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Automotive Industry Hot Topics

June 28, 2024

This week Alan discusses tariffs on Chinese EVs and the EV demand decrease.

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Tariffs on Chinese EVs

• Germany seeks to prevent or soften EU tariffs on Chinese EVs 

• EU moves to hike tariffs on Chinese electric vehicles 

• India says high tariffs on EVs to protect from Chinese imports 

• Chinese EV stocks surge after EU slaps up to 38% additional import tariffs 

• Stellantis Moves Some EV Production Out of China Due to EU Tariffs 

• Canada considers imposing import tariffs on Chinese EVs 

• China wants EU to scrap EV tariff plans as talks start 

Alan’s thoughts:

The EU plans to raise the duty on Chinese-manufactured EVs by 38%, despite European automakers opposing the tariff to prevent a potential trade war escalation. Many European manufacturers import parts from China and run the risk of facing retaliatory duties. The tariff is relatively benign when compared to the 100% duty imposed by the U.S. Still, it sends a message that “unfair subsidization” of Chinese imports will not be tolerated. Canada is considering similar measures to protect its robust automaking industry. The industry needs a level playing field and an appropriate capacity to meet demand. Excess capacity, dumping, and subsidized products create labor, supply, profitability, and sustainability issues in the long term, which is not a good outlook for the auto industry. 

EV Demand Decrease: 

• EV adoption falls to its lowest point since 2021: JD Power 

• GM trims 2024 EV forecast amid slower-than-expected demand 

• Almost 40% of U.S. EV buyers want to go back to combustion engine cars, survey says 

• EV maker Fisker's bankruptcy heads toward liquidation as creditors fight over assets 

Alan’s thoughts:
GM is reducing its forecast for EV sales in 2024 by approximately 50,000 units, citing a slowing rate of sales growth. GM still expects EVs built off their Ultium Platform to be profitable, even at 200-250,000 units, suggesting GM has a good command of its variable costs and productivity improvements. Matching supply to demand is the hallmark of any good company and we’re simply seeing adjustments being made to match the market demands. Fortunately, companies such as GM, Ford, Toyota, and others have sufficient alternative powertrains to offer to customers with little or no disruption. 

Meanwhile, Fisker files for bankruptcy, highlighting the cash-hungry nature of automotive design, development, and production. It takes more than a good idea and talent to make it as an OEM. 

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