The American auto industry faces a daunting threat from Chinese carmakers establishing production in Mexico. By doing so, they take advantage of North American trade regulations that allow them to ship electric vehicles (EVs) to the United States at highly competitive prices. This strategy could flood the U.S. market with affordable Chinese EVs, putting significant pressure on domestic manufacturers, especially as the demand for electric vehicles increases.
Price Disparity and Competitive Struggles
Chinese-made EVs are priced far lower than their American counterparts, with the average Chinese EV costing roughly half of what a U.S. electric vehicle sells for, around $55,000. As Chinese vehicles become more widely available in the U.S., American manufacturers may struggle to compete. This price gap could lead to the closure of factories and the loss of jobs, particularly in America’s industrial heartland, where many automotive jobs are centered.
Historical Parallels and Concerns
This situation mirrors past challenges when heavily subsidized Chinese products, such as steel and solar equipment, undermined American industries over the last 25 years. The fear is that a similar fate could befall the U.S. auto industry, particularly in the emerging EV market, which is seen as crucial to the future of American carmakers. The competition could jeopardize the growth of domestic EV manufacturers and harm their prospects in the long run.
Senator Sherrod Brown, along with others, has raised concerns over the potential damage to the U.S. auto industry. In a letter to President Joe Biden, he emphasized the risk of Chinese government-subsidized goods flooding the U.S. market and called for an outright ban on Chinese EVs to protect American jobs and manufacturing. The Alliance for American Manufacturing has even warned that this could be an “extinction-level event” for the domestic automotive sector.
