The Globally Competitive Electric Car Market Has Been Dominated by Chinese Companies in Recent Years, Such as Warren Buffett-Backed BYD, Which Even Overtaken U.S. Electric Car Manufacturer Tesla as the World Market Leader Last Quarter. But it's Not Just in the Chinese Market That Competitors are Active; They Also Aim to Establish Themselves in Europe and the USA.
Tesla CEO Elon Musk's main focus is on China. When presenting Tesla's figures, he expressed concern about Chinese competitors and even called for trade barriers to protect domestic car companies. Musk sees Chinese imports as an existential threat to Tesla and other global automotive conglomerates.
The Alliance for American Manufacturing (AAM), a nonprofit partnership of leading American manufacturers and the United Steelworkers, also warns of the aggressive strategy of Chinese automakers. In their report "On a Collision Course: China's Existential Threat to the American Auto Industry and Its Path Through Mexico," the AAM describes the danger of Chinese imports into the U.S. via Mexico.
According to the report, Chinese carmakers are increasingly pushing into Mexico to build large assembly plants. An analysis by the Economic Policy Institute shows that China's foreign direct investment in Mexico rose by 126 percent between 2018 and 2022, with the majority going into the automotive sector. Mexico is the second-largest importer of Chinese cars, most of which, however, are exports to the USA.
Mexico is Part of the USMCA Agreement that Replaces NAFTA, Granting Duty-Free Status for Vehicles from Mexico and the USA as Long as Certain Requirements are Met. This Allows Chinese Automakers who Build Factories in Mexico to Gain Indirect Access to the US Market Through the NAFTA Region.
The AAM Warns that Chinese Automakers Have Received Financial and Regulatory Support for Years and Thus Have Excessive Production Capacity and Ample Funds. This Poses a Significant Threat to the Domestic Auto Industry, Potentially Leading to Job Losses and Capacity Reductions Unless Countermeasures Are Taken.
The organization therefore recommends that federal policymakers take measures to protect the domestic automotive industry. This includes, among other things, increasing tariffs on Chinese automobile imports and tightening origin rules in the upcoming review of the USMCA in 2026. In addition, additional measures should be taken against forced labor in the Chinese automotive industry. The AAM believes that Washington should act to protect the domestic auto industry from the threat posed by Chinese import competition.
