European Union member states approved tariffs of up to 45 percent on Chinese-made electric vehicles, or EVs, in a contentious vote today. Just 10 countries voted in favor of the tariffs, while 12 abstained and five voted against, including Germany, the EU’s largest economy and biggest car manufacturer. (Reuters)
Our Take
Back in 2017, we ran an article on China’s ambitions to become “this century’s Detroit,” capitalizing on the economic opportunity that EVs presented. “China has taken a big but ultimately safe bet on the future of transportation,” Ashley Feng and Sagatom Saha wrote then. “[T]he most likely scenario is that Chinese companies will flood the market to secure a monopoly and push out competitors, as Chinese solar panel companies have done for the past decade.”
Indeed, that is exactly what has happened, and despite Beijing’s ambitions being well-documented, Western carmakers were still caught unprepared to compete with Chinese-made EVs. In many ways, this is simply Economics 101: As heavyweights in an industry grow complacent and less innovative, emerging companies disrupt the status quo and become the new industry leaders.