The Biden administration created conditions for Chinese electric vehicles (EVs) to undercut American competitors, and it is now scrambling to choke off that possibility, energy and trade experts told the Daily Caller News Foundation.
With a boost from President Joe Biden’s signature Inflation Reduction Act (IRA), the administration is aiming for 50% of all new car sales to be EVs by 2030, aggressively regulating the auto market, spending billions of dollars to push consumers and manufacturers to adopt EVs and striving to build out a domestic supply chain to realize the target. However, the administration’s conflicting green-industrial agenda and China’s dominance of key supply chains has positioned Chinese firms to cash in on subsidies and potentially flood the American market with cheaper EVs despite the administration’s ongoing efforts to keep them out, trade and energy experts told the DCNF.
“The Biden Administration has a problem of its own making. They made EVs the centerpiece of their climate agenda even though they knew that China owns or controls more than 80% of the minerals and materials that go into the components of nearly all EVs, not just ones made in China,” Tom Pyle, the president of the American Energy Alliance, told the DCNF. “Even if they successfully prevent Chinese brands like BYD from entering the U.S., they still have largely ignored the intent of their own law — the IRA — by creating loopholes in the domestic content provisions that you can drive a truck through.” (RELATED: Former EPA Chief Of Staff Mandy Gunasekara Warns Biden’s Push For Electric Vehicles Is Major Boost For China)
‘It’s Scary Right Now’: Autoworkers Worried Biden’s Electric Vehicle Push Could Kill ‘Thousands Of Jobs’ https://t.co/bWAjI4FFkt
— Daily Caller (@DailyCaller) February 20, 2024
Biden stated on Feb. 29 that China is looking to dominate the auto market and flood the U.S. with its cheaper EVs by using unfair trade tactics, and also warned that certain Chinese EV models could pose serious national security and espionage risks. In the statement, he explained that he had instructed the Department of Commerce to open an investigation into these models and determine what can be done to address the key risks they pose to American security.
“It looks as though Team Biden is beginning to get mugged by reality,” Dan Kish, a senior fellow at the Institute for Energy Research, told the DCNF. “They act surprised when they discover that, right under the surface, there is the obvious fact that they have real problems here with regard to EVs and China, security and subsidy design … anybody who looked at the structure and goals of the Biden agenda on these issues could have told you that these sorts of problems were clearly going to arise.”
The Commerce Department probe could shake up Chinese firms’ plans to invest in manufacturing facilities located in Mexico, ostensibly intended for those companies to have a new channel to penetrate the American market, according to Axios. It is “only a matter of time” until Chinese companies open up shop in Mexico to take advantage of loopholes in U.S. trade law, according to Connor Pfeiffer, the director of congressional relations for the Foundation for Defense of Democracies Action.
BYD — a Chinese auto manufacturer that is the world’s largest producer of pure EVs — is currently looking for a factory site in Mexico to increase their share of the “local market,” according to Reuters.
In the aggregate, Chinese dominance of key EV supply chains and the conflicts in the Biden administration’s green-industrial agenda reflect a disjointed approach to industrial policy that elevates the risks of Chinese interests capitalizing on Biden’s taxpayer-backed EV goals, other trade and energy experts told the DCNF.
Chinese companies — including those involved in producing steel and solar panels — have a “long history” of deliberately routing their component parts through third countries to evade U.S. tariffs, sanctions and other rules governing imports, Pyle told the DCNF.
Biden’s plans for EVs are a key pillar of his broader green-industrial agenda, which essentially holds that a massive wave of domestic green energy investment and production — unleashed by new subsidies, regulations and policies — can breathe new life into America’s industrial base.
However, these goals can find themselves in tension with each other when it comes to EVs, largely because China dominates the global supply chain for minerals and refining capacity needed to produce EV batteries and is capable of producing EVs at a much lower cost than American manufacturers. The Biden administration must strike a delicate balance to satisfy both aspects of its green-industrial agenda, according to Financial Times. (RELATED: Biden’s EV Dreams May Be Screeching To A Halt As Consumer Enthusiasm Wanes)
GM’s Profits Take $1 Billion Nosedive Amid Biden-Backed Electric Vehicle Pushhttps://t.co/elctBsCE02
— Daily Caller (@DailyCaller) July 27, 2022
“There’s no comprehensive strategy. If we in the U.S. are going to have an industrial policy, that means more than just giving out money, going to a groundbreaking ceremony and patting yourself on the back,” Nazak Nikakhtar, chair of Wiley Rein’s national security practice and former assistant secretary and under secretary at the Department of Commerce, told the DCNF. “It means actually enacting a meaningful set of policies that ensure the success of the domestic investments.”
The disjointed approach was on display in December 2023, when the administration proposed eligibility requirements for IRA EV tax credits that allow for vehicles built with minerals extracted and processed by Chinese companies to be eligible for the subsidy until 2025.
“The reality is that the vast majority of spending — whether via subsidies, grants, or mandates — on more EVs, and solar and wind hardware for the U.S. will directly benefit China because that nation is the utterly dominant supplier of key energy minerals and components needed,” Mark Mills, a distinguished senior fellow at the Texas Public Policy Foundation and an expert on the automobile market, told the DCNF. “Thus, it is only a detail whether those materials show up in EVs assembled in America, or assembled in China. It is no exaggeration to say that aggressive policies to pursue a ‘green’ agenda constitutes a win for China, both economically and geopolitically.”
The White House did not respond to a request for comment.
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