Chinese Electric Vehicles Could Subdue US Market If EPA Proposal Continues

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Industry experts warn that expanding EV mandates could strengthen Chinese industry

While Chinaโ€™s electric vehicle (EV) manufacturers have had a tough time breaking into the U.S. market, this could soon change as the U.S. Environmental Protection Agencyโ€™s (EPA) push for EVs could end up benefiting Beijing.

As the domestic market becomes increasingly saturated, Chinese EV manufacturers are looking to boost their exports abroad, with the United States being a major prospective market. The United States has been a tough nut to crack due to a 27.5 tariff percent imposed during the Trump administration which makes Chinese vehicles more expensive. In addition, the current EV tax incentives are only available for U.S.-manufactured vehicles.

However, the EPAโ€™s proposal to increase EV presence in the country presents China with an opportunity to rapidly expand in the U.S. market.

The agencyโ€™s proposal requires 37 percent of new light-duty cars and trucks to be electric battery vehicles by 2027โ€”a number that rises to 60 percent plus by 2030.

In a July 12 blog post at the Alliance for Automotive Innovation CEO John Bozzella warned that if U.S. policymakers and regulators move fast on EV mandates in the coming years, China will gain a โ€œstronger foothold in Americaโ€™s EV battery supply chain and eventually our automotive market.โ€

He pointed out that battery electric vehicles (BEV) only accounted for six percent of vehicle sales in 2022. If the EPA โ€œgets its wayโ€ and a fivefold jump in BEV is necessary in four years and a tenfold jump in six years, it would require massive quantities of minerals, a situation that considerably favors Beijing.

โ€œChina is expected to produce almost 90 percent of the anode active material and 80 percent of the cathode active material in 2030,โ€ which are the two leading components in an EV battery, Mr. Bozzella pointed out.

As such, EPAโ€™s EV targets would mean that China and Chinese-backed mineral companies in countries like Congo, Chile, and Indonesia will become critical to fulfilling the agencyโ€™s goal.

Byย Naveen Athrappully

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