News came out on Friday that President Biden is set to quadruple tariffs on Chinese EVs to protect the US auto industry from the rapid growth of Chinese EV manufacturing.
But instead of just de facto banning the competition from giving Americans access to affordable hot new EVs, the US should instead try making affordable hot new EVsitself.
The global auto industry is in a time of flux.
Cars are changing quickly, as is car manufacturing. The leaders of today, and of the last half-century, are not guaranteed to remain the leaders in the face of new entrants and new technology. And most of all, a new powertrain – electric – that will account for roughly 100% of cars on the road within a couple decades, which no serious person disputes.
Further, as one of the most polluting sectors globally and the most polluting in rich countries, it is necessary that transportation clean up its act, and fast, in order to avoid the worst effects of climate change. The sooner this happens, the easier it will be for all of us.
The new entrants to car manufacturing aren’t just in the form of startups like Tesla or Rivian, but in the form of nations which previously did not have a large presence in international auto manufacturing, but will take advantage of this flux to become more competitive in a changing global market.
The largest of these new entrants is the second most populous country in the world, the world’s largest exporter and its second-largest economy: China. China has heretofore not been a major player in car exports, but that’s changing.
China has been spending the last couple decades building up its manufacturing base, particularly in electronics, and particularly focusing on securing raw material supplies and partnerships and on building up refining capacity.
The strongest move in this respect has been Xi Jinping’s centerpiece Belt and Road Initiative, a set of policies intended to secure trade routes and mineral partnerships between China and less-developed, mineral-rich countries, generally in exchange for infrastructure development. It’s not unlike the actions of the West via the IMF and the World Bank, investing in development of poorer countries in order to secure material partnerships.
All of these entities have been credibly accused of exploitative actions towards the developing world – generally utilizing terms like economic imperialism, debt-trap diplomacy, or neocolonialism.
But the point of this is that China has been getting ready for this transition for a long time through concerted national effort, whereas the US is only recently doing so (via the Inflation Reduction Act and its attempts to onshore/”friend-shore” EV manufacturing and sourcing).
Japan and the 1970s as parable
We have, in fact, seen this story before. In the 1970s, the US auto industry was rocked by dual crises, a gas price crisis that left their large, gas-guzzling vehicles less competitive, and a steel crisis which greatly affected US steel manufacturers.
The steel crisis came courtesy of Japan, a country whose manufacturing methods far outstripped America’s, and which was determined to undercut American steel. It could produce steel cheaper and better than the US, and the low prices that Japan was offering were simply unbeatable by American manufacturers. As a result, many American steelworkers lost their jobs.
Here’s an article about the steel crisis from 2021 from the Alliance for American Manufacturing, which makes parallels to today’s situation between the US and China. In it, former steelworkers are quoted about what happened at the time:
The cost was cheaper, and their quality was better, too. We didn’t care about quality because we were the only game in town forever.
-Ed Cook, former president USW Local 3069
The U.S. steelmakers and, as time wore on, the automakers, were being outperformed by Japan and their superior technology advancements. Our employers didn’t invest in new technology until recognizing the concept of foreign competition was here to stay.
-Doug May, retired steelworker
The US tried to stop the bleeding with tariffs after accusing Japan of illegally “dumping” steel at unfairly subsidized below-market rates to gain export market share. But the tariffs didn’t stop the advancement of the technologically-superior Japanese steel industry, which remained strong even after their imposition.
The early-70s steel crisis was soon joined by the mid-to-late-70s oil crisis, where the US (and much of the Western world) saw oil shortages and high gas prices. At the time, American automakers mostly produced giant gas guzzlers, and Japanese automakers exploited this crisis by rapidly introducing smaller, more fuel efficient cars to America, just as the environmental movement was starting to gain steam and emissions regulations were starting to take effect.
Automakers responded by undergoing half-baked attempts to meet the standards while still trying to sell their gas guzzlers, by lobbying governments not to implement regulations, and begging for tariffs against competing Japanese autos. Not by actually rising to the challenge and making better vehicles, but rather by asking for the rules to be changed so they could get a free win by doing nothing new.
Eventually, Japan agreed to voluntary export restrictions and US automakers managed to get in gear and start making better cars. But as a result of this disruption in the 1970s, Japan is still considered one of the premier manufacturing industries in the world (automotive and otherwise), and has held the crown of the largest auto-exporting country on the globe for decades.
Between preparation, determination, and opportunity, Japan was able to gain a lasting lead.
All of China’s effort to build EV manufacturing bore fruit – while the country was initially slow to adopt EVs, in 2023 it had a whopping 37% EV market share (up from 5% in 2020 and .84% in 2015), leapfrogging several early adopter nations. But EV manufacturing has grown even faster, with Chinese EV production outpacing domestic demand and exports rising rapidly in recent years as well.
