According to foreign media reports, Asian enterprises, from parts manufacturers to battery suppliers, are preparing for the impact of US President Joe Biden's imposition of tariffs on China's electric vehicles, electric vehicle batteries and raw materials.
The source said that Samsung, a South Korean technology group, was asking auto parts suppliers to provide non Chinese production options because of concerns about the US raising tariffs. This largest technology company in South Korea provides electronic modules and solutions for various automotive applications, and has a large supply chain in China. Samsung did not immediately respond to a request for comment.
At the same time, Anson Chiu, CEO of Taiwan auto electronics supplier Liteon Technology, said that the company had built a factory in Dallas, Texas, to help customers avoid the impact of tariff hike.
Chiu said in a recent interview in Taipei: "The auto industry expected this to happen and has been preparing for it for a long time. Some major policies are generally not announced without signs, and new production capacity cannot be built overnight. We need time to prepare."
For electric vehicle batteries and battery materials, it is not easy to assess the impact of increasing import tariffs, because even if battery manufacturers use battery materials from China, the U.S. government still allows them to provide certain subsidies.
Lu Ting, chief China economist of Nomura Securities, said: "In 2023, the United States will account for 20.8% of China's lithium battery exports, so a substantial increase in tariffs by the United States will have a significant impact on China."
Lu Ting added that, on the other hand, the US government has not yet completely abolished the tax relief for Chinese batteries under the Inflation Reduction Act.
Lu Ting said that the bigger problem is that if Europe follows the example of the United States and imposes high tariffs on Chinese electric vehicles, "in the long run, the intensification of trade tensions may hinder the development of the export industry and encourage more supply chains to move out of China."
At the same time, some enterprises are worried that China may take countermeasures against the tariff action of the United States. Ryuta Morishima, executive officer of the Battery Supply Chain Association (BASC), a Japanese industry organization, said that the imposition of tariffs on Chinese electric vehicles might hinder Japanese enterprises from producing electric vehicles in North America and other regions.
Morishima said: "Mines for graphite and other materials needed for electric vehicle batteries, as well as nickel and lithium refineries, are usually located in China. We need to pay close attention to any potential export control measures in China."
Japanese automobile manufacturers usually have assembly plants in the United States, but they make purchases globally, including purchasing raw materials from China or enterprises associated with China. Some people worry that if the US tariff triggers China's countermeasures, these measures will target the industries that have the greatest impact on China's supply chain, including battery materials.
According to the data released by the market analyst Woods Mackenzie, China currently accounts for about 60% of the global supply of rare earth mining, and many nickel producers in Indonesia have also been supported by China's massive investment. At present, the supply of these producers also accounts for more than 60% of the global market.
However, some people are very optimistic about this. Korean battery manufacturers and automobile manufacturers betting on the US market welcomed the tariff hike and hoped that this would reduce competition with Chinese enterprises.
An executive of a Korean battery manufacturer who did not want to be identified said: "There is nothing wrong with this. The 100% tariff means that electric vehicles equipped with Chinese batteries will not be able to enter the U.S. market."
According to SNE Research, headquartered in Seoul, in the first quarter, Chinese enterprises Ningde Times and BYD had the largest share in the global battery market, accounting for 37.9% and 14.3% respectively; Next is South Korea's LG New Energy, accounting for 13.6%; Panasonic, a Japanese enterprise, accounted for 5.8%.
Hyundai Motor Group sells electric vehicles of Hyundai, Kia and Zenith brands in the United States. The Group said that it was reviewing the possible impact of tariffs on its business, but declined to comment further.
The US's move to raise the import tariff of Chinese electric vehicles to 100% is not expected to have a direct impact on BYD, Geely and other Chinese automobile manufacturers, because before China's cars entered the US market, they had to pay a 25% tariff, which has blocked Chinese car companies from the US market.
Last week, BYD said that the imposition of tariffs by the United States would not have a significant impact on it. Stella Li, CEO of the company's Americas, said at the electric vehicle conference held in Mexico: "We have no plan to enter the U.S. market, so this news has no impact on us." She also said that BYD has planned to build a new factory in Mexico to serve the local market.
Howard Yu, professor of management and innovation at IMD in Lausanne, Switzerland, said that although the new U.S. tariff policy has limited short-term impact on Chinese electric vehicle manufacturers, because they do not sell directly to the United States, the long-term impact will be "huge", because the rise in tariffs will affect the next wave of growth of Chinese enterprises. He said: "In my opinion, the US move has changed these enterprises, especially the top enterprises' current views on international strategy."
Yu also predicted that Chinese electric vehicle manufacturers would try different strategies to enter the US market. He said: "They will first move their factories to Southeast Asia, because the tariff system does not apply to these countries. They can also implement the B2B strategy, provide parts, and even move their factories to Mexico or even the United States."
Yu said: "European customers are quite open to Chinese cars. Politicians there will have extra considerations if they follow the actions of the US government."
In the long run, raising tariffs and other trade barriers will also encourage Chinese manufacturers to explore other more popular markets, even smaller ones.
The popularization of electric vehicles in Australia has been slow, but with the deterioration of China's domestic market, the increase of barriers in the United States, and Europe's vigilance against the proliferation of affordable electric vehicles, Chinese car companies are looking for a way out for their product supply, and Australia's electric market may become more attractive. The country is expected to introduce fuel efficiency standards next year, which will further stimulate the transition to electric vehicles and other less polluting vehicles.
Scott Dwyer, research director of the Institute for Sustainable Future at the University of Science and Technology Sydney, said: "Australia itself is not a huge market. But for Chinese car companies with resources and capabilities, this is a good market, which can solve some problems of Chinese product exports."
