The Chinese electric car industry is rapidly advancing and may soon pose a significant threat to Western automakers. However, the notion that Chinese cars, such as the $10,000 BYD, would be sold in the US at the same low price is unlikely. Several factors contribute to the lower prices in China, including a price war, government subsidies, and lower labor costs. If Chinese cars were to be sold in the US, they would need to meet different safety standards, which would increase costs.
Additionally, the US imposes tariffs of over 100% on Chinese-made cars, effectively banning them from the market. Even if these tariffs were lifted, it’s unlikely that Chinese cars would be sold in the US at significantly lower prices than their Western counterparts. Rivian CEO RJ Scaringe notes that the focus should be on the technology and quality of the cars, rather than just the cost. Chinese cars are often equipped with advanced infotainment systems, powerful software, and frequent updates, making them more competitive in terms of technology.
Scaringe argues that Western automakers should focus on developing better products and technology to compete with Chinese manufacturers. The Xiaomi SU7, a premium sedan, is an example of a Chinese car that integrates seamlessly with other devices and offers advanced features. Ford CEO Jim Farley has also acknowledged the superiority of Chinese in-vehicle technology and announced plans to develop a new EV platform to compete with China.
In the event that Chinese manufacturers start building cars in the US, Scaringe believes they will win on technology, not cost. The cost advantage of Chinese cars is largely due to factors that would not be applicable in the US, such as lower labor costs and government subsidies. Therefore, Western automakers should prioritize developing better products and technology to stay competitive in the market. As Scaringe notes, “the cars are actually better” is the key phrase, and Western manufacturers should focus on matching the technology and quality of Chinese cars rather than just trying to compete on price.