The tariffs implemented by the United States have rendered exports to the country unfeasible for Chinese electric vehicle (EV) makers, according to an official from leading manufacturer Xpeng during his trip to Hong Kong.
However, Yeqing Zheng stated on Thursday that the increased initiatives taken by Guangzhou-based Xpeng to explore other markets—through setting up production facilities abroad and granting technology licenses—might mitigate the effects of these tariffs.
He stated that the sector was previously subjected to “an exceptionally high degree of tariffs imposed by the United States prior to this episode of the trade conflict.”
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If my calculations are correct, at present, we in the EV industry face an effective rate of around 270 percent… It’s still not feasible for any Chinese automobile maker, particularly those producing electric vehicles, to ship their products directly to the U.S.,” stated the vice president and general counsel of Xpeng.
U.S. President Donald Trump has levied accumulated tariffs totaling up to 145 percent on all Chinese products across several stages of escalation. Additionally, the White House disclosed that certain items could face even higher rates, potentially reaching up to 245 percent.
During a panel at an American Chamber of Commerce event in Hong Kong, an Xpeng executive addressed the difficulties confronting China’s tech industry due to recent regulations. The conversation focused on these emerging challenges faced by the technological landscape in the country.
He mentioned that the majority of automobile manufacturers had started adopting three approaches to cope with the unpredictability caused by the continuing trade conflict.
The first was to aggressively pursue opportunities in other global markets.
Localisation was the second tactic, which involved establishing manufacturing and assembly operations outside China.
“Through localization, we aim to avoid or at least facilitate our entry into such strategically significant areas,” he stated. “We understand that if we wish to achieve a substantial market presence within any country or region, localization is essential.”
Creating local supply chains was additionally necessary to further reduce the effects of trade barriers and possibly improve market accessibility.
The third approach focused on “services rather than products,” mainly via technology licensing.
He explained that this entailed moving away from exporting vehicles directly and concentrating on offering technical know-how and intellectual property to collaborators in various nations such as the United States, enabling them to manufacture locally.
He pointed out an instance involving the collaboration between battery producer Contemporary Amperex Technology Limited and American auto giant Ford. Together, they established a facility in Michigan, utilizing the expertise of the Chinese firm to manufacture affordable lithium-iron batteries.
During the same discussion panel, Denis Simon, who holds the position of Bank of America Visiting Chair in International Finance at Tsinghua University’s Schwarzman Scholars program, pointed out that one unforeseen result of the United States imposing stricter limitations and erecting “higher barriers” in specific tech sectors has been accelerating advancements in Chinese technology.
He mentioned that restricting China’s entry into specific technologies and market areas has “motivated” the nation to “increase its own resources, become more self-sufficient, and enhance its innovative capabilities domestically.”
Simon highlighted a notable change in the U.S. stance toward China circa 2015, an evolution he thought drove up trade and technological limitations.
Suppose the United States produces cannons, yet we do not manufacture cannonballs, whereas China does produce them,” Simon stated. “It’s essential for us to develop our capacity to create cannonballs.
“He stated that we must stop Chinese imports of cannonballs into the United States to enable a gradual yet steady development of our domestic production capabilities.” He provided the Chips and Science Act of 2022 from the Biden administration as an illustration.
Grace Shao, who founded the industry newsletter AI Proem, pointed out a notable change in the attitude of China’s emerging tech pioneers—a rising wave of self-assurance and patriotic sentiment among them.
“They’re like: ‘we are a China team, we are Chinese, we’re Chinese educated, brought up, and we are so proud to represent China’,” she said, noting a departure from previous tendencies to downplay origins.
She pointed out the case of Hangzhou-based DeepSeek, indicating that their focus on adopting open-source technology showcased their innovative abilities.
She mentioned, ‘The adoption of open source is essentially a show of transparency: “If you question my integrity, go ahead and review what’s documented—feel free to verify whether I’m replicating your work, okay?”’
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The article initially appeared on the South China Morning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.
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