Miles apart: U.S. and Europe diverge on Chinese EVs (2023)

“The U.S. has not outright hung up a ‘Do Not Invest’ sign, but we have made it clear we are anxious about Chinese car companies,” said Scott Kennedy, an expert in Chinese economic policy at Washington’s Center for Strategic and International Studies. “Europe has been much less interventionist and more supportive.”

The U.S. imposes a stiff 27.5 percent tariff for Chinese-made cars — put in place during Donald Trump’s presidency — and has buttressed that with the protectionist tax credits of President Joe Biden’s Inflation Reduction Act, which put a premium on car and battery production in North America. In addition, hostility toward Beijing from leaders in both political parties would make it difficult for Chinese carmakers to penetrate the U.S. market, at least openly.

Meanwhile, Europe’s moves have, intentionally or not, provided a strategic opening for China’s startup car brands. The bloc’s tariffs on imported cars are only 10 percent, and European national subsidies for electric vehicles apply to imports as well as domestically made cars and trucks.

The attraction of the European market for electric vehicle makers is magnified by the E.U.’s recent decision to ban the sale of new combustion engine cars starting in 2035 — a decision the U.K. has also followed.

That’s why it’s possible to see a BYD-branded car in Dusseldorf, but unlikely in Dallas. BYD, a maker of both clean cars and the battery cells that power them, sold nearly 2 million cars last year (way more than Tesla). It’s one of many Chinese brands moving into the European market.

“Europe’s [electric vehicle] market is comparatively far more open than those of China and the U.S., where national or regional assembly is a prerequisite to qualify for purchase subsidies and import duties on foreign vehicles are higher,” said a recent report by the Allianz insurance company on the threat Chinese carmakers pose to the E.U.

The Chinese challenge

The reputation of China’s carmakers has rapidly shifted, from being seen as making low-quality knock-offs to becoming a true rival for Western brands. Its domestic market dwarfs any other, selling 27 million cars last year, compared with 13.75 million cars and light trucks in the U.S. and 9.25 million cars in the E.U.

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The country’s lead in electric vehicles is even more pronounced.

Last year, 5.4 million battery electric vehicles — two-thirds of the world total — were registered in China. It also controls some 76 percent of global battery cell production capacity and has a fierce grip on the raw materials used to make them. That offers the country’s carmakers a strategic advantage and the ability to build EVs at a cost-slashing scale.

And it has already grabbed a foothold in the U.S. market, despite Washington’s trade barriers: The Chinese carmaker Geely owns the Swedish automobile manufacturer Volvo and its luxury EV affiliate Polestar, which is building a factory in South Carolina.

Ford CEO Jim Farley has no illusions about what China means for his industry.

“We see the Chinese as the main competitor, not GM or Toyota,” Farley said at a finance summit hosted by the investment bank Morgan Stanley. “The Chinese are going to be the powerhouse, I think.”

The fact that Ford — with auto plants in the U.S., Europe and China — is not preoccupied with Toyota (the world’s largest automaker) or General Motors (its leading domestic rival) is a clear signal of how the carmaker assesses the threat from Chinese mass market EVs.

Several trends back up Farley’s assessment.

Last quarter, for the first time in history, China surpassed Japan to become the world’s leading auto exporter, according to China’s General Administration of Customs.

“The quality and value for Chinese cars has improved by leaps and bounds, especially in the last three years,” said Michael Dunne, an independent automotive consultant active in the U.S. and China.

At April’s Shanghai auto show, Chinese EVs made global headlines, from the high end — the glitzy HiPhi Y SUV — to the low, like BYD’s Seagull, a hatchback with a minuscule $11,400 price tag.

“It reminded me of the heydays of the Tokyo auto show in the ‘80s,” said Joe Langley, an auto forecaster and analyst with S&P Global Mobility. He spoke of the era when Japanese automakers remade the global automotive order by producing small, reliable cars like the Toyota Corolla and the Honda Civic.

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China’s potential for disruption is perhaps even greater — especially in Europe.

Europe’s friendly shore

The E.U.’s 2035 clean car mandate — echoed in the U.K. — is the opening Chinese brands needed. Sales are also driven by comparatively generous purchase premiums in some richer countries like France, Germany and the Netherlands.

Chinese firms plowed $24 billion into the EV ecosystem in Europe last year — representing more than half of all of China’s direct investment into the continent, according to a report by the global consultancy Rhodium.

“Europe has few major battery firms of its own and is still very open to Chinese investment in the industry,” the report said.

China’s auto exports are still tiny, representing around 3.5 percent of European auto sales last year, according to S&P. But Transport & Environment, a green nongovernmental organization, reckons that Chinese firms could grab 9 percent to 18 percent of the all-electric car market by 2025.

Germany’s national statistics office said in May that imports of China-made electric vehicles (from both domestic brands and Western carmakers like Volkswagen building in China) represented 28 percent of all its EV imports in this year’s first quarter. That’s three times higher than the same period in 2022.

