DETROIT (AP) – Chinese automakers are making inroads around the world with growing sales of their high-tech, stylish and affordable electric vehicles. Even before Canada agreed this week to cut tariffs on Chinese EVs in exchange for concessions on Canadian farm products, it has worried competitors.
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Experts now say easier access to Canada could be a big boost for Chinese carmakers trying to dominate the global market — especially as their domestic market weakens. This poses a threat to other auto manufacturers, especially American companies.
U.S. officials made the comments on Friday at an assembly plant for Jeep-maker Stellar in Toledo, Ohio. Transport Secretary Sean Duffy said the Chinese Communist Party had invested in its auto industry to “control the industry”.
“Why? They want to take over the auto industry. They want to take these jobs away,” Duffy said. As for Canadian trade deals, he added: “They’re going to live to regret the day they partner with China and bring in their vehicles.”
Others say change is inevitable.
“It’s telling us that Chinese automakers are really popular, and doing better and better, and not just something that’s sold in a global market that’s very marginal or less important to American automakers,” said Ilaria Mazzocco, deputy director and senior fellow to the trustee chair in Chinese trade and economics at the Center for Strategic and International Studies.
What makes Chinese vehicles different?
Experts say that Chinese-made vehicles are high-quality, stylish and affordable.
“It’s clear that vehicles made by Chinese brands come at a very competitive cost, but are also technically very desirable,” Mazzocco said. “They tend to be connected vehicles, so they have a lot of additional software capabilities that consumers like. But the price point and competitiveness are really big selling points.”
These vehicles can cost anywhere from $10,000 to $20,000; In the US, new vehicles run close to $50,000 on average, and EVs even more.
Chinese companies have unique advantages in auto manufacturing and production, efficiency and vehicle lightening, which help extend the driving range of electrified vehicles.
“They’ve found a way to make small and midsize cars — cars that people want — at a reasonable price,” said Sam Fiorani, vice president of Autoforecast Solutions. “These are the segments where GM and Ford and almost everyone else has given up.”
Many automakers have phased out smaller vehicles in favor of higher-margin, larger sport utility vehicles and pickup trucks that are more profitable.
So why are Chinese EVs such a threat to American automakers and others?
Much of the global auto market is electrifying, an ideal opportunity for advanced Chinese automakers to capitalize on. According to data released this week by Benchmark Mineral Intelligence, China will see 17% growth in plug-in hybrid and electric vehicles by 2025, while Europe will see 33% growth.
Meanwhile, U.S. sales of electric cars rose just 1 percent last year. As the rest of the world moves forward, U.S. automakers have scaled back their once-ambitious, multibillion-dollar electrification plans, opting instead for more efficient hybrid electric and gasoline vehicles amid a shift away from the Trump administration’s EV-friendly policies.
That shift threatens the competitive edge of U.S. automakers for years to come. As such, Tesla lost its crown as the world’s best-selling electric vehicle maker last year, delivering just 1.64 million vehicles by 2025 to Chinese rival BYD’s 2.26 million.
Experts worry for the future of American carmakers as the Trump administration’s policy of loosening emissions regulations comes at a time when Chinese companies are rapidly moving ahead.
Chinese automakers will have to meet the standards required for the Canadian auto market to succeed in the latest trade arrangement — the same standards as the U.S. — which is likely to encourage Chinese auto manufacturing investment in Canada.
They also need to establish which segment of the market they are targeting there: high-end vehicles, or less expensive ones that sell in high volume.
Regardless, “it brings home what it takes to compete globally,” said Mark Wakefield, global automotive market lead at AlixPartners. The company estimates that the share of Chinese brands in the world market will be 30 percent by 2030.
“They’ve started in Europe. They’ve started in South America. Now Mexico and Canada,” Wakefield said. U.S. carmakers “don’t want to end up with your ethanol-based cars like Brazil that aren’t sellable anywhere in the world and … like Britain or Australia that used to be important in the auto world, and don’t really matter anymore.”
Why have others sought to regulate the expansion of Chinese EV-makers?
Countries have tried to regulate Chinese EVs from entering their markets for various reasons.
“China has become this overwhelming machine that makes cheap vehicles. And the fear is that if you give them an inch, they’re going to take a mile,” Fiorani said. “The other issue is technology. These vehicles are data centers … and the idea that a Chinese state-owned company can access a high proportion of drivers’ destinations gives them an advantage for all kinds of outlets.”
The European Union raised tariffs on Chinese EVs last year, though the two have since settled earlier this year.
In 2024, former President Joe Biden set a 100% tariff on Chinese electric cars. Canada agreed to import taxes on vehicles as of this week. And even with the annual import cap, Canada’s cut of its tariffs this week means those companies are another step closer to American soil. The Mexican auto market has welcomed Chinese EVs with huge growth over the past year.
“The advance of Chinese manufacturers is inevitable. It will happen eventually. Everyone is negotiating to put barriers to finding out: what data is being processed, how much market share do you allow Chinese manufacturers to have?” Fiorani added.
“There are a lot of trains that have to be put in place, but eventually they’re all going to make their way to western markets.”
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Alexa St. John is an Associated Press climate reporter. Follow her on X: @alexa_stjohn. Reach him at ast.john@ap.org.
