China's electric vehicle production capacity far exceeds domestic demand, and the penetration rate is just over half already discounted due to oversupply. The United States is the core of Western countries, if the United States can remove tariffs on Chinese electric vehicles, persuading the European Union and Canada to remove tariffs on electric vehicles will be natural. Stop the United States from restricting our connected car hardware and software.

China and the United States will hold talks on economic and trade issues, including U.S. restrictions on China's electric vehicles.

   Commerce Minister Wang Wentao and his US counterpart will exchange views in the near future on bilateral economic and trade ties and key issues of mutual concern, including restrictions on electric vehicles (EVs), Xinhua News Agency reported on Oct. 1, citing sources familiar with the matter.

   During a two-day working group meeting with a US delegation in Beijing in September, Chinese officials expressed "serious" concerns about additional US tariffs on Chinese goods, investment restrictions and Russia-related sanctions.

   Earlier, the White House announced that it would increase tariffs on $18 billion worth of goods imported from China, mainly targeting strategic industries such as electric vehicles, batteries, steel and key minerals.

   On May 14, the White House announced a new tariff policy on China, in which the tariff rate on electric vehicles will be increased from the existing 25% to 100%, effective in late September. The tariff rate on semiconductors will increase from 25% to 50%, effective in 2025.

   In addition to electric vehicles and semiconductors, Washington will increase tariffs on some steel and aluminum products to 25 percent from the original 0 percent to 7.5 percent. Tariffs on natural graphite and some other key minerals jumped from zero to 25 percent; The tariff on solar cells was increased from 25% to 50%.

   A White House statement said the move was intended to encourage China to "eliminate their unfair trading practices in technology transfer, intellectual property, and innovation."

   The tariffs were imposed after the Office of the US Trade Representative conducted a review of previous levies proposed by former US President Donald Trump. Biden, for his part, said the tariffs were aimed at strengthening protections for strategic domestic industries from China's state-driven excess capacity. Beijing has vowed to retaliate.

   As we all know, the number of electric vehicles we export to the United States is very small, very small to negligible. That is, although the US tariff rate on Chinese electric vehicles has increased from 25% to 100% before September, a four-fold increase, in fact, it has little impact on our electric vehicle exports. Why do we still have to communicate with the United States about tariffs and other restrictions on electric vehicles?

China's electric vehicle production capacity far exceeds domestic demand, and the penetration rate is just over half already discounted due to oversupply.

   According to the passenger car sales data released by the Passenger Car Federation, although the car trade-in subsidy was raised to 20,000 yuan in August, car sales in August fell 0.9% year-on-year to 1.907 million units, an increase of 10.9% from the previous month.

   In terms of year-on-year data, car sales have been lower than the same period in 2023 for five consecutive months. Despite the increased subsidies, people are still unwilling or unable to afford to buy cars.

   In August, new energy sales exceeded one million units for the first time, reaching 1.025 million units, an increase of 43%, and the penetration rate reached 53.75%. Sales of gasoline vehicles shrank by 882,000 units. However, the domestic sales of new energy vehicles are far from enough to absorb the capacity of electric vehicles. In August, 99,000 new energy passenger vehicles were exported, an increase of 23.7% year-on-year.

   Forced by severe oversupply, China's electric car makers launched a frenzies of discount promotions in September. Phate Zhang, founder of Shanghai-based electric vehicle data provider CnEVPost, commented on the X platform: "Although September is the peak season for car sales, new energy vehicles have also embarked on this road of no return after deep discount promotions for traditional fuel vehicles. After production capacity far exceeds demand, major players in new energy vehicles use more discounts to stimulate consumers' buying interest after launching new models and aggressively cutting prices."

   BYD, Ideal Automobile, Xiaopeng Automobile, Zeeker and Leapmotor set new monthly delivery records in September, fully proving that the promotion campaign is starting to work.

   BYD delivered a record 419,000 electric vehicles in September, up 12.4 percent month-on-month and 45.9 percent year on year. It was the fourth consecutive month of record sales for the company.September sales were up 11.6 percent from August and 48.9 percent from a year earlier.

   Xiaopeng Motor delivered 21,400 vehicles, breaking the record high of 20,000 in December, with sales up 52.1 percent from August and 39.5 percent year-on-year. The M03, the first model of its budget Mona brand, which went on sale in late August, accounted for 10,000 sales in September.

   If the export market cannot be opened up, or exports decline due to tariff measures, it will intensify competition, internal volume and discounts in the domestic electric vehicle market, thereby damaging the profits and sustainable operations of auto manufacturers, and will be a serious blow to the electric vehicle industry to continue to lead the global market.

The United States is the core of Western countries, if the United States can remove tariffs on Chinese electric vehicles, persuading the European Union and Canada to remove tariffs on electric vehicles will be natural.

   After the United States decided to impose 100 percent tariffs on Chinese electric vehicles in May, the European Union and Canada began to draft similar tariff measures.

