Tesla’s Big US Win

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Tesla has faced increasing challenges around the world as EV sales slow. Although it has about half the US market, it is not immune from these difficulties in its home country. New guidelines for the import of Chinese EVs to the US have just given Tesla a big win. 

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The Biden Administration will increase the tariff on Chinese EVs to 100%. The rate now is 25%. Even at 25%, Chinese car companies cannot enter the market and make a profit. The 100% figure will set the profit bar ridiculously high. 

Elon Musk described what was at stake on Tesla’s most recent earnings call. “If there are no trade barriers established, they will pretty much demolish most other car companies in the world.”

While Tesla is a significant beneficiary of the decision, it will save GM and Ford from what could be existential threats. Neither has had any success in the US EV market. Each only sells a few thousand EVs a month. Most of these are expensive compared to their lowest prices, gas-powered cars. Creating EV lineups that will attract many consumers may take the better part of a decade. In the meantime, they continue to fight the recent lack of demand for EVs. 

The $15,000 EV

Biden’s decision could be unfortunate for American consumers interested in EVs. It keeps what are described as well-made vehicles, which are priced in some cases below $15,000, out of the US. Without the Chinese, US buyers will continue to pay premiums that make EVs relatively expensive.

Conversely, China’s EV tariffs could save hundreds of thousands of jobs in the US car industry. Until American manufacturers can build $15,000 EVs, China’s products are a threat to steal sales well into the hundreds of thousands of cars a year.

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