Chinese EVs posing threat to U.S. automakers despite increase in tariffs

There’s growing concern in the U.S. and Europe about the threat of Chinese made vehicles on the legacy automakers, despite the recent announcement from the White House that EV tariffs are increasing from 25% to 100%.

Out this week, a study from consulting firm AlixPartners that Chinese automotive brands are expected to achieve 33% market share across the globe by 2030.

The Chinese made a big, successful strategic bet over the past decade that EVs would become the dominant drivetrain globally, and as a result locked up the vast majority of battery production and the related battery supply chain.

But even as the U.S. enacts trade policies to protect the domestic market, Chinese automakers continue their steady march to global dominance on the strength of their electric vehicle product offerings.

What AlixPartners described as an “overtime culture” in China enables companies to release new vehicles and product updates faster than their overseas rivals.

China has popularized what has been called the 996 working hour system.

The 996 working hour system is a work schedule practiced illegally by many companies in China. It derives its name from its requirement that employees work from 9:00 am to 9:00 pm, 6 days per week.

That equates to working 72 hours per week.

A number of Mainland Chinese internet companies have adopted this system as their official work schedule. Critics argue that the 996 working hour system is a violation of Chinese Labor Law and some have even called it “modern slavery”.

What AlixPartners described as an “overtime culture” in China enables companies to release new vehicles and product updates faster than their overseas rivals. Some battery materials companies there have been accused of engaging in forced labor.

Since 2019, the 996 issue has been met with growing discontent in China, but despite official promises to get rid of the system, it is still widespread in the country.

AlixPartners found that Chinese brands’ share of the automotive market is expected to double in Europe to 12% by 2030, and more than double in Russia to 69%. The firm anticipates Chinese brand share to triple in Central America and South America to 28% and nearly quadruple in the Middle East and Africa to 39%. Chinese brands are also expected to achieve more than 30% market share in South Asia and Southeast Asia, up from only 3% in 2024.

Both U.S. and European tariffs are likely only buying time and nothing more. Eventually, with the establishment of local production, especially in Europe, tariffs may prove to only be a short-term band aid.

As the U.S. erects prohibitive tariffs against Chinese EVs, it will protect the legacy automakers in the short term. But if China continues to out-innovate the U.S. in terms of EV and battery technology, and the world shifts towards EVs as the dominant drivetrain of the future, protecting legacy automakers from forced competition and innovation may just be delaying their inevitable demise.

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