While Biden has pushed for stronger emissions standards, automakers seem determined to lobby against progress, to give themselves a false sense of security that they can take their sweet time in transitioning to EVs.
But regardless of how much automakers kick and scream about needing to build something other than massive gas guzzling land yachts, technology and world industry will continue their inexorable advancement. The industry can catch up, or it can continue dragging its feet and moving slower than its competition, somehow hoping to catch up from the losing position it’s already in.
None of this kicking and screaming is happening in China.
As mentioned above, Chinese government has focused heavily on securing materials and on encouraging upstart EV makers (with a total of either $29 billion or $173 billion in subsidies from 2009-2022, depending on whose numbers you accept, either of which are less than the hundreds of billions in subsidy allocated by the US in the Inflation Reduction Act, or the $7 trillion global subsidy for fossil fuels).
But that’s just the thing, tariffs don’t generally work. We saw how they failed to forestall Japan, but there are many other examples showing their ineffectiveness or weird side effects, and economists generally agree that they are a poor measure to help domestic industry. Some company leadership favors the idea of tariffs, while other (perhaps more sober) leaders do not.
On the one hand, it could help domestic auto jobs, because free trade for Chinese EVs could result in a race to the bottom for auto manufacturing. And it could result in Chinese companies trying to set up manufacturing in the US to avoid tariffs – which could help US auto jobs, but these moves would likely spark a whole new round of controversy when announced.
But on the other hand, China is likely to implement retaliatory tariffs which will hurt US workers (for example, soybean tariffs which ruined the US soybean industry in 2018 – and resulted in more soybean demand from Brazil, which led to extensive clearcutting and fires in the Amazon). And the nature of today’s globalized economy and complex supplier relationships around the world can result in a lot of chaos when a major player implements a major tariff.
So in the end, US jobs likely won’t benefit overall, and US consumers will simply be denied a chance to buy cheap new EVs from China – like, for example, the excellent Volvo EX30. The EX30 is currently made in Geely’s China factory and starts at around $35k even after the 25% tariff.
A 100% tariff would bring it to a starting price of ~$54k instead (unless or until Geely moves production out of China, something BYD has also considered). The EX30 also happens to be one of the only small EVs that will be available in the US in the near term, so a tariff would further doom US consumers to the plague of SUVs that has befallen us.
By raising prices of vehicles that could undercut US autos, what this means is that inflation – the price of goods for US consumers, which includes autos – will increase. Cars will be more expensive as US manufacturers will have less competition, less reason to bring costs down, and less reason to offer reasonably-sized models. We’ll be stuck with the expensive land yachts that US automakers have been punting at us for so many years. People will continue to accuse EVs of being too expensive – as a result of policy that directly makes them so.
Meanwhile, one of Biden’s signature legislative wins, the Inflation Reduction Act, does include a different type of protectionist provision that seems to have accomplished its goals. It offers tax credits to EV purchasers, as long as those EVs include domestically-sourced components and are assembled in North America. This lowers the effective price of EVs, helping buyers, and stimulates investment in US manufacturing as well.
Of course there is a large short-term factor to this decision: the US election, which is just a few months out.
In this election, President Biden is running against a candidate who has no issue being loudly racist, and channels that racism into protectionist trade measures. The US’ current 25% tariff against China was implemented by him in 2018, and a centerpiece of his policy promises revolve around extending these short-sighted measures.
This trade policy is not made out of a consideration of what will be best for the auto industry or the US, but rather is a populist way to seize on Sinophobia, scapegoating the US’ main geopolitical competitor for various social ills happening domestically.
But that sort of sentiment is popular. US sentiment towards China is at record lows, making it a popular target for scapegoating. The sharp turn downwards in recent years is likely influenced by the loud scapegoating from Mr Trump, though it has affected voters across the party identification spectrum.
So Biden’s decision to increase tariffs on Chinese EVs may end up being popular, regardless of its positive or negative effects – after all, Trump’s previous round hurt the US economy, but was still popular.
But it is also good to remember that this election is indeed important. While President Biden’s tariff policy mirrors that of Mr. Trump, Biden’s overall environmental policy does stand out as head and shoulders above the destructive, ill-considerednonsense we saw from the EPA under fossil fuel advocates Scott Pruitt and Andrew Wheeler.
So while this EV tariff increase doesn’t seem like a great idea, the alternative is, somehow, much worse. Isn’t that just the story of US politics in a nutshell.
But will the tariff change minds? While tariffs are popular, Trump has associated himself so closely with protectionist trade policy that voters with a thirst for protectionism seem more likely to vote for the candidate that has done more to shout his bombastic racist ideas from the rooftops.
