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Opinion | China is not to blame for the snail’s pace of US EV progress
- Washington’s concerns about the impact of China’s excess production on American firms are clearly more political than economic
- It’s the US market’s high prices that hinder widespread EV adoption, but American sentiment on competing economies is what counts in an election year
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The latest buzzword in the Western media’s China reporting, “overcapacity”, is yet another addition to Washington’s repertoire of criticism about Beijing’s economic policies and global strategies.
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Just a week before her visit to China, US Treasury Secretary Janet Yellen said at a solar energy manufacturer in Georgia that China’s excess production is hurting American firms and workers. Specifically, she hinted that the recent surge in China’s exports of electric vehicles, batteries and solar panels could create problems for US manufacturers and employees.
US Trade Representative Katherine Tai, who was in Brussels for the US-EU Trade and Technology Council meeting at around the time of Yellen’s visit, was more blunt in her comments on China. She said Beijing’s non-market policies would have “significantly damaging economic and political outcomes” for the United States and European Union, where firms would struggle to “survive”. She mentioned Chinese overproduction of steel, aluminum, solar panels and EVs as causes of concern and emphasised that China’s overproduction of EVs has become “very motivating for Europe”.
Tai called for “defensive” US-EU countermeasures such as tariffs, along with measures that are “more on the offence”, like incentives “to correct for a market dynamic that is not playing out in our favour”. What Tai’s comments really reveal is US discomfort with Chinese innovation in EV and other technology areas.
In conflating overcapacity and the broader issues of the EV market, Washington’s narrative is way off the mark. It is the US market’s high prices, not Chinese overcapacity, that hinder widespread EV adoption, given that Chinese EVs are completely excluded from the US currently.
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In 2023, the EV share of the total US vehicle market was only 7.6 per cent. The average price of a new EV in the US is around US$50,000. American consumers who can’t afford such prices have limited choices. Meanwhile, China’s largest EV maker, BYD, offers a subcompact, Seagull, for less than US$10,000.
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