Chinese EVs Could Decimate U.S. Auto Industry

“Yes, undoubtedly, it would be a bloodbath for all of American industry, not just carmakers,” he said. “Manipulative currency depreciation, product price manipulation, subsidies from non-transparent financial institutions, and a cheap Yuan allows China to protect its domestic car market while increasing the profitability of exports at the expense of Western firms.”

The current situation in Europe presents a stark warning for the United States about the dangers of a flood of Chinese EVs.

Prior to the emergence of Chinese EV companies, any European company looking to enter the Chinese market was forced to form a joint venture with a Chinese company. As Swedish Professor Bjorn Skjeggestad explained, this resulted in “the costless transfer of the know-how and capital critical for production” from European to Chinese companies.

Volvo, Skjeggestad said, perfectly illustrates this strategy. “Along with opening its first production plant in Chengdu in 2013, Volvo has already shared nearly all expertise with Chinese partners as the law required,” he said, explaining that, in about seven years, Chinese business leaders had formed a new car-producing firm “that almost entirely drew upon Sweden’s hard-won mastery and proficiency.”

Now, Chinese firms are flooding the European market with cheap EVs subsidized by the Chinese government. “Unsurprisingly, their sales skyrocketed in Europe, with competitors being knocked out, and Europe has limited tools left to deal with it.”

A new analysis from the policy group Transport & Environment suggests that China will produce 25 percent of all-electric cars for sale in the European Union in 2025. Chinese brands such as M.G. and BYD already control twenty percent of the European market share.

European leaders are now scrambling to stop the bloodbath in their own auto industry, but it may be too late. The E.U. is even considering a 25 percent “retroactive” tariff that would attempt to force Chinese firms to pay for prior sales as a solution as European car companies cut hundreds of jobs.

Industry experts have warned that China has already launched plans to circumvent U.S. tariffs by building assembly plants in Mexico. Without a more aggressive approach to trade policy, Chinese automakers could soon enjoy the same hold on the American market that they have in Europe.

Despite the urgency of the threat, however, the Biden administration has been slow to respond. Dr. Braunschweiger told me that Chinese leaders have used Biden’s obsession with creating a so-called “green revolution” against him, arguing that China’s production capacity will “support the global energy transition.” This, he said, is “Biden’s Achilles heel.”

As long as Biden is in office, his climate agenda will provide ample incentive and opportunity for China to infiltrate and undercut the American market. When it comes to auto manufacturing, the United States is indeed facing a potential “bloodbath” if Trump does not emerge victorious this November.

Ben Solis is the pen name of an international affairs journalist, historian, and researcher.