Make America gas again: How Trump's trade war with China impacts the global EV race
Donald Trump and China are dishing out tariffs like hotcakes. Here's what that means for the international EV race.
- America just experienced a tire blowout in the international race to create the best electric vehicle brands.
- China is fierce competition in the EV space and a trade war could give them a lead that leaves the U.S in the dust.
- Brands like BYD and Xiaomi are already producing spectacular EVs that could become more popular due to tariff turmoil.
The race to create the world's most popular vehicles is underway, and the United States is on the verge of losing its confident lead. For the last few years Tesla has dominated competitors from Europe and Asia in individual vehicle sales despite America's slower approach to the mass adoption of electric vehicles.
According to the International Energy Agency, over 1.7 million EVs were sold in America in 2024. That's up from a mere 300,000 electric vehicle sales in 2020. It's no secret that EVs are becoming more popular in America, but what are the financial implications of a foreign automaker becoming the undisputed sales and product leader in the electric vehicle space?
Millions of electric vehicles could be sold in America in the years to come. If those vehicles are from foreign nations, consumers could pay hefty prices due to import tariffs. Furthermore, the world automotive industry market size is projected to reach over $6 billion dollars by 2033, an increase from over 3.5 billion in 2023, according to Yahoo finance.
There are billions of dollars on the line in the race to create the most popular electric vehicles internationally. The victorious country will win millions of vehicle sales which translates to tax revenue, jobs and reinvestment in dominating brands.
The American auto industry is a cornerstone of the economy. It has taken major hits through financial crises, playing a huge role in the Great Recession of 2008. The emerging EV space is a huge opportunity for American companies to experience international sales success. So, who are the big names in this race and why is America quickly losing steam?
What is the best-selling electric vehicle in the world?
The U.S. may not produce the most EVs by volume, but America produced the best-selling electric vehicle in the world in 2024. To top it off, this EV is mostly American-made. The Tesla Model Y held the crown in 2024 and has been making waves in the industry since deliveries began in the first quarter of 2020.
A whopping 69% of Tesla parts are made in the United States or Canada. The company's CEO Elon Musk may be eccentric, but Tesla produced a mind-blowingly popular product in a competitive market using mostly American parts. The Model Y and Model 3 gave America an edge as superior products in the market momentarily.
Which country is leading in electric vehicles?
Unfortunately for the home team, China is dominating the EV space in terms of both production and sales. The country may not have produced the best-selling electric vehicle in the world last year, but they were certainly in the running. Furthermore, nameplates like the BYD Seal are gaining popularity. The BYD Seal electric sedan starts under $25,000 in China, which is more affordable than the Tesla Model 3 electric sedan.
From affordability to impressive specs, it seems Chinese EVs are outperforming American electric vehicles in nearly every arena. The Xiaomi SU7 is a Chinese luxury sport sedan that has captured the attention of major automotive and technology influencers such as Doug DeMuro, Marques Brownlee and Forrest Jones.
The Xiaomi SU7 produces 673 horsepower, has 497 miles of range on a single charge, and rockets from 0-60 miles per hour in a mere 2.7 seconds. Drivers can recharge the SU7's battery from 10-80% in just 20 minutes. Simply put, there are no American EVs that impressive for under $60,000. The Xiaomi SU7 in the TikTok video below has a sticker price around $41,500. Houston, we have a problem.
How Trump's tariffs will affect the EV race
Donald Trump's 'Liberation Day' tariff policy has prompted swift retaliatory tariffs from China. White House press secretary Karoline Leavitt announced 104% tariffs on China on April 8 during a briefing. Where does this leave consumers?
Economists and automotive executives predict that Trump's tariffs will make manufacturing significantly more expensive and difficult. The increased costs could lead to higher prices for consumers.
On the sales side, retaliatory tariffs will increase the prices of American-made electric vehicles like the popular Tesla Model Y and Tesla Model 3 internationally. This will cause American EVs to be less attractive in the eyes of foreign consumers and more affordable nationally produced models to be more appealing. Who would have thought that Donald Trump would be the one to stop Tesla's amazing international sales run in its tracks?