China’s advantage is twofold. Its EV producers don’t carry European automakers’ legacy costs of transitioning away from combustion engines. And with its vast domestic market, China has cracked the code on inexpensive production of battery cells — the main cost of an EV.

“They are leveraging their specific product know-how over incumbent European brands that employ a lot of people to make engines,” said one senior automotive manager granted anonymity as they are not cleared to talk publicly. To match that kind of efficiency, “VW would have to lay off half of its staff.”

The risk to Europe’s economy is extreme. Cars are the continent’s largest industry and biggest employer and account for 10 percent of manufacturing activity.

Car exports have generated a trade surplus of between €70 billion and €110 billion every year over the past decade for the European economy, the Allianz report said.

The prospect of that trade surplus evaporating is leading to growing pressure on the European Commission — the executive branch of the E.U. that’s responsible for trade policy for its 27 member countries — to boost tariffs on foreign cars.

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That’s creating divisions within the bloc. For example, French-backed carmakers are seeking a higher protective barrier, while German ones — reliant on car sales in China and worried about Beijing’s retaliation — hold their tongues.

The American moat

The outlook for China’s EV makers in North America is drastically different.

The tariff makes U.S. market access almost three times more expensive for China-built vehicles than the E.U.

And suspicion of China is so pervasive among both Republicans and Democrats that it is spilling over into related areas of policy. The specter of Chinese imports is one argument that U.S. carmakers are using to caution the U.S. government against creating E.U.-style clean car sales regulations.

“If U.S. regulators and policymakers move too fast on EV mandates over the next several years, I predict China gains a stronger foothold in America’s EV battery supply chain and eventually our automotive market,” said John Bozzella, America’s chief car lobbyist at the Alliance for Automotive Innovation.

Republican lawmakers in Washington have struck similar notes, seeing an opportunity to use the president’s climate goals against him. “Joe Biden’s obsession with electric vehicles … is turning over American power and money to China,“ Republican Sen. John Barrasso (R-Wyo.) said on the Senate floor in February.

But Biden is making his own efforts to blunt China’s influence over the U.S. auto industry, one of the aims of the Inflation Reduction Act he signed last year. The bill’s stringent sourcing rules include specific prohibitions on tax incentives for electric vehicles made outside North America.

An obvious solution for China’s automakers would be to set up factories on North American soil. That’s already happening in Europe, and some Chinese car companies, along with battery-makers, have explored that option for the Americas.

Polestar’s South Carolina factory aims to produce all-electric SUVs for the North American market — and the company notes that means they qualify for the IRA tax credit.

The bar is higher for Chinese car companies without a protective Swedish name.

“Mention the word ‘China’ to a member of the House or Senate, Democrat or Republican, the executive branch, they will give you the same look and say, ‘No, not welcome here,’” said Dunne, the independent automotive consultant.

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The new instinct for many lawmakers in Washington is to jump at even the appearance of Chinese influence — a choice that paradoxically could hinder the development of a U.S. battery supply chain, a chief goal of the landmark climate law that Congress passed last year.

The most recent casualty of anti-China sentiment is Microvast, a Texas company that won a tentative $200 million grant from the Biden administration to build a battery component factory in Tennessee. The government said the goal of the award was “bolstering domestic supply chains for lithium-ion batteries and creating well paying jobs in the United States.”

But last month, Biden’s Energy Department announced with little explanation that it would not award the money after all. The proposed grant had drawn ferocious criticism from congressional Republicans because of the company’s ties to China, including a Microvast subsidiary there.

Ford got similar pushback in February when it said it would work with CATL, a giant Chinese battery-maker, to build a battery plant in Michigan. Ford insists it is just licensing the technology and that CATL will have no role in the factory.

Farley, Ford’s CEO, delicately objected to the criticism in his appearance last month at the Morgan Stanley conference. Like other automakers, Ford is working hard to deliver the features Americans demand in an EV, like longer range. Chinese companies may be best suited to deliver those advantages.

“They have some of the best battery technology,” Farley said of the Chinese. “If localizing their technology in the U.S. gets caught up in politics, you know, the customer is really going to get screwed.”

Similar concerns exist in Europe.

William Todts, the head of Transport & Environment, wants as many people as possible to switch to EVs, but not while gutting the continent’s most important industry.

“The goal is not to obstruct ambitious car and battery makers: the world sorely needs them. It’s to ensure intense but fair competition,” he wrote in a policy paper, adding that if the E.U. doesn’t act to block unfair competition from both China and the U.S., “Europe may well be on course to become a dumping ground for subsidized Sino-U.S. EVs and batteries.”

A version of this report first ran in E&E News’ Energywire. Get access to more comprehensive and in-depth reporting on the energy transition, natural resources, climate change and more in E&E News.


What is the EV market share in Norway 2023? ›

In May, 80.7% of cars sold in the country were fully electric. This is down slightly from the 2023 average of 83%, but higher than last year's May numbers, which stood at 73%.