It does seem that, with anti-Chinese sentiment at an all time high, any mention of China short-circuits a certain percentage of the electorate. Despite the demonstrably positive effect that Biden’s EV policy has produced in terms of investment in US EV manufacturing, that very same policy is often ignorantly criticized for helping China – which it does not do. Just have a look in the comments below, we’re sure a number of people who did not get this far into the article will echo exactly this incorrect sentiment.
But that’s a hard thing to explain, which has taken me thousands of words already (sorry) to merely scratch the surface of. The simplicity of “China bad” is a lot more comforting and simple to accept, despite lacking nuance.
How do we beat China? Not by tariffs, but by trying harder
Apologies for taking so long to get around to the point, but I hope that after laying out the actions China has taken to grow its EV industry, the history of foreign entrants into the auto industry, the effectiveness of tariffs, and the effectiveness of other trade policies and the politics behind them, the conclusion of how to go forward is already clear.
In order to beat China, we need to stop messing around with comforting but ill-considered policies that won’t work, and instead commit ourselves to the massive industrial shift that we need in order to catch up with a country that has already been doing so for over a decade.
We cannot do this by moving slower than a target that is already ahead of us. We have to move faster. And the West doesn’t get there by taking $1 billion in bribes to tank domestic industry, by softening targets or backtracking on EV plans. In particular, having one party that actively opposes any attempt to prepare the US auto industry for the future is certainly not helpful. This back-and-forth is not happening in China – they are committed.
The US auto industry has become accustomed to offering huge, expensive gas guzzlers, and to being “the only game in town.” But that didn’t work for the US in the 70s, and it won’t work now.
Even if prices on small Chinese EVs are unattainable, the way to solve that is through smart industrial and materials policy (as China has spent years on and we’ve only just started), through targeted subsidy to a new and important industry (which we’re doing, though republicans want to eliminate that), and by perhaps redirecting tax breaks that currently encourage giant vehicles to stop encouraging huge gas guzzlers and instead encourage right-sized EVs (and end other policies like the EPA footprint rule which EPA is finally doing something about).
So, if you’ll forgive me for taking this apparently unpopular anti-tariff stance, I think it’s clear that simply doubling the price of the competition isn’t the best way to ensure US auto stays competitive. It won’t help US consumers, it likely won’t have a net positive effect on US jobs (across sectors), it will lull industry into a false sense of security, it doesn’t help the environment, and perhaps least important but still worth mention, it violates the oft-repeated-but-never-honestly-held principle that government should “avoid picking winners and losers.”
Instead, lets focus on encouraging the new tech and discouraging the old tech, and moving quickly to beat China at their own game. If we want to pick winners, then why don’t we pick us.
This is how we get the American auto industry, a jewel in the crown of America for more than a century, into competitive shape for the future. We should have been doing more earlier, but as the famous (possibly Chinese) proverb says: “the best time to plant a tree is 20 years ago, the second best time is today.”
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The Einride Level 4 autonomous HDEV is being operated under a relatively new Belgian regulatory framework, and showcases how Einride (and Europe) might hope to take the lead in advancing autonomous freight technology. Now in service at the Port of Antwerp-Bruges, one of the most complex logistics centers in the world, Einride believes its autonomous trucks can move goods with more efficiency and lower emissions than human-driven, diesel-powered rivals.
“Antwerp is more than a logistical hub,” explains Johan Klaps, an alderman at the port of Antwerp. “(Antwerp) is also a place where the mobility of tomorrow is tested and concretized. Autonomous and sustainable applications such as Einride’s proves that innovation is a driver for competitiveness and economic growth.”
Einride autonomous HDEV
The Einride truck itself is an impressive piece of engineering, fitted with a robust 320 kWh li-ion battery pack that promises more than 650 km (405 miles) of all-electric range, thanks to a combination of slippery aerodynamics, energy-efficient electric drive motors, and (of course) the energy-smart driving tactics employed by its impressive self-driving software.
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Einride says its autonomous driving system (backed by a remote operator, Waymo-style, to help deal with edge cases) processes over 5 million data points per second, using radar and LiDAR to feed AI that generates real-time driving instructions for seamless navigation and freight delivery. And, thanks to its purpose-built, cab-less design and 82,000 lb. GVWR, each electric truck can operate with fewer than one remote operator per vehicle, paving the way for far more cost-efficient and expansive logistics operations without the need for many more operators.
“What we are seeing today in Antwerp perfectly aligns with European ambitions,” says Andrea De Candido, Connected, Cooperative and Automated Mobility (CCAM) DG RTD – European Commission. “(We’re) developing innovative technologies that are efficient, safe, sustainable and scalable. Through pioneering projects like this, we strengthen Europe’s position in future-oriented automated mobility solutions.”
