With Donald Trump's return to the White House, Tesla CEO Elon Musk's vocal support during the election campaign is anticipated to provide Tesla with increased regulatory flexibility. Since the November 5 US presidential election, Tesla's market value has risen by over 39%, adding around US$70 billion to Musk's net worth.
According to Bloomberg, the market anticipates that Trump's return to power will significantly benefit Tesla. However, his strict policies are expected to complicate the prospects for Chinese electric vehicle (EV) manufacturers.
The Biden administration previously imposed additional tariffs on Chinese EVs, yet Chinese manufacturers continue their efforts to penetrate the US market. Trump has vowed to increase import tariffs on Chinese EVs further, aiming to protect American automakers.
A bipartisan consensus in the US opposes allowing China to dominate the EV and other industries. The Biden administration's 100% tariff on Chinese EV imports, effective as of September 27, lays the groundwork for Trump to heighten these trade barriers if he decides to impose stricter sanctions.
Trump's cautious stance on broad EV adoption may be softened by Musk's influence. Analyses suggest that a Trump administration could foster a more favorable regulatory environment, potentially easing compliance requirements across states and accelerating Tesla's planned Robotaxi rollout in 2025.
In this regard, Chinese EV manufacturers may explore various avenues to respond.
Analysts identify three main strategies for Chinese EV manufacturers. Firstly, they could relocate operations to the US to bypass Trump's tariffs, aligning with Trump's commitment to attract foreign operations to the US. Secondly, they could absorb the costs of potential additional tariffs. Thirdly, they might pursue new export markets to accommodate China's surplus EV production capacity.
A fourth option involves lobbying for tariff exemptions on Chinese EV products, though not all Chinese automakers may be open to this approach.
Some Chinese EV manufacturers are setting up production facilities in the EU and Mexico while exploring opportunities in Africa and Southeast Asia. In October, the EU raised tariffs on Chinese-made EVs to a maximum of 45.3%, leaving limited room for regulatory concessions.
Market analysts suggest that Trump's new policies could restrict growth in the US EV market. GlobalData has adjusted its projections, estimating that under Trump's leadership, EVs will capture a 28% market share by 2030, down from the previous forecast of 33%.
Despite these changes, the US remains a minor market for Chinese EV exports. Chinese customs data shows that in 2023, China exported around 10,000 passenger EVs to the US, accounting for less than 1% of China's total EV exports.
Data from the China Passenger Car Association (CPCA) shows that in the first seven months of 2024, China's EV exports to the US and Canada declined by 10%, down to 28,000 units, representing only 2.4% of total EV exports during this period.
While the outlook remains uncertain, it is unlikely to deter Chinese EV manufacturers from introducing more competitive models. Industry experts suggest that Trump's pragmatic focus on strengthening the US economy may also create opportunities for Chinese EV manufacturers.
