American Automakers Backing Away From EVs Might Be Good News For China
On February 6, Stellantis disclosed a huge $26 billion charge from its major business overhaul, which included the introduction of gas-powered models and hybrids, but was notably absent a push for further electrification. The brand is not the only automaker doing so. Many domestic OEMs have scaled back their approaches to electrification in the face of a new regulatory climate from the Trump Administration, stiff competition abroad, and declining American interest following the suspension of federal tax subsidies for qualified EVs.
US automakers continue to shun EVs while China gains
Ram
Stellantis is far from being alone, according to a CNBC report. General Motors and Ford have also lost billions in EVs, and are similarly scaling back some aspects of their EV operations following the suspension of subsidies. Meanwhile, Stellantis CEO Antonio Filosa blames the $26B charge on an overstimation in the pace of the transition away from fossil fuels. Tesla is in a similar boat, having canceled both the Model S and X following poor sales, repurposing the plant for humanoid robot production.
For every closure or model cancellation, a gap is filled by a competitor. Most frequently, it happens to be a Chinese one. BYD has filled the vacuum left by a decline in Tesla's market share in Europe. Global market share for Chinese automakers has climbed by nearly 70% in the last five years. “The Chinese auto industry presents an existential threat to the traditional [automakers],” said Terry Woychowski, a former GM executive, to CNBC. American automakers worry Chinese brands will eventually find their way into the American market, and once they do, consumers may choose new competitors over old hands.
"The existential risk to the U.S. auto industry isn’t Chinese EVs alone, it’s the combination of sustained government support, vertically integrated supply chains and speed," said Elizabeth Krear, CEO of the Center for Automotive Research. "Those advantages lower costs and accelerate execution. Concurrently, saturation in China’s domestic market is driving automakers to expand aggressively into global markets."
Chinese EVs continue to grow, crossing borders into Canada
BYD
Chinese automakers continue to circle the US market. Deeply similar to our own, the Canadian market is the latest place Chinese automakers have expanded following the suspension of Canadian tariffs. Other targets have included South America, India, and Mexico, all of which were spots US automakers were or are expanding into, to say nothing of the manufacturing presence many hold in Latin American nations. Ford, for example, assembles some of its vehicles in Mexico.
Stephanie Brinley, automotive analyst at S&P Global Mobility, said that Chinese automakers will take time to break into the US market, motivated by both the appeal of their vehicles and the whims of present and future administrations: "Breaking into the U.S. market successfully and sustainably is not an easy accomplishment; it takes time, investment, patience and the willingness to make product mistakes but improve them until you get it right. It is expected that some Chinese automakers will have that blend and eventually look to participate in the U.S. market."