Chinese EVs are circling the US market. Detroit’s best option would be to partner with them.
The TL;DR
Chinese EVs face a US tariff of 125% but enter through Canada, Mexico, and a deal with Detroit. Experts say they will be on US roads by 2030.
Chinese electric cars are facing a 125% tariff, a proposed Senate ban, and strong opposition from lawmakers and the US auto industry. But there is a growing possibility that Chinese EVs will be sold in the US within the next few years. The internal routes are multiple: they go through Canada, Mexico, and deal with the very automakers they publicly oppose.
China will capture about 75% of global EV production and 40% of global EV trade by 2025, according to the International Energy Agency. Production of 16 million electric vehicles exceeded domestic demand by 20%, driving exports to a record 2.5 million units. “The only market in the world they haven’t entered is the United States,” said Michael Dunne, CEO of Dunne Insights.
The Big Three are in dire straits. Ford, GM, and Stellantis have backed away from aggressive EV plans while many experts agree on an electrified future. “US companies have backed away from many of their electric car campaigns, because they have not been able to develop, cheaply, a compelling value proposition,” said Stephen Dyer of AlixPartners.You can’t compete if you’re not in the game.“
But all three are quietly deepening ties with Chinese automakers. Ford is in talks with Geely to form a European partnership and, according to The Wall Street Journal, “seems to open the door to allowing Chinese cars in the US at some point.” GM imports CATL battery cells for its Chevy Bolt.
Geely already uses Volvo plants rather than building new factories, giving it production bases in Europe and the US without investment in green space. Volvo’s factory near Charleston, South Carolina, could be converted to other Geely platforms, including Zeekr, the brand Waymo uses for its robotic fleet.
Chinese EVs are already coming to Canada, with Prime Minister Mark Carney signing a deal in January that allows up to 49,000 Chinese-made EVs a year at a 6.1% tariff. In Mexico, Chinese cars account for a quarter of total sales. BYD and Geely are among the finalists who are bidding to buy the Nissan-Mercedes plant there. The GAC has announced plans to start a meeting in Mexico this year.
Trump expressed support in January for allowing Chinese companies to operate in the US, as long as they hire American workers. But obstacles still exist. The Senate bill to permanently ban Chinese automakers has bipartisan support. The rules restrict Chinese-developed software for connected cars. And the USMCA trade agreement is up for renewal, with the Trump administration seeking a new US content requirement for cars.
Even the border is becoming porous. Chinese EVs from BYD, Geely, and Xpeng are seen at the US-Mexico border, bought at Mexican dealerships for less than $20,000 by residents traveling to American border towns. Registration in the US is almost impossible, but the demand signal is clear. According to Kelley Blue Book, 38% of Americans would consider buying a Chinese car.
China’s domestic market is also pushing companies abroad. EV and hybrid sales in China fell 6.8% year-over-year in April. Overall car sales fell by 21.5%. Overcapacity and intensifying competition mean that Chinese carmakers must export to survive.
“By 2030, we will see some form of Chinese cars on American roads,” said Dunne.Somehow, they will find their way in.” The question is whether Detroit will be a partner or a spectator if they do.
