Tarrifs?

Much has been discussed on unfair competition from Chinese automakers, in particular, when it comes to Chinese EVs. The discussion always struck me as strange for several reasons: First, as we shall see, there really are no cheap EV’s, Chinese or otherwise, or at least ones priced at parity with internal combustion cars in other markets such as Australia. Further North American Automakers have no interest in making small inexpensive vehicles, but if one succeeds in the market, that might change. North American automakers certainly have the know-how to make cheap EVs. Further, here is perhaps some leverage for Canada as the second Trump administration settles into the White house.

Lets start with what Chinese made EV you can actually buy in Canada. BYD? Zeeker? Shaumin? Nio? Xpeng? Nope, none of these are available in Canada, although BYD has working with the TTC, and delivered a few e-busses. You can buy a Polestar 2, and some Tesla Model Y cars on Canadian roads are made in China. Neither of those are cheap, with MRSP’s of 50k USD (source), and 55k USD (source). The bottom line is that there is no flood of cheap chinese EVs. Such a flood might appear in the future, but at the time of this writing, you simply can’t buy a cheap Chinese EV in Canada.

So its all in some auto-CEO’s head? Perhaps, but these CEOs do have a point: Traditional automakers have not figured out how to make cheap EVs well. Yes, Tesla has figured out how to make an EV, both at scale and profitably so (source), but the cheapest Tesla Model 3 I can buy at the time of this writing is at $55k (source). The Nissan Leaf, which is cheaper (~45k at the time of this writing source), but 45k, is a far cry from 23k Nissan Versa (source). Plus rumours have it that the Nissan Leaf was not all that profitable for Nissan (source, source).

That’s not to say that North American automakers cant make EVs, far from it: Ford, GM and Stellantis (source), all have at least some EVs on offer, many of them quite good. But they all have a much higher sticker price than the 23k Nissan Versa. In short, main-stream auto knows how to make a luxury EV, or at least “affordable luxury” EV, and if you are willing to spend at least 45k to get one, you certainly can. Indeed, Tesla has proven that in the North American Market, you can profitably sell $55k (source) EVs.

There is Chinas manufacturing capacity. Mainland China alone could supply 40 M cars a year (source), into a global automotive market of some 90 M cars a year (source). So China has the capacity to produce every other car sold globally, of which the Chinese market alone amounts to some 27 M cars a year. This puts Chinese automakers in a tough spot. They only way to grow, and thus move their companies forwards is exports.

But even in the relatively open market of Australia, BYD will charge you upwards of 30k (CAD for consistency) (source), for the somewhat smallish Dolphin. The MG4 is 35k (source), and the Orca funky cat is about the same (source). That’s not exactly a cheap, at least when compared to the (combustion) 23k Nissan Versa we discussed above.

So even in markets where the Chinese compete, that mythical 10k Chinese EV is nowhere to be found. And given that, why risk a trade-war with China that benefits nobody, particularly at a time when Mr. Trump might return to the White-house, seems Canada could do with all the leverage it can get.