   In August, Canada announced it would impose a 100 percent tariff on electric vehicles imported from China, including cars, buses, trucks and delivery vans. This is in line with measures taken by the United States to stem the influx of Chinese electric vehicles into North America. It came into force on October 1 after a 30-day consultation period over the summer. There will also be a 25% surcharge on steel and aluminum imports from China, effective October 15.

   Canada also said in early September that Ottawa could impose further tariffs on Chinese batteries, technology products and key minerals.

   The European Union has also announced that it has decided to increase the export tariff of electric vehicles in China to 8-36.3 percent. Among them, tariffs of 36.3%, 19.3% and 17% were imposed on SAIC, Geely and BYD, respectively. The additional tariff on Chinese-made electric cars from Tesla, the US electric car company, is just under 8 per cent.

   A tariff of 8% to 36.3% is much lower than the 100% tariff in the United States, but it will hurt our electric vehicle exports, because the EU is our largest export market for electric vehicles.

   Under the influence of the EU's announcement of tariffs on Chinese-made electric vehicles, the number of Chinese electric vehicles exported to the EU has declined significantly.

   China exported 605,000 electric vehicles in the first half of 2024, up 13.2% from a year earlier, according to the General Administration of Customs. Exports of electric vehicles to the 27 countries of the European Union totaled 221,000 units, down about 15 percent from the same period last year. The share of electric vehicles exported to the EU in total exports fell to 36.5 percent from 48.6 percent in the first half of last year.

   Among them, the monthly export volume in June fell below 30,000 for the first time this year, hitting a new low in the year, down 31% year-on-year.

   We have been communicating with the EU about electric vehicle tariffs, but it has not been very effective. From the point of view of the European Union, the United States has raised its tax rate to 100%, while the European Union has only 8% to 36.3%, which is already very interesting.

   For Canada, due to the existence of the US-Canada-Mexico Free Trade area, if Canada cannot be consistent on the tariff issue, it will lead to trade friction between the United States and Canada. The United States is Canada's largest export market, which it is clearly unwilling to bear.

   As the saying goes, you have to tie the bell. If we can open the knot with the United States and let the United States cancel the tariffs on electric vehicles, the problem of electric vehicle tariffs in the EU and Canada will naturally be solved.

Stop the United States from restricting our connected car hardware and software

   Lianhe Zaobao website reported on September 25 that the United States intends to restrict the use of Chinese connected car hardware and software and vehicles in the United States. The White House said there were national security concerns about the data collection of smart cars made by Chinese companies, and that the hardware and software of connected cars in China and Russia were also easy targets for hackers. It wants to solve the so-called "security problems caused by smart cars" by suppressing the hardware and software of connected cars in China and Russia.

   The move will include a ban on the use and testing of autonomous driving systems and automotive communication system technologies in China and Russia, Bloomberg reported, citing sources. While the ban mainly focuses on software, the proposed rules would cover some hardware, they said.

   In order to solve the problem of new energy vehicle production capacity digestion, many electric vehicle companies in China have invested in overseas factories and assembled complete vehicles in overseas countries close to the market by exporting software and hardware parts from the domestic automotive supply chain. One of the biggest investments by Chinese auto makers is in Mexico, which has joined the US-Canada-Mexico free Trade area.

   On Oct. 1, about 20 Democrats in the U.S. Congress urged Mexican President-elect Claudia Sinbaum to address national security concerns posed by connected cars being produced in Mexico by Chinese automakers, the South China Morning Post reported.

   The lawmakers, led by Rep. Elissa Slotkin and Sen. Sherrod Brown, asked Sheinbaum in a letter to establish a national review and send a delegation to the United States for negotiations by early 2025.

   Therefore, if this plan is implemented, it will be a serious blow to our auto assembly plants in Mexico. All modern cars and trucks have on-board networking hardware that provides Internet access, enabling them to share data with devices inside and outside the car. If a car produced by a Chinese company in Mexico uses our connected technology, it will be banned from sale in the United States.

   On September 25, China's Ministry of Commerce responded to the matter in the form of a spokesman's question and answer on its official website, saying that China firmly opposes the move by the United States.

   The spokesperson said that in recent years, the US has imposed high tariffs on Chinese cars, restricted their participation in government procurement, and introduced discriminatory subsidy policies. Now, on the pretext of so-called national security, the US has stigmatized the software, hardware and vehicles of Chinese connected vehicles as "unsafe" and restricted their use in the US. What the US has done is groundless, violates the principles of market economy and fair competition, disrupts and distorts the global auto industry chain and supply chain, and constitutes economic coercion. It is believed that our          Minister of Commerce has invited his US counterpart to exchange views in the near future on bilateral economic and trade relations and key issues of mutual interest, especially the issue of restrictions on electric vehicles (EVs), and preventing the United States from restricting our connected car hardware and software is one of the priorities.