Mar 5, 2024 - Technology

White House moves to stem wave of Chinese EVs

Annual electric vehicle exports from China, by import location
Data: Atlantic Council; Chart: Tory Lysik/Axios Visuals

China's rapidly rising electric vehicle exports are forcing the White House to weigh climate goals against industrial policy — and the latter has the upper hand for now.

Why it matters: The world's second-largest economy is cranking out lots of affordable EVs, just as the White House increasingly views chargeable cars as a weapon in the fight against global warming.

  • The White House wants EVs at 50% of U.S. sales by 2030, and looming EPA rules could effectively force much higher levels soon after.

Friction point: Biden officials also want clean tech made in the U.S., a big goal of the 2022 Inflation Reduction Act.

  • Their economic pitch touts a green manufacturing surge that provides a bulwark against China. There are also fears of security threats from Chinese tech.
  • Last week the White House, warning of a "flood" of Chinese cars, announced a Commerce Department probe of security risks from "connected" vehicles from there.

State of play: Chinese-branded EVs aren't for sale in the U.S. and very few have made it here, thanks in part to 27.5% tariffs. But they still could be low-cost enough to compete.

  • And Chinese automakers potentially building factories in Mexico, which has a fluid trade relationship with the U.S., could open new avenues.

What's next: "The probe will inject uncertainty into Chinese plans to site EV manufacturing facilities south of the border, increasing investment risks and reducing the probability of [final investment decisions]," Joseph Webster of the Atlantic Council's Global Energy Center, tells me via email.

Quick take: EVs represent the deepest tensions between White House climate ambitions, economic goals and foreign policy.

  • The 2022 law tethers big consumer EV subsidies to cars with battery materials sourced domestically from free-trade partners — but not China, a dominant player in those markets.
  • There's also a political overlay. U.S. automakers see Chinese EVs as a major threat, and auto workers fear the EV transition will come at their expense.

What we're watching: The Atlantic Council's Webster, in a new post, says the U.S. and allies should develop a "joint, balanced" approach to managing competing goals.

  • Among his recommendations: an "interim" policy, while the Commerce probe proceeds, that keeps Chinese EVs with sensors from "reaching locations sensitive to U.S. and allied security."

The bottom line: "There's almost an across-the-board apprehension about Chinese EVs, even though they would make an important contribution to [lower] CO2 emissions," Gary Clyde Hufbauer, a trade analyst at the Peterson Institute for International Economics, tells Vox.

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