Feb 15, 2024 - News

American automakers' Chinese EV panic

Illustration: Shoshana Gordon/Axios

Illustration: Shoshana Gordon/Axios

The Detroit Three automakers consider Chinese electric cars an existential threat even though they aren't for sale in the U.S. yet.

Why it matters: For big legacy automakers like Ford, Stellantis and General Motors, budget-priced Chinese cars represent another Tesla-like seismic disruption, Axios transportation correspondent Joann Muller reports.

  • The local automakers are reassessing their strategies and cutting budgets to stay competitive.

The big picture: The entire industry is worried about the magnitude of what Stellantis CEO Carlos Tavares calls "the China offensive."

  • Companies that can't match China's low-cost electric vehicles (EVs) "are going to be in an existential problem," Tavares told Bloomberg.
  • Even the indomitable Tesla CEO Elon Musk is concerned.

Catch up fast: China is the world's largest and fastest-growing automobile market.

  • Chinese cars have long been poorly made. But thanks largely to government support — plus access to cheaper batteries and labor — the country now makes attractive, affordable models, like the sub-$11,000 Seagull EV from BYD, the world's top seller of EVs and plug-in hybrids.

What we're watching: Chinese cars are already being exported to Mexico, and Chinese carmakers are scouting plants there, the Financial Times reported — meaning Mexico could become a back door for selling these cars in the United States.

The bottom line: Detroit has seen this movie before with Japanese and Korean rivals, which filled a need for affordable, efficient cars that consumers eventually embraced.

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