29 August 2024

Impact of proposed US and Canada duties on Chinese EVs

The electric vehicle (EV) market is growing rapidly (in long term), with Chinese manufacturers making deep inroads into North America, both in the US and Canada, but the recent news on duty levy proposals  by these two countries could spoil the apple cart for China.

Canada has said it will impose a 100 per cent tariff on imports of China-made EVs after similar announcements by the US and European Union.

Impact of proposed US and Canada duties on Chinese EVs
Canada has proposed 100 per cent
tariffs on imported Chinese EVs. 

Recent trade policy changes, including new duties imposed by the United States and Canada, are set to impact Chinese EV sales.

We will give you insights on the current sales figures, potential reductions, and how duties may affect these numbers.


Current sales of Chinese EVs in US and Canada

As of 2024, Chinese EVs have gained a noticeable presence in North America. Here’s a look at the current sales figures:

United States: In 2023, approximately 200,000 Chinese EVs were sold in the US. This represents around 7 per cent of the total US EV market, which is estimated to be 2.85 million units.

Canada: Canada’s sales of Chinese EVs were nearly 20,000 units in 2023, which was around 5 per cent of the EV market. The total EV market in Canada was nearly 400,000 units.


Effects of new duties on sales

New import duties imposed by the US and Canada are likely to affect the sales of Chinese EVs significantly. Let’s see the potential reduction in sales numbers and percentages due to these duties.


United States EV situation

In the US, a new duty on Chinese EVs could lead to a substantial increase in vehicle prices. 

Assuming a potential duty of 15 per cent, the average cost of a Chinese EV, which is about $40,000 in the US, could rise by $6,000. This price increase is likely to reduce consumer demand.

If sales were to drop by 20-30 per cent due to the increased costs:

20 per cent reduction: 200,000 units x 20 per cent = 40,000 units. This would reduce the sales of Chinese EVs to 160,000 units, cutting their market share from 7 per cent to approximately 5.6 per cent.

30 per cent reduction: 200,000 units x 30 per cent = 60,000 units. This would reduce sales to 140,000 units, lowering their market share to about 4.9 per cent.
 

Canada EV situation
 
In Canada, the impact may be slightly less severe due to the smaller market size but still significant.

Assuming a 15 per cent duty increases, the price of a Chinese EV would rise from $30,000 to $34,500:

20 per cent reduction: 20,000 units x 20 per cent = 4,000 units. This would reduce sales to 16,000 units, decreasing the market share from 5 per cent to around 4 per cent.

25 per cent reduction: 20,000 units x 25 per cent = 5,000 units. This would bring sales down to 15,000 units, lowering the market share to about 3.8 per cent.


E-Vroooom’s views

The imposition of new duties on Chinese EVs by the US and Canada is poised to significantly impact sales.

So, the impact of the US and Canada duties on Chinese EVs would be significant and China has to scurry and look for other big markets like India, and to do just that, it has to urgently improve relations with the Narendra Modi government in order to push more of its EVs into the country.

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