Tariffs on Chinese EVs Make California’s Mandate Even Less Realistic

Tariffs on Chinese EVs Make California’s Mandate Even Less Realistic

People look at a BYD Seagull car by Chinese electric vehicle (EV) manufacturer BYD Auto at the Bangkok International Motor Show in Nonthaburi on March 27, 2024. (Lillian Suwanrumpha/AFP via Getty Images)

John Seiler

John Seiler

5/19/2024

Updated: 5/19/2024

0

Commentary
Back when I was growing up near Detroit in the 1960s and 70s, now and then somebody told a questionable story that went something like this. “Did you hear about a guy over in Ferndale who invented an engine running on water?”
“No. What happened to it?”
“The oil companies paid him $100 million for the plans and to keep his mouth shut.”
That comes to mind as California continues grappling with Gov. Gavin Newsom’s mandate for all new cars sold in California to be zero-emission vehicles by 2035.
Electric cars aren’t quite as unrealistic as a water-powered car. They do exist and many people buy them. But as a practical replacement for gas- or diesel-powered cars, they’re about as realistic as water-powered cars. That’s going to become more and more evident every year as we head toward 2035.
Bloomberg just headlined, “Once-Loved EV Startups Teeter on Edge as Buyers Sour on Industry.” Subheadline: “Stocks of most EV newbies trading at fractions of prior highs.”
The crash especially hit hard Rivian Automotive in Irvine and Lucid Group in Newark, which “reported wider-than-expected losses, after losing a staggering amount of money for every vehicle they sold.”
The article quoted Brian Mulberry, client portfolio manager at Zacks Investment Management, who said, “There really is no room for startups in this environment as rates are too costly to finance growth and margins are not strong enough to attract private capital.”
Here’s what he meant by “rates too costly.” Mr. Newsom first ordered the new gas-powered car ban in September 2020, when the Federal Reserve Board was holding its key Fed Funds rate close to 0 percent. Today, according to the New York Fed, it’s 5.33 percent.
Another problem is the volume of electric vehicles needed for California’s plan currently just doesn’t exist in the United States. Lucid’s plant is in Casa Grande, Ariz. And Rivian’s is in Normal, Ill. And of course industry leader Tesla, once headquartered in Fremont, Calif., moved to Austin, Tex.
But to achieve anything near Mr. Newsom’s 100 percent mandate, cheap cars will have to be imported in massive quantities from communist China. But that isn’t going to happen. Global political realities are colliding with California’s environmental dreams.

The Reality

The Washington Post headlined May 14: “Biden hits Chinese EVs with tariffs topping 100% as election looms: The move, which quadruples tariffs on electric cars, is aimed at preventing China from adding autos to the list of industries it dominates.”
The president also imposed new levies on computer chips and lithium batteries, both used in electric cars.
The threat was well-described in a May 13 Associated Press story headlined, “Small, well-built Chinese EV called the Seagull poses a big threat to the US auto industry.” It’s made by BYD and sold in China for $12,000. Although the price likely would be higher in the United States. Still, according to Cars.com, currently the cheapest EV sold in the U.S. is the Nissan Leaf, starting price $29,280.
The Leaf is manufactured in Smyrna, Tenn., where the plant needed a $1.4 billion loan from the U.S. Department of Energy—that is, the taxpayers—to start construction. Which shows this type of EV production isn’t viable in a free market.
The BYD Seagull is the kind of car most Americans might be interested in. Not BYD’s $160,000 SUV, about which Mr. Newsom gushed he “wanted two of them” during his embarrassing junket to China last October—which I reported on in The Epoch Times in my article, “Chinese State-Owned Media Uses Gov. Newsom in Massive Propaganda Blast.”

Donald Trump vs. Chinese Cars

There will be even worse news for the EV industry if Donald Trump becomes president again. I listened to his recent rally in Freeland, Mich. In between the Don Rickles-style insults of President Biden and other opponents, at about 36:30 on the video, he pledged to autoworkers: “I’m going to save your industry, and we’re going to make your industry much bigger. Because we’re going to put tariffs on cars that are coming into our country. I don’t know if you know it. ... China is building some of the largest auto plants in the world along our border in Mexico. And they think they’re going to take those cars and sell them into the United States and lose all your jobs in Michigan.”
He then criticized United Auto Workers President Shawn Fain. “And you ought to tell the head of the [United] Auto Workers, as a union boss, he stinks,” former President Trump continued. “Because what he’s allowing to happen to you as union workers. ... But we’re going to put tariffs on those cars, and we’re not going to let them sell those cars in the United States.”
Michigan is a top battleground state with 15 electoral votes needed by either candidate for victory nationwide. Former President Trump won it in 2016 over Hillary Clinton, 47.50 percent to 47.27 percent. President Biden won it in 2021 over former President Trump, 50.62 percent to 47.84 percent. It likely will be close again on Nov. 5.
Based on an average of 46 polls, Politico pegs former President Trump ahead of President Biden by 4 points, 49 percent to 45 percent.
Notably, former President Trump’s rally in Freeland was 50 miles northwest of Flint, a city devastated even more than Detroit by the decline of the U.S. auto industry. In 2011, TheGrio magazine detailed its problems under the headline, “Flint’s economic fall like none other in the country. It was a city that was integral to the birth of the auto industry. It fell quicker and harder than any other Midwestern city.”
That was just before the 2014 Flint Water Crisis. “Besides lead contamination, the Flint River water was blamed for an outbreak of Legionnaires’ disease,” according to AP. The city became a watchword of American industrial decline and the complacent attitude of the country’s ruling elites, especially in Washington, D.C., toward the devastated middle class. The despair of those poisoned and laid off in Flint may have contributed to former President Trump’s victory in Michigan two years later.

Conclusion: EVs Not Ready for Prime Time

The historical fact is the internal-combustion engine is one of the greatest inventions of mankind. Cars now have become so refined, tailpipe emissions are very low, and 1960s-levels of smog are seen only in TV shows of that era. California’s 100 percent mandate for 2035 inevitably will be postponed, especially if former President Trump becomes president and, as he has promised, cancels President Biden’s own 70 percent EV mandate by 2032.
A gas car today also has been improved upon with hybrid cars, which can be excellent and still are getting better. CNBC reported in April, “After years of being overshadowed by flashy electric vehicles from Tesla and others, the hybrid—a gas sipper that has both an engine and an electric motor—is back in the spotlight. ... Hybrid sales grew five times faster than EV sales in February 2024, according to Morgan Stanley.”
Because of high prices on everything, I’m keeping my creaking 2010 Camry going as long as possible. I like sedans, not SUVs. But if I needed a new car, I’d definitely look hard at another Camry, which for 2025 will be hybrid-only.
As to electric cars, the only one I would consider is a golf cart.
Copy
facebooktwitterlinkedintelegram
John Seiler

John Seiler

Author

John Seiler is a veteran California opinion writer. Mr. Seiler has written editorials for The Orange County Register for almost 30 years. He is a U.S. Army veteran and former press secretary for California state Sen. John Moorlach. He blogs at JohnSeiler.Substack.com and his email is writejohnseiler@gmail.com

Author's Selected Articles
California Insider
Sign up here for our email newsletter!
©2024 California Insider All Rights Reserved. California Insider is a part of Epoch Media Group.