China is leading the electric vehicle competition, and should its relationships with the European Union strengthen, the United States might get left behind.
This year, significant changes are happening in global trade due to President Trump’s imposition of tariffs on American trading partners. The traditionally robust alliance between the United States and Europe is weakening as a result of this trade conflict. China could be seeking opportunities to draw Europe nearer, particularly concerning electric vehicle technology.
Welcome to the Friday issue
Critical Materials
Here’s your daily update on the latest news and developments in electric vehicles and tech. Today’s highlights include: Tesla has halted sales of their U.S.-produced Model S and X in China, as well as Lucid’s plans to acquire certain assets from the insolvent truck manufacturer.
Nikola
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30%: Is Hostile America Bridging the Gap Between the EU and China?
The European Union and China share significant trade connections, yet their partnership has faced challenges. The EU has voiced concerns about China’s extensive electric vehicle subsidies, arguing these provide an uneven playing field for Chinese manufacturers against their Western counterparts. Additionally, they appear to be at odds regarding Russia and the conflict in Ukraine.
However, as U.S. policies become more aggressive towards its allies, China and Europe are opening talks to deepen their trade ties. Chinese EV makers stand to benefit the most from that. Instead of the steep tariffs the EU slapped on Chinese EV imports last year, the two trading partners are now looking to establish minimum prices for Chinese-made EVs.
Here’s more from
Reuters
this morning:
EU trade commissioner Maros Sefcovic spoke with Chinese Commerce Minister Wang Wentao in the last 24 hours and both sides agreed to look into setting minimum prices, the EU spokesperson said.
Sefcovic has earlier stated that any floor prices should be just as effective and enforceable as the EU tariffs.
The Chinese Commerce Ministry stated that talks would commence right away.
Although numerous Chinese automotive companies have already ventured into the European market, they encounter import taxes as high as 45.3%, varying based on the company. The European Union applies different rates such as 17% for BYD, 18.8% for Geely, 35.3% for SAIC, and a reduced rate of 7.8% for Teslas manufactured in China. These additional charges surpass the regular 10% duty levied by the EU on all imported vehicles entering their territory.
The German automotive industry association apparently greeted the trade discussions positively. After all, China represents a massive market for German car manufacturers, contributing about one-third of their sales volume in the previous year. In reaction to the European Union’s duties, Chinese auto companies intended to increase their presence on the continent through establishing domestic production facilities. Companies such as BYD, Chery, Geely, along with battery producer CATL, have shown resolve in setting up manufacturing operations across Europe.
While Chinese EVs face steep tariffs in the U.S., European automakers remain heavily reliant on the lucrative American market for exports. The Trump administration’s 25% tariffs on cars and auto parts are still in effect, even as broader tariff measures are on a 90-day pause. Meanwhile, China is dominating the EV race, and if its ties with our allies across the Atlantic deepen, the EU could pull ahead, leaving the U.S. in the dust.
60%: Lucid Acquires Failed EV Truck Maker Nikola’s Assets
On Friday, Lucid declared that it would be acquiring certain facilities and assets formerly owned by truck manufacturer Nikola. This deal will not encompass the company’s operations, customer network, or the hydrogen fuel-cell technology utilized in its vehicles.
In 2014, the bankrupt manufacturer of heavy-duty vehicles ventured into electrification with electric trucks powered by batteries before shifting focus to hydrogen fuel cell technology. Nevertheless, Nikola’s CEO at the time, Trevor Milton, faced legal troubles as he was jailed on fraud charges and subsequently granted a pardon by President Donald Trump. The firm suffered significant setbacks due to multiple incidents involving fires in their trucks along with allegations of dishonesty within the leadership, leading to a severe decline in the company’s fortunes.
On the contrary, Lucid is experiencing growth. The company plans to assume control of Nikola’s production plant in Coolidge, Arizona, along with a location in Phoenix, which served as both Nikola’s main offices and research & development hub. As stated in a Lucid statement, these sites feature various assets such as battery and environmental test rooms, a complete vehicle dyno, and machine tools.
These locations contribute an additional 884,000 square feet to Lucid’s presence in Arizona. Additionally, the company plans to provide employment opportunities for more than 300 ex-Nikola workers who have expertise in different fields such as engineering and software development. According to the automaker, these new facilities will facilitate increased production of the forthcoming Gravity SUV and support the development of future mid-sized vehicle platforms.
90%: Tesla Halts Sales of Model S and Model X in China
Tesla has removed its premium Model S sedan and Model X SUV from ordering options on their Chinese website. These vehicles are manufactured at Tesla’s facility in Fremont, California, and they appear to be among the newest victims of the current trade conflict initiated under the Trump administration.
The United States has imposed a 154% tariff on all goods coming from China. In response, China set their tariff limit at 125%, stating that such measures are nothing more than “a joke” and warning they will “ignore” additional provocations from the U.S.
According to the data, Tesla managed to sell just 1,553 Model X vehicles and 311 Model S units in China over the past year.
Reuters
That’s merely a portion of its total sales, so we can safely assume that Chinese EV buyers won’t miss out on these vehicles. With brands such as BYD, Xpeng, Li Auto, and more offering numerous advanced and top-notch options, customers certainly aren’t lacking in choices.
100%: Will Lucid Maintain Its Growth Trajectory?
Smaller players are likely to be more susceptible to the ongoing global trade war compared to legacy carmakers sitting on huge cash reserves. Lucid seems to have strong financial support from its ties to Saudi Arabia’s Sovereign Wealth Fund and also plans to enter the mass market mid-size crossover segment in the coming years.
Do you think the Gravity SUV will help it expand its business? Can it survive this brutal trade war? Leave your thoughts in the comments.
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