The problem with EVs is they're made in China
Two-thirds of the world's EVs are made in China.
Why it matters: As the world meets in Dubai to try to get a grip on carbon emissions, the most obvious way of accelerating the shift from gas-powered to electric vehicles has run straight into a geopolitical brick wall.
Be smart: The best way to get more people to buy EVs is to make them affordable to many more people, thereby boosting demand.
- Cheaper EVs are relatively easy to find elsewhere in the world, but those EVs are Chinese, and the U.S. is determined to block imports of Chinese EVs.
By the numbers: Chinese consumers had their choice of 235 different EVs in the first half of this year, per JATO, and paid on average $35,000 for a battery-powered vehicle.
- Americans, by contrast, had only 51 EVs to choose from and ended up paying an average price of more than $70,000 — in a country where median after-tax annual household income is just $64,240.
- EVs will account for only 9% of auto sales this year in the U.S., compared with 18% in Ireland, 37% in Sweden, and 82% in Norway.
- Consumers at the top end of the market are very well-served right now. But the broad mass of Americans looking for affordable vehicles has very little to choose from.
Between the lines: Some Chinese EVs are too small or flimsy for the U.S. market — but many aren't. The four-door MG4, for instance, a sporty hatchback with up to 320 miles of range, sells on average for $38,000 in Europe.
- The $35,000 Volvo EX30, made in Zhangjiakou, is receiving rave reviews and will actually be available in the U.S. next year; its manufacturer, Geely, is willing to pay a 27.5% tariff in order to try to break into the American market.
- Chinese manufacturers have "radically improved their vehicle designs and their execution," notes Joe Langley of S&P Global Mobility.
Where it stands: The U.S. has two competing policy objectives. From a climate perspective, it should love the fact that China is capable of producing some 36 million EVs per year — a number that dwarfs North American production of just 1.2 million EVs per year.
- From a strategic perspective, however, the U.S. hates the idea that Chinese imports might undercut domestic manufacturers and further damage a nascent sector that's already struggling with unsold inventory.
What we're reading: The WSJ's Yuka Hayashi had a fascinating article that you might have missed over the Thanksgiving break.
- "Washington has effectively built a fortress to keep out Chinese EVs," she writes — but nevertheless goes on to paint a picture of the Chinese industry as "a modern day Godzilla with the power to trample on and destroy anything that gets on his path" that's planning to use "unfairly low prices" to launch "a big assault."
- The words "flood," "flooding," and "swamp" are all used to characterize what China might do to the U.S. market — and what policymakers on both sides of the aisle are determined to avoid.
What they're saying: "Global markets are now flooded with cheaper Chinese electric cars," complained European Commission president Ursula von der Leyen in a speech in September.
The bottom line: The U.S. seems determined to remain the exception to that rule, even if that means remaining near the back of the pack in terms of EV adoption.