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Chinese electric vehicles may lose their appeal due to decreasing value – here’s the reason.

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The US government has announced a significant move to increase the border tax on Chinese-made electric vehicles from 25% to 100%. President Biden’s decision aims to address the threat posed by more affordable EVs to domestic carmakers. Chinese EVs imported to the US are currently subject to a 27.5% tax, making their sticker prices competitive but not as cheap as previously feared.

(Image credit: Volvo)

The Volvo EX30, for example, was set to be sold in the US for $35,000 but will now cost $54,000 due to the increased tariffs. This price shift is due to the vehicle’s production and assembly in China by the Chinese parent company Geely. The pressure from domestic automakers prompted President Biden’s move, who even initiated a Commerce Department investigation into Chinese imports for national security concerns.

With the US government also planning to raise tariffs on other Chinese products like semiconductors, lithium batteries, and critical minerals, the entire electric vehicle manufacturing landscape is set to be affected. These components are crucial for the production of modern EVs, including those made in the USA. This could result in increased prices not only for Chinese EVs but also for domestically manufactured vehicles and other consumer tech products.

Analysis: will other markets follow suit?

Zeekr X

(Image credit: Zeekr)

Economic experts question the effectiveness of such protectionist measures, advocating for tax breaks and incentives for domestic EV manufacturers instead. While only a few Chinese-made EVs are currently available in the US, other major markets like Europe may experience similar tariff adjustments to safeguard their automotive sectors. This global trend could result in increased EV prices, slowing the adoption of electric vehicles and hindering progress in reducing global carbon emissions.

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