What is Norway's share of electric cars? ›

Norway is racing ahead with its share of fully electric cars

As of 2021, Norway has done the best by far in its progress towards zero emissions. In that year in Norway, 15.5 per cent of all cars were fully electric. This rate was just 0.8 per cent in the EU as a whole.

Is it free to charge an electric car in Norway? ›

In addition to all these privately owned charging stations, there are also some publicly owned EV charging stations. While Norway does provide a lot of free goods and services, free charging of your EV is not one of them, so you still need to pay.

Who has the largest EV market share? ›

Tesla will remain the most significant player in the US EV market, but Ford, GM, and Stellantis are projected to be the biggest share gainers. Ford and GM are both projected to reach 14% EV market share in the US, while Stellantis, which has been slower than its rivals, is expected to hit 8%.

Which country has the most EVs per capita? ›

Last year, Norway had the highest number of EV sales per capita, with 20 cars purchased for every 1,000 people, accounting for 65% of all car sales7.

What is the share of electric vehicles in Germany? ›

Plug-in electric car registrations in Germany – April 2023

BEVs: 124,476 – up 18% at 14.3% market share.

What is the share of electric vehicles in Switzerland? ›

Passenger cars accounted for around three quarters of this stock; for some time there has been a trend towards hybrid and electric vehicles. In 2022, almost 110 800 all-electric vehicles were registered, representing 2.3% of all passenger cars. The canton of Zug had the highest rate of electric vehicles at 4.6%.

What percentage of cars in Sweden are electric? ›

Sweden is the country with the most spectacular rise in the last twelve months: going from about 57,500 electric passenger car registrations in 2021 to almost 95,000 in 2022. That is, from 19.1% to 33% market share (among newly registered vehicles).

Do electric cars pay tolls in Norway? ›

Since Norwegian authorities wish to encourage people to have electric cars, you may get other perks depending on where you are. In certain cities, electric cars can drive in bus lanes, or park for free. Sometimes, they are exempted from road tolls, or benefit from a reduced fare on ferries.

How much does it cost to fully charge a Tesla in Norway? ›

The prices depend on the locations, but in general, are considered competitive. In the video, Bjørn Nyland shows a price of 4.95 NOK/kWh or €0.49/$0.52 (Membership pricing) at a 150 kW Supercharger.

Is Tesla supercharging free in Norway? ›

Tesla is offering free Supercharging for select sites in Europe to “avoid the rush this winter holiday.” Free Supercharging will be available along travel routes in France, Germany, Norway, and Sweden.

What is the best-selling EV in the world? ›

For the first time ever, an all-electric vehicle — specifically the Tesla Model Y — is now the world's bestselling car. According to analyst data from Jato Dynamics (published by Motor1), the Tesla Model Y has surpassed Toyota's RAV4 and Corolla models to top global sales rankings in the first quarter of 2023.

Who is the largest EV manufacturer in USA? ›

Tesla built 1.3 billion EVs in 2022, the most by a U.S. company and second most in the world. Tesla built the highest number of battery electric vehicles in 2022. Volkswagen, GM, and Stellantis round out the top five EV manufacturers.

What happens to old electric car batteries when they are used up? ›

Yes, when EV batteries reach the end of their working life, they will be recycled. In the US, when the typical 8- to 10-year battery warranty has expired, most EV providers can reuse the batteries for a second or third time.

What US state has the most EVs? ›

California. It's probably not too surprising that California is the long-time leader in EV registrations. The Golden State was still on top back in 2017, when it had 8.64 EV registrations per 1,000 people, and that number has since more than tripled.

What state has the most electric cars? ›

California's status remains unchanged from 2021, when the DOE reported that it was the top state for EV registrations, followed by Florida, Texas, Washington, and New York.

Which country has the best EV policy? ›

The EV-frontrunner Norway is one of the countries with the most lucrative EV incentives in the world. Norway has been implementing incentives to buy electric vehicles – import and VAT tax exemptions – since the 1990s.

What percentage of EV sold in Norway? ›

In 2022, 79.3 percent of all new cars sold in Norway were 100 percent battery-electric powered vehicles.

What percentage of cars sold in Norway are EV? ›

EVs counted for 80% of car sales in Norway, but northernmost region lags behind. Four out of five new passenger cars sold in Norway in 2022 were all-electric, placing the country well on schedule towards the goal of ending sales of fossil fuel vehicles by 2025.

What is the EV target for 2025 in Norway? ›

The Norwegian Parliament has decided on a national goal that all new cars sold by 2025 should be zero-emission (electric or hydrogen). By end of 2022, more than 20 percent of registered cars in Norway were battery electric (BEV). Battery electric vehicles held a 79.2 percent market share in 2022.

What is the global EV sales forecast for 2023? ›

The International Energy Agency expects over 14 million EVs to be sold globally in 2023, which would account for about 18 percent of total car sales for the full year, as reported by CNET.


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