US Treasury Secretary Warns that China’s Electric Vehicles and Solar Panels are Set to Flood the World
US Treasury Secretary Janet Yellen has recently warned that China will flood the global market by exporting excess production of affordable green energy products, such as electric vehicles and solar panels. This will drive down market prices and have an impact on the entire manufacturing industry worldwide.
Yellen expressed her concern about the global impact of China’s excess capacity during a speech in Georgia. She stated, “I am concerned about the global implications of the excess capacity that we are seeing in China. It has distorted prices and global production models, while also harming US companies, workers, and those around the world.”
Yellen’s concerns are supported by a report from the European Federation for Transport and Environment (T&E), which indicates that Chinese electric vehicles will account for over 25% of the total sales in Europe this year. Since the beginning of 2024, the market share of Chinese electric vehicles has increased by more than 5% compared to the same period last year.
China’s dominance in solar energy, electric vehicles, and lithium-ion batteries has led to an excess production that the domestic demand cannot keep up with. As a result, the world’s second-largest economy will export this excess production to foreign markets at lower prices. Similar situations have occurred in industries such as steel, which led to market manipulation and significant disruptions to businesses in other countries.
Secretary Yellen intends to address these trade practices during her upcoming visit to China. She stated, “I plan to make this issue a priority in the upcoming discussions. I will try to urge my Chinese counterparts to take necessary steps to address this issue.”
Similarly, European governments are extremely concerned about the potential flooding of their markets with cheap Chinese electric vehicles and solar panels, as they experienced with steel products in the past. Currently, approximately 19.5% of electric vehicle sales in Europe come from China, and one-third of electric vehicles sold in France and Spain are produced in China.
T&E’s report suggests that without appropriate countermeasures, the Chinese electric vehicle market share in Europe will exceed 25% by 2024. While some Chinese electric vehicles, like Tesla, have gained market share, the dominance of Chinese brands such as BYD will increase to 11% by 2024 and 20% by 2027.
“The United States and Europe are falling far behind because they lack affordable electric vehicle options with the same quality to compete. Famous car companies focus more on design and engines,” commented Tu Le, the founder of Sino Auto Insight.
T&E predicts that Europe will increase import tariffs 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 as European car companies need to develop their own capabilities to catch up with their Asian competitors for long-term competitiveness.
“The core issue at present is that European electric vehicle companies cannot produce products without relying on batteries from China. China has superior technology and manufacturing supply chains compared to Western countries. From raw material sourcing to refining costs, China outperforms other nations,” evaluated Tu Le.
Source: CNBC