China Electric Vehicle (EV) Brands Dream of International Success

China Electric Vehicle (EV) Brands Dream of International Success

Amid a tumultuous trade war between the US and China, one of Beijing's biggest ambitions is to become the world's leading manufacturer of electric vehicles.china electric vehicle Chinese EV makers have enjoyed years of subsidies, tax breaks and consumer incentives, in line with the ruling Communist Party's global climate commitments. That's boosted them to the point that they now vie with Tesla for leadership of the battery electric vehicle market.

As China's EV market matures, some brands have even started to dream of becoming international players — though it will be a difficult challenge.china electric vehicle For starters, they'll have to overcome the perception that their cars aren't as safe as their American competitors. Then there are the tariffs and regulatory hurdles that will need to be cleared, especially in the US, where the Biden administration has threatened to levy 100% tariffs on imported Chinese EVs, accusing them of being a threat to national security.

Despite these obstacles, Chinese brands believe they're well-positioned to make it into the big leagues, and many are already planning on expanding their operations beyond China's borders.china electric vehicle The Chinese company BYD, which produces the Yuan Plus SUV that's sold as the Atto 3 outside of China, for example, has set a goal of selling 500,000 units globally by 2025. That's a big jump from its current sales of around 100,000 annually, and would put it well ahead of other major carmakers.

But for now, Chinese EV companies are focused on establishing themselves as global brands in Europe, where demand for low-emission transportation is high.china electric vehicle Moreover, the continent's existing tariff structures offer an attractive entry path for them: The European Union levies a 10 percent "most-favored-nation" levy on car imports from all countries except the United States, which charges 2.5 percent.

As a result, the cost of Chinese EVs can compete with those from non-Chinese manufacturers. For example, the Yuan Plus costs 119,800 yuan ($16,550) in China and $19,990 in the US – about the same price as a base model Tesla Model 3. The higher prices have led to some Chinese EV companies starting ride-hailing businesses to help absorb their inventories, according to a 2021 report from Fitch Ratings Inc.

In the long run, the competitive price advantage will give Chinese EVs an important edge in their quest to become global brands. But there are a number of other factors that could slow their momentum.

For one thing, the current political animosity toward China has led to some of its EV manufacturers deciding to skip the US for now. This will likely affect the expansion plans of Chinese companies like NIO, which has removed the country from its initial plan to enter 25 markets by 2025. In addition, the tariffs and the perceived security risk have made some foreign investors wary about investing in the sector. This could have a significant impact on the growth of EVs in the US, which currently has the world's largest EV market.