A more regionalised, more protected and less efficient car industry would not be a better one
sales as government subsidies were cut prompted Tesla to slash prices, triggering a price war at the start of 2023 that hit less coveteds from foreign carmakers. Growing nationalist sentiment among Chinese buyers and greater efforts by the government to encourage domestic firms such asAt the same time carmakers are reconfiguring supply chains to make them less exposed to geopolitical concerns, with reliance on China a growing issue.
Restrictions on access to the West’s technology may also have an effect. America’s efforts to bar Chinese firms from advanced technology include a ban by the Commerce Department on exporting certain semiconductors to China. And theact passed last year offers new subsidies for manufacturing semiconductors at home. China’s car firms may lead the world ins and automotive software but they rely almost entirely on chips imported from America, Europe and Taiwan.
Efforts to pull up the drawbridge will hamper China’s exports. So might worries about the security of data gathered from users of Chinese-made cars. America already imposes hefty tariffs on Chinese cars: 27.5%, against 10% levied by the. That may not hold back the import of Chinese cars for ever, as cheaper models could still be competitive.
The results are already evident. Tesla is scaling back European investment to focus on North America, and will build a new gigafactory in Mexico. Ford chose Michigan for a new battery factory.is thinking of relocating a battery factory from Europe, reckoning it could be worth $10bn in subsidies over its lifespan. Few carmakers seem able to resist the American lure. Europe is intent on responding to America’s lavish handouts.
Rising tensions with China would affect many industries besides cars. And even if the broad influence of China on both carmaking and the experience of driving persists, tastes will still differ between regions. Chinese tech, the American love of large pickups and Europe’s taste for small cars all show a world that is not entirely uniform. Yet a more regionalised, more protected and hence less efficient car industry would not be a better one.
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