China EV Manufacturers & World Economy

As China gets closer to meeting its own electric car needs, many of its car companies are looking more and more to export markets to absorb some of their production. But for some countries, the electric car onslaught coming from China is seen as a threat to local companies and their workers. The EV revolution was never intended to displace domestic industries and workers but that seems to be what is happening.

In response, France and Turkey this week announced restrictions on electric car imports designed to stem the tide of Chinese EVs flooding their ports. In France, the new rules heavily favor cars manufactured domestically or elsewhere in the EU at the expense of Chinese made cars.
MG, BYD, and Chery are all looking at sites to build new factories in the country, according to unnamed sources cited by The Financial Times, and this investment is causing angst in Washington as it seeks to keep China out of the US electric car market.

But the possible expansion of Chinese automakers into Mexico, which recently replaced China as the US’ biggest trading partner, will fuel fears that it could serve as a backdoor.

Lawmakers on a select committee on China recently warned that stronger trade rules may be needed to prevent Chinese automakers from “gaining a backdoor to the US market” through its trading partners.

Nations appear intend to stop competition from China. I would think if successful such actions slows conversion of world’s vehicle fleets to EV.

  • Chinese EV giants are planning factories in Mexico, and it’s alarming US officials: report*

So, NAFTA is supposed to be only to provide cheap labor for USian “JCs”, not a tariff dodging mechanism for companies in other countries?



US requirements are more than just “where assembled”. Where the various parts of the vehicle are made (i.e. think EV battery–all the way down to the origin and processing of materials used) are also a significant factor.

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iirc, the USMCA did increase the amount of zone sourced material needed to qualify, and some percentage of the material has to be made by labor making at least $15/hr. There seems to be plenty of NAFTA zone supply chain in place to supply a Mexican BYD plant. My pre-USMCA Volkswagen is 40% Mexican, 11% US/Canada, with a Japanese transmission. The VW plant in Puebla way predates NAFTA. Most of the other non-big three Mexican plants appear to have been built within the last dozen years.


Critical Minerals: To be eligible for the $3,750 critical minerals portion of the tax credit, the percentage of the value of the battery’s critical minerals that are extracted or processed in the United States or a U.S. free-trade agreement partner or recycled in North America, must meet or exceed the following thresholds:

2023 40%
2024 50%
2025 60%
2026 70%
2027 and later 80%

Battery Components: To be eligible for the $3,750 battery components portion of the tax credit, the percentage of the value of the battery’s components that are manufactured or assembled in North America must meet or exceed the following thresholds:

Year Battery components minimum percent value requirement
2023 50%
2024 and 2025 60%
2026 70%
2027 80%
2028 90%
2029 and later 100%

I see no way for a Chinese EV to be made in Mexico–using qualified materials–to be eligible for any tax credit. Then again, if the selling price is low enough (i.e. at least $7500 less than most competing EVs, similar equipped), then the subsidy is irrelevant. Then customers would be worried about service of the vehicle over the first 5-10 yrs (i.e. battery life).

Seems the batteries could be completely Mexican made. The law you quote says “North America” and/or “free-trade agreement partner”. The NA of NAFTA means North America, so Mexico is, by definition, part of North America, and it is a “free-trade” agreement. I think there is some minimum USian content requirement in the USMCA, but that would not be hard to meet.

Proterra’s battery plant in South Carolina was bought by Volvo last month. They would probably be happy to make batteries for a BYD plant in Mexico.

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Maybe, but there is an issue not mentioned. Proterra did not have contracts to supply them materials for the SC plant that would survive bankruptcy as valid/enforceable contracts. Whether qualified suppliers would want (or be able) to supply a China-owned plant in SC is something we do not (yet) know. To hit their low selling price, how would the BYD EV compare to other US EV mfrs? We do not know. But low prices in the China market are due to subsidized costs of battery materials/processing. Those manufacturing subsidies will not be available in the US market.

Geely Holdings owns 15.9% of Volvo AB votes. Industrivärden, an investment group, owns 27.9% of Volvo AB votes. You do have a valid point about Shiny concerns about Chinese firms “poisoning our blood”. The Ford battery plant near Marshall, MI, the one that has been put on hold, was a JV between Ford and a Chinese company, and the xenophobes were out in force campaigning against it. Ford is partnered with a Korean company for the plants in Kentucky and Tennessee.

It is far, far, too late, to keep Chinese factories out of the US though. In the late 90s, I worked in an Office Depot warehouse in Plymouth, MI. That warehouse is now owned by Fuyao Glass, one of many plants and warehouses owned by Fuyao in the US now. OEMs buy Fuyao glass for their cars because it is cheap.

The Proterra plant is in South Carolina, which is militantly anti-union, so the labor will be cheap, probably close to the $15/hr that the USMCA requires.

Zip Recruiter reports average manufacturing wage in SC is $21/hr. Indeed reports average production worker pay is $14.84

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