increasing its tariffs on Chinese EVs from the current 25% – follow the EU’s announcement in September that it was opening an investigation into the extent of Chinese state support for the industry.
"Global markets are now flooded with cheaper electric cars, and their price is kept artificially low by huge state subsidies," said European Commission president Ursula von der Leyen at the time.
Vehicle exports out of China rose sharply in 2023, up 58% to 4.9 million, according to the China Association of Automobile Manufacturers, making it the largest exporter in the world, ahead of Japan and Germany.
Of those, the majority are still combustion-engined cars, but the share of ‘new energy vehicles' (electric cars and plug-in hybrids) rose even faster, at 78%, to account for 1.2 million of that total.
Not all of those exported vehicles are made by Chinese brands. Many come from Tesla's Shanghai plant – the source for all right-hand-drive Teslas shipped to the UK.
Aside from MG, Chinese brands are still in the early stages of market acceptance in Europe and last year accounted for just 3% of the western Europe car market, at 350,000 units, according to data from market analyst Matthias Schmidt.
Whether that number grows further depends very much on the results of the EU investigation into state aid and any subsequent decision to raise barriers to Chinese EVs. A decision is expected in May ahead of the European elections in June.
“History tells us they tend to find something, which may well result in increased trade barriers into Europe,” said Mike Hawes, CEO of the UK's Society of Motor Manufacturers and Traders. “Then the question is 'what happens to the UK market?'.”
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