Chinese Electric Vehicles are Leading the Race
But you won't see many of them in the western world. What are the real reasons behind the lesser known Chinese trade war?
Flying Electric Vehicles (EVs), EVs with advanced features like 1000 kilometer range, swappable batteries, and chargers capable of about double the output of Tesla’s most powerful charger are no longer a vision of the future—they are here today. These advancements have been driven by a massive Chinese EV ecosystem, supported by billions in government investment.
Not only has China brought the future of EVs to the present, but these vehicles are also being sold at remarkably lower prices than their Western counterparts. In some places, the cheapest Chinese EVs can be purchased for around $11,000. Naturally, one might wonder how they can be so affordable and why they aren’t more common in North America.
The first reason for their low cost is straightforward: China has lower environmental and labor standards. This lack of restrictions allows manufacturers to produce vehicles more cheaply, with savings passed on to consumers. However, a more complex factor lies behind this affordability.
The Chinese EV industry is heavily subsidized by the government, which has been driving the technological leaps we’ve witnessed. Some estimates suggest the government has invested over $200 billion in the industry over the past decade. Officially, these subsidies aim to promote environmental protection and sustainable development by reducing air pollution, lowering carbon emissions, and decreasing reliance on imported oil—aligning with China’s climate goals.
Armed with cheaper manufacturing, labor, and government subsidies, Chinese companies began exporting vehicles worldwide—and they succeeded. However, Western governments, including those in the US, Canada, the UK, and Europe, objected, arguing that this was unfair to domestic car manufacturers. Citing “unfair trade practices,” they imposed tariffs on Chinese EVs, with Canada’s reaching as high as 100%.
Shortly after, China retaliated by imposing tariffs on Canadian canola, claiming Canada was dumping it and selling below fair market price—the same accusation Canada leveled against China regarding EVs. Officially, these actions are unrelated, but one might speculate that the canola tariff is a response to Canada’s EV tariff.
About half of Canada’s canola is consumed domestically, with the other half exported. Of those exports, approximately 68%—or 5.9 million metric tons—go to China. Consequently, China’s tariffs will have significant repercussions for this industry.
So, what are these tariffs really about? Why is Canada willing to jeopardize a major export to keep affordable EVs out of its market? A key reason revolves around batteries and the supply chain.
China currently holds a 60% market share in battery production. If Chinese EVs overtake Western EVs in the market, it will significantly impact Western battery manufacturers. Chinese EVs, powered by Chinese batteries, could eventually dominate the market, potentially driving Western EVs and battery producers out of business. This would leave the West entirely dependent on Chinese battery manufacturers and technology, giving China control over the supply chain for anything requiring batteries.
Batteries power many essential products and services. Most critically, consider military applications, first responders, and other vital sectors. Batteries are integral to a wide range of technologies, and China could dictate their prices, withhold cutting-edge innovations, or, in the event of a conflict with the West, cut off the supply entirely.
In response, Western governments are introducing subsidies of their own, hoping to catch up and strengthen their industries. Unfortunately for Western consumers, an $11,000 EV may remain an unrealistic dream for the foreseeable future.