The “bloodbath” Donald Trump warned about in mid-March has arrived on US shores sooner than expected. When he created a media-fed controversy by using that word to describe the impacts on US automakers if Biden were to be re-elected, Trump was referring to plans by Chinese car companies to flood the American car market with cheap, high-quality SUVs by exploiting loopholes in tariff laws utilizing plants built in Mexico as the jumping-off point.


At least one such plant, by Chinese auto company BYD, is in the planning stages, meaning the flood is set to begin within the next few years. But Reuters reported recently that Swedish-based, but Chinese-owned carmaker Volvo (a subsidiary of China’s Geely) is about to beat the competition as soon as this summer with the introduction of a small battery electric SUV, the EX30, in the US.

The EX30 will directly compete with the Tesla Model Y in terms of performance and features, but at a price tag of $35,000, $8,000 less than the Model Y’s current cost. Reuters writes that, “[t]he competitive price reflects an unusual combination of Geely’s China-specific cost advantages and Volvo’s ability to skirt US tariffs on Chinese cars because it also has US manufacturing operations.” Even better, Volvo says that, even at that market-undercutting price, it expects to realize a 15-20 per cent profit margin on the EX30, meaning it has room to cut the price further should Tesla or other companies find ways to meet its initial price tag.

Making the economics even more appealing to both consumers and Volvo/Geely is a recent Biden interpretation of a provision in the 2022 Inflation Reduction Act (IRA) that provides buyers with a $7,500 federal subsidy if they initially lease the vehicle. Many buyers will later purchase the car outright by paying off the lease early without loss of any portion of the subsidy. The Biden Treasury Department created this situation with an interpretation that classifies leased EVs to be “commercial vehicles” regardless of class or configuration, a leap of logic that is truly breathtaking even in this administration.

One can only wonder if management at Tesla and legacy US carmakers like Ford and GM read that particular fine print as they loyally lobbied for the passage of the IRA in cooperation with the Biden administration in their eager pursuit of federal rents. As things are turning out, they may well have been signing their companies’ financial death warrants.

Under current US law, cars manufactured in China and imported directly into the US face a tariff of 27.5 per cent. Volvo qualifies for tariff refunds because it has US-based operations from which it also sells similar cars. Other Chinese car companies – like BYD – will be able to bypass US tariffs by building manufacturing plants in Mexico or Canada, utilizing a loophole in the US/Mexico/Canada Trade Agreement (USMCA). The USMCA was a Trump-era renegotiation of the former NAFTA agreement.

Volvo and Geely have been able to achieve the lower costs for the EX30 by utilizing a shared platform which allows Volvo cars to utilize the same batteries, motors, inverters, gears and other high-cost equipment used by Geely in its own manufacturing. It remains to be seen whether BYD and other Chinese car companies will be able to realize even lower costs by manufacturing cars in Mexican plants. The competition in that realm could become fierce in the coming years.

One thing is certain, though: US carmakers, manufacturing EVs in US plants, paying US labour rates, and utilizing enough US-made parts to fully qualify for IRA subsidies will not be price-competitive with either class of Chinese EVs.

This is the “bloodbath” Trump was talking about, and it has arrived far sooner than even Trump expected.

https://blackmon.substack.com/...9&triedRedirect=true

they may 'flood' the market but I don't see their being a lot of buyers

and if its a 'commercial vehicle' does that mean it gets commercial plates?

Link

The problem with BYD is they make problem vehicles, they have a large amount of issues that plague the vehicles. IF you want to lay blame, the real problem is the EU and California both mandating nothing but EV new car sales, Biden is just fueling the fire.

As a Manufacturer you either give up or go all in, CA being the largest market in the USA means to sell in CA you have to have an EV fleet.


BYD’s Quality Problems Hit International Markets: Report

EVs piling in European warehouses and logistics-related quality issues are new headaches for the world’s largest EV maker.

BYD is running into some new obstacles as it expands its footprint in the Chinese and overseas markets. Chinese-made BYD models shipped to Europe, the Middle East, and South Asia are plagued with quality issues, The Wall Street Journal said in its latest report.

The Warren Buffet-backed automaker had a record sales year in 2023, dethroning Tesla as the world’s largest electric vehicle manufacturer. It was also the third largest automaker by market capitalization as of the end of last year, right behind Tesla and Toyota.

The recent report states that export vehicles from China require several fixes and repairs when they arrive at their destination. Vehicles that landed in Japan had scratches, and the ones that arrived in Europe had mold, the report stated.

While mold can be a common occurrence in cars, especially when they’re stored for a long duration in humid weather, the issue with BYD cars in Europe was that they didn’t receive the proper treatment to have the mold removed.

In Thailand, where Chinese EVs have taken the domestic automotive market by storm, BYD’s quality issues seem to be mounting. Complaints of paint and plastic peeling have become public. Meanwhile, in Israel, BYD EVs are reported to have warped under the weight of roof racks.

These seem like logistics-related issues, rather than manufacturing defects. A BYD executive told WSJ that the issues were equivalent to “going to a decent restaurant but finding that the plate is chipped.” Some 10,000 BYD cars are estimated to be parked in European warehouses, where they have been waiting to be sold since the end of last year.

Maintaining tight quality control across the global shipping route might be a new challenge for BYD. But it’s too early to gauge if these quality problems are false alarms or something BYD needs to take very seriously.

The automaker’s sales slumped in February 2024 due to an industry-wide slowdown. It is also expected to miss its internal target of selling over 400,000 cars in international markets this year.

If recent current events are any indicator of the market need, I suppose we’ll be seeing a lot of Chinese EV’s in lots waiting for buyers that don’t materialize. That, and disabled/burning on the side of the road. If people don’t want US made EV’s, what makes them think the shitty Chinese are will do any better because they’re a little cheaper?

quote:

Originally posted by nhtagmember:
they may 'flood' the market but I don't see their being a lot of buyers

and if its a 'commercial vehicle' does that mean it gets commercial plates?

Depends on prices. Look at Amazon and Walmart to see that price is number one for most Americans or people in general. Something like 70% of what’s for sale on Amazon comes from China. Thats the reason BYD went from a phone battery company to passing Tesla as the biggest EV manufacturer in the world and only changed to 100% EV’s starting in 2022.

I price shop as well but EVs are a bit different than bath towels. Not sure that people will buy Chinese junk no matter what the price.

The smart money is on smart people not buying into an immature technology with a questionable infrastructure and parts controlled by our enemy.

I don’t want to buy a Chinese coffee pot let alone a car

quote:

The smart money is on smart people not buying into an immature technology with a questionable infrastructure and parts controlled by our enemy.

Smart, which is questionable to begin with...

quote:

Originally posted by nhtagmember:
I don’t want to buy a Chinese coffee pot let alone a car

Plenty of people don't care where it's made as long as they can afford it or finance it....