Recently, U.S. Senator Marco Rubio started pushing for more tariffs. Why? Because cheaper Chinese electric cars have a pretty good chance of destroying vehicle manufacturing in the United States. While this is a reasonable argument to make, tariffs alone would only delay the inevitable, so more must be done if the goal is to protect the U.S. automotive industry.
I agree with Rubio that these tariffs are necessary, or at least some of them. United States automakers are simply not delivering EVs cheap enough to compete, and geopolitical realities dictate that we don’t let the United States become dependent on China for EVs. It’s also true that without more export markets for their cars, Chinese industry is in trouble, and we’d be better off to let them experience trouble right now, because sending even more U.S.
In practice, though, automakers missed the boat on that strategy. The right time to be offering expensive EVs with a plan to trickle the technology down into lower markets was a decade ago, when Tesla was doing that. Now, expensive EVs have to compete with the $39,000 Model 3, and that’s before the point-of-sale tax credit that works like a discount now, so the actual price a buyer pays is around $31,500, and it’s cheaper in states with their own state-level rebates.
The price cap for EV tax credits probably needs to be revised to lower over the next ten years to hurry domestic automakers along while the tariff dam temporarily holds Chinese automakers back. Their complacency at the top of the market can’t be rewarded anymore. Other things, like more subsidies for battery production need to happen to help automakers get better pricing going.