A trade war is currently brewing between China and the West, as both sides vie for dominance in the global market for electric vehicles. In the port city of Ningbo, Chinese car company Zeekr is making significant strides in the luxury EV market, with plans to expand beyond its borders. As a subsidiary of state-backed company Geely, Zeekr has garnered criticism from US and EU critics who argue that China’s government support gives companies like Zeekr an unfair advantage.
During a recent trip to Beijing, US treasury secretary Janet Yellen accused China of “overproduction” and “dumping” its EVs on overseas markets. This has led the European Commission to launch an investigation into whether punitive tariffs should be imposed on China’s EV industry. However, at Zeekr, the potential for tariffs is being downplayed. The company maintains that the global market is large enough for all players to coexist.
Speaking to reporters at an auto show on the outskirts of Beijing, Zeekr vice president Chen Yu explained that Chinese car companies have learned a great deal from their foreign counterparts who first entered the EV market in China. “We learned about the performance, design, culture, and everything else,” Mr. Chen stated. Now, companies like Zeekr and BYD, a major player in Chinese EV manufacturing, are challenging traditional car companies.
Mr. Chen rejected the notion that Chinese EVs are dominating the market, stating that they simply offer more diversity for local customers. However, the potential for tariffs from Europe is a cause for concern for the Zeekr executive. “If the tariff goes up, we are definitely worried about the potential challenges,” he noted.
At the auto show, car dealers and importers were impressed with China’s EVs and cautioned traditional car manufacturers that they are facing stiff competition. New Zealand car dealer Matthew Foot, who has attended the annual show for the past five years, stated, “It’s going to be very hard to beat China. They have incredible resources from the government, from lithium mines to ships and everything in between. It’s clear why Europe fears them and is considering tariffs.”
The ongoing trade tensions between China and the West will be a topic of discussion during US Secretary of State Antony Blinken’s visit to China this week. The US currently imposes a 27.5% tariff on Chinese cars, while Europe’s tariff is only 10%, causing concern for companies like VW, Volvo, and BMW. During a visit to Beijing last week, German Chancellor Olaf Scholz acknowledged the need to address questions of overcapacity and subsidy competition.
Germany, as Europe’s largest car manufacturer, is in a delicate position. It fears that if the EU imposes tariffs on Chinese cars, China may retaliate by restricting access to its market. However, more than half of all new electric cars sold worldwide are from China, and the country has the ability to produce them faster and at a lower cost than its competitors. BYD, China’s largest EV manufacturer, even surpassed Tesla in sales at the end of last year. The competition in the EV market is fierce, with staggering levels of production. BYD owns its mines, battery factories, and eight ships, while Zeekr, a smaller company, has 2,700 workers producing around 500 cars per day.
The focus on EVs is a part of Chinese President Xi Jinping’s plan to revamp the country’s debt-driven economy, known as “new production forces”. This shift involves a move away from investing in infrastructure and towards new technology. In the industrial hub of Anhui Province, local officials are not fazed by the threat of tariffs, with provincial official Pan Feng stating, “China is a big country with a big market, and it has the power and confidence to counteract these conflicts.”
Chinese buyers also have confidence in their country’s EVs, with over seven million sold domestically last year. China also boasts the most charging stations in the world. While charging his BYD electric car in Zhejiang Province, Mr. Zhang expressed his satisfaction with Chinese-made EVs, stating, “Chinese-made cars are good enough for us ordinary Chinese. If you’re thinking of buying an EV, there’s no need to go for a Mercedes or a German EV.”