With driver shortages still hitting the industry and electric semi fleets already running across Europe, the Middle East, and even here in the US, it’s only a matter of time before Einride rolls out its autonomous trucks in more markets.
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Due to Tesla still referring to them as “new, more affordable models”, many people believed that Tesla would still bring to market new, cheaper models.
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In fact, the automaker initially stated that it would arrive in the “first half of 2025.”
The new stripped-down Model Y is codenamed E41 and is expected to feature cheaper materials and fewer features than the normal Model Y, which starts at $45,000 in the US.
It is expected to be similar to what Tesla did with the new base Model 3 in Mexico, which features cloth materials instead of vegan leather, lacks a rear display, has no ambient lighting, and features a less advanced audio system.
However, we now learn that the new affordable Model Y will go further than a cheaper interior.
Green, a well-known Tesla hacker who often reveals new features in vehicles through looking deep in firmware updates, claims to have uncovered new details about the upcoming Model Y E41 through the latest Tesla firmware update.
Simplified model Y “E41” that was sighted live now appears in the firmware too. They will have two audio options: “essential” and “essential with commodity” Backup camera would lose a heater no “airwave” in console E41 fascia (performance will also get a fascia update)
The details are somewhat limited as he has to decode them from the firmware, but here’s the full list of what he has found out about the new cheaper Model Y:
“Essential” and “essential with commodity” audio packages
Backup camera without heater
No “air wave” in the center console, which likely means no air flow control for the second row
A new front fascia
Simplified fiberglass headliner
Simplified cabin lighting (footwell only)
Simplified seat controls (single axis)
No power mirror folding
No puddle lamps
No glass roof
No second row display
No Tire Pressure Monitoring System
Simplified 18″ wheels
Downgraded suspension
Tesla has yet to confirm when the new Model Y version will launch, but we previously reported that Tesla is likely waiting for Q4 as it is enjoying strong demand in Q3 from the end of the federal tax credit in the US.
Electrek’s Take
I like “simplified”. I don’t know if the term comes from Green or Tesla, but it certainly works better than “stripped-down,” even though it is also accurate based on what we are learning about the new version.
This didn’t work with the Cybertruck. Tesla quickly discontinued the “simplified” version, but the Cybertruck was already much less popular than Model Y.
I don’t know. This could work. It depends entirely on pricing. If it brings the base price down to $35,000, I can see some people going for it.
However, it will likely devalue Tesla’s “premium” brand and the Model Y significantly.
Also, most of the demand is likely going to come from Model Y buyers in the first place – cannibalizing Tesla’s own sales.
In short, it’s more of a placeholder to slow down the degradation of Tesla’s EV business amid its shift to autonomous driving and robotics, rather than a solution to return to EV growth. That’s a bummer.
Tesla needs brand-new EV models. It’s plain and simple.
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For decades, Briggs & Stratton has helped keep the lights on after the storm with its gas-powered generators. Now, the company is bringing that legacy into the modern electric era with a home backup battery — and a new partnership with EG4 is making it easier than ever to integrate Briggs’ batteries into your home solar setup.
That dependability makes the EG4 inverters favorites among “preppers” as well. Its 18KPV inverters are EMP-hardened, promising reliable performance even after Electromagnetic Pulse (EMP) events that would disable other electronics.
“Our collaboration with Briggs & Stratton combines EG4’s advanced energy storage systems with their proven generator and storage technologies to give customers more ways to achieve reliable, uninterrupted power,” said James Showalter, founder and CEO of EG4. “With this partnership we are making it easier than ever to build the right solution for energy independence.”
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Simplify, SimpliPHI
SimpliPHI battery storage; via Briggs & Stratton.
Briggs & Stratton’s SimpliPHI battery packages start with one, two or three SimpliPHI-branded 6.6 kW batteries, designed as modular components to deliver a range of power options tailored to how much of the home or business the user wants to keep powered power during an outage. Is that 25% of their normal energy usage? 100%? Just add more batteries.
The companies explain that, with a 200A pass-thru for easy integration into most homes’ main service panels, the Briggs & Stratton + EG4 home solar battery system can be scaled up to 18 batteries for 119.7 kWh of energy storage and a maximum continuous power of 84 kW, or up to 90 hours of power at 100% load.
“We are excited to expand our closed-loop integrations with EG4,” explains Sequoya Cross, vice president of energy storage for Briggs & Stratton Energy Solutions. “We have been consistently impressed with their approach to the market, innovative design choices and products that reliably serve their customers.”
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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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