Those who wait for the price of electric vehicles to drop before abandoning their gasoline car will have to be patient. it’s not for tomorrow.
The increase in American tariffs on Chinese cars which should be formalized in the coming days by the Biden administration further pushes away the hoped-for and expected drop in prices. The 25% duties imposed by the previous American president on imports of Chinese cars have just been increased to 100%, which will double their price.
The American decision is in clear contravention of the rules of the World Trade Organization (WTO), but that does not seem to have had much influence. The United States seems ready to do anything to protect its automobile industry and especially its shift towards electrification, which promises to be difficult.
There are very few cars made in China on American or Canadian roads, but the rise of Chinese manufacturers threatens manufacturers all over the world.
In the space of a few years, China has overtaken Germany, Japan and South Korea as the largest car exporters. China’s largest manufacturer, BYD, now sells more cars than Tesla. China leads in number of units. In value terms, the country ranks sixth on this list, but that is precisely its advantage: prices that are still unbeatable by the competition. The European Union has also launched an investigation into the aid it considers illegal granted by the Chinese government to its automobile industry to ensure a dominant position on the world market.
According to figures from Chinese authorities, vehicle exports increased by 57.9% between 2022 and 2023, a surge fueled by electric vehicles. The increase is such that China is running out of boats to transport its vehicles to buyers.
Part of this increase is explained by a considerable increase in sales in Russia, which most other auto manufacturers have deserted since the invasion of Ukraine.
The largest buyers of Chinese vehicles are in Europe and Asia, especially in Belgium, Spain, the United Kingdom and Thailand, official figures show.
In total, China exported some 5 million vehicles last year, most of them gasoline-powered, but electric vehicles are the fastest growing. They are also the ones most likely to pull the rug out from under the feet of American and European electric car manufacturers, who are trying to catch up.
For Canada, which has a relatively low tariff on Chinese car imports, this could be the ideal opportunity to increase the number of electric vehicles and achieve its goal that all new vehicles sold by 2035 are electric. The high price of electric cars and their lack of availability cast serious doubt on whether this objective will be achieved. Welcoming more cars made in China at reasonable prices on the Canadian market would certainly accelerate the desired electric shift.
If it decides to follow in the footsteps of its American neighbor by in turn increasing tariffs on Chinese imports, Canada is putting itself at odds with the WTO, of which it remains an ardent defender.
It’s a choice that isn’t really a choice. Not because of WTO rules, but rather for internal political reasons. Canada is going out of its way to keep its piece of the auto industry, which will cost taxpayers billions. Access to the American market is vital for the investors it wants to attract. Pressure from the Canadian auto industry and the political weight of the United States will be strong for Canada to in turn restrict the entry of Chinese electric cars.
There’s no betting on that. The electrification of transport can always wait.