Chinese Electric Vehicles and Solar Panels Threaten Global Market, Warns US Treasury Secretary
US Treasury Secretary, Janet Yellen, has recently issued a warning that China’s export of cheap green energy products, such as electric vehicles and solar panels, could flood the global market and disrupt production worldwide. Speaking in Georgia, Yellen expressed concerns over the global impact of China’s excess capacity, which has distorted prices and disrupted global production, causing harm to US companies and workers, as well as those around the world.
China’s Dominance in the Electric Vehicle and Solar Panel Markets
According to a report by the European Transport and Environment Federation (T&E), Chinese electric vehicles are expected to capture more than a quarter of the European market this year. Furthermore, the market share of Chinese electric vehicles has increased by over 5% compared to the same period last year. This market dominance is a result of China’s early investment in solar energy, electric vehicles, and lithium-ion batteries, which has led to an excess of production capacity that the domestic market cannot absorb. As a result, China is pushing this surplus production to foreign markets at lower prices, similar to what has happened in the steel industry, disrupting market prices and affecting business operations in other countries.
Addressing the Issue: Yellen’s Plan
During her upcoming visit to China, Secretary Yellen intends to raise this issue as a priority in discussions with Chinese officials. She plans to exert pressure on her counterparts to take the necessary steps to address this concern. Secretary Yellen stated, “I intend to make this a major issue in the upcoming talks. I will urge Chinese counterparts to take the necessary actions to resolve this problem.”
Concerns for the US and Europe
The US has attempted to invest in green energy technologies with substantial support packages worth trillions of dollars. However, China’s significant investments over the years have allowed them to surpass any other country in green energy technology. China’s ability to maximize production output at extremely low prices puts them at a competitive advantage in any market, regardless of the amount of government support provided.
Similarly, European governments are deeply concerned about the potential flood of cheap Chinese electric vehicles and solar panels in their markets, similar to what happened with the steel industry. Currently, approximately 19.5% of electric vehicles sold in Europe come from China. In countries like France and Spain, one-third of electric vehicles are produced by Chinese manufacturers. According to T&E, if no countermeasures are taken, China’s electric vehicle market share in Europe is projected to exceed 25% by 2024.
The Competitive Challenge for US and European Automakers
Both the US and Europe are falling significantly behind as they lack affordable electric vehicle options of sufficient quality to compete with Chinese manufacturers. While renowned car companies focus primarily on design and engines, they have failed to produce affordable electric vehicles that can rival Chinese brands. According to Tu Le, founder of Sino Auto Insight, “Both the US and Europe are lagging far behind because they do not have affordable electric vehicle icons of sufficient quality to compete. Famous car companies are only interested in design and engines.”
T&E predicts that Europe will raise import taxes on Chinese electric vehicles from 10% to at least 25% to ensure fair competition for local manufacturers. However, CNBC believes this is only a temporary solution. European automakers need to develop their own capabilities to catch up with their Asian counterparts and compete in the long term. Tu Le highlights the core issue, stating, “The fundamental problem today is that European electric vehicle companies cannot produce products without batteries from China. China’s technology and manufacturing supply chain are far superior to those in the West. From raw material sourcing to refining costs, China outperforms other countries.”
Source: CNBC