China has dominated EV sales over the years, but it has primarily been in its domestic markets. Will these automakers be able to compete for the production of electric cars for American customers? Let’s take an in-depth look at Chinese electric cars in the United States.
Are there any electric cars made in China?
China entered the automotive market many decades after the US. with its internal combustion engine engines as the primary power source. This vast Asian country only sold cars on Chinese soil.
Now that they have gotten into EV technology, there are more opportunities to reach American markets and other countries. They are currently not selling Chinese electric cars in the United States.
Technically speaking, the answer is no. American automobile manufacturers don’t sell electric vehicles directly from China. But, the Polestar brand is manufactured by Volvo, which was purchased by Zhejiang Geely Holding Group.
The vehicles were built in China and then exported to the U.S. (and many other countries) for sale. The Polestar 3 will soon be manufactured at the Volvo plant in South Carolina.
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What is stopping Chinese automakers from promoting EVs in America?
There are two main reasons we don’t see too many Chinese carmakers producing cars for the North American marketplace. The first is the “chicken taxes,” an old concept. This is a tax that certain companies pay for imports to the United States.
The tariff was created in 1960 after other countries imposed a VAT on U.S.-chicken sold in European markets. Lyndon Johnson took a stand against the rising prices by raising tariffs by 25% on certain goods. The Washington Post reports that it is still being implemented today, despite some modifications made over time.
Another recent issue is the Inflation Reduction Act (2022). Previously, EVs were sold with a federal tax credit as an incentive to use electricity. But, the U.S. has changed what electric vehicles are eligible for in this new law.
Today, the credit is limited to EVs that are produced in North America. This excludes markets like China, Russia, Iran, and others.
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Chinese electric car companies will sell in North American Market?
Despite trade tariffs being imposed and the elimination of the federal tax credit, some Chinese electric cars carmakers plan to enter the United States marketplace. Some companies plan to relocate their manufacturing plants to the U.S. in order not only will they be able to avoid higher production costs but also because the cars will be produced here instead of in China.
Nio is a Chinese automaker. It currently sells vehicles to Norway. But plans are in place to soon reach North American customers. The company was initially going to make gasoline-powered cars but will soon move to EVs.
Another Chinese company that sells cars is XPeng. However, the company’s sales are primarily focused on Norway. It will then move to Sweden or the Netherlands. While no immediate plans have been made for the American marketplace, other Chinese automakers may move west.
China sells a lot in the European and domestic markets. But, because of some limitations, selling on U.S. soil is very difficult. However, this is about to change as many Chinese automakers will be moving their operations to the United States within the next few decades.