If Donald Trump wins the election and lets Chinese cars into the U.S., Tesla Inc. and other companies that make electric cars will have to deal with a lot of price competition.
Trump said he was okay with Chinese automakers moving production to the U.S. from Mexico in his speech at the Republican National Convention on Thursday night. He said this would create jobs in the U.S. auto industry. Trump also said he would put tariffs on Mexican auto imports to make it harder for Americans to buy cars made in other countries.
Trump said, “Plants will be built in the United States, and our people will work in those plants.” “If they don’t agree with us, we’ll put a tariff of about 100 to 200 percent on each car, and they won’t be able to be sold in the U.S.”
When asked for comments, the Trump campaign and Tesla TSLA, -4.02% did not respond right away.
Tesla CEO Elon Musk has backed Trump’s campaign for president, even though the Republican nominee is against solutions to climate change and Wall Street thinks a Trump term would be bad for the EV market as a whole.
A few weeks ago, Musk told shareholders, “I can be convincing.” “I believe he does. Many of his friends now have Teslas and love them.” He also really likes the Cybertruck. That’s why I think those may be factors, yes.
If Chinese automakers came to the U.S., Pat Ryan, founder and CEO of the car-shopping app CoPilot, said it would “bring massive price pressure to EVs and break the lower-price-point EV market wide open from a supply perspective.”
Electric vehicles made up 8% of new car sales in the U.S. this year, up from 7.2% last year. However, Cox Automotive says Tesla’s market share dropped to less than 50% last quarter.
“The overall level of competition for electric vehicles is rising.” “This increased competition is keeping prices low, which is slowly making more people buy EVs,” said Stephanie Valdez Streaty, director of industry insights at Cox Automotive.
Already, the prices of EVs, like Teslas, have dropped a lot in the last two years because there are too many on the market and not enough people want to buy them. Musk has said again that the company needs to solve “the fundamental affordability question” even as prices go down. He said this because many people live from paycheck to paycheck.
The Tesla Model Y has been one of the best-selling cars in the U.S. so far in 2024. Its price has dropped from $62,990 in 2022 to $49,990 now, a 20.6% drop. Even more dramatic is the drop in the price of used Teslas. A used Model Y now sells for about $34,283, which is about half of what it cost in 2022 ($68,323). It costs an average of $25,906. to buy a used Model 3.
Even so, that might not be low enough for some buyers since interest rates are still high and a lot of people are still having a hard time with money. Cox Automotive Chief Economist Jonathan Smoke says that the average American family can only afford a $400 monthly car payment, which is the same as a $20,000 loan with today’s interest rates. This is because of their income and the rule of thumb that they should spend no more than 10% of their take-home pay on car payments. Cox Automotive data from June shows that as car prices have gone up, the average monthly payment has gone up to a much higher $756.
BYD Co. Ltd. in China 1211, +0.58% 002594, +1.01% Low-cost EVs have become popular thanks to BYDDY, +1.42%, which is now the biggest electric car company in the world. In China, the Qin Plus, which costs about $15,200, is BYD’s best-selling car. The new Seagull, on the other hand, costs about $10,000. Some European and American brands sell models made in China in the U.S., but there are big problems, like a 27.5% tariff on Chinese-made cars, which Consumer Reports says is part of “bipartisan efforts to ban the import of Chinese-made vehicles altogether.”
Tesla has factories in Fremont, California; Austin, Texas; Sparks, Nevada; Buffalo, New York; Shanghai, China; and Berlin, Germany.
Ryan from CoPilot said that if Chinese automakers made cars in the U.S., it “could potentially rock the market and make EVs very cost-competitive.” “However, those made in the U.S. are not likely to be at the $25,000 price point,” which is too high for many people to afford.
Trump brought up the idea of Chinese automakers making cars in the U.S. at the same time that he criticised the Biden administration’s investments in infrastructure for electric vehicles, which include setting aside $7.5 billion to build more chargers. If Trump wins, he is likely to end federal tax breaks for people who buy electric vehicles. On the other hand, his running mate, Ohio Sen. J.D. Vance, wants to keep the rebates for petrol vehicles.
Joseph Yoon, a consumer-insights analyst at Edmunds, said that the price difference between petrol and electric cars is getting smaller, but only because buyers are getting tax breaks. “Getting rid of that tax credit will definitely stop a lot of people from even considering buying a used electric car. This is especially true if we assume that ending EV subsidies and programmes will also mean that improvements to EV infrastructure across the country will move more slowly.”
Trump said at the convention, “I’m all for electric.” They can fill out their application. But anyone can buy a gas-powered car, a hybrid, or a gas-powered car.
In his speech at the convention, the Republican candidate promised to bring down the cost of energy. He said, “Ma’am, we’re going to drill.” “Energy is the start of so much.” Don’t forget that our country has by far the most liquid gold under its feet.
