Auto CEOs Sound Alarm on Chinese EV Competition

Western automakers, from the Big Three to EV pure plays, are delivering the same stark warning: Chinese automakers pose a threat to their survival if domestic production isn’t protected, Pra Subramanian reported for Yahoo Finance.

While short-term issues like cost control and EV demand are more top of mind for Rivian, the threat from China isn’t far off. (Photo: Rivian Facebook)

“China poses a clear and present threat to the auto industry in the U.S.,” wrote the Alliance for Automotive Innovation (AAI), a trade group that represents the Big Three and other automakers, ahead of a House hearing on Chinese vehicles last December.

The AAI said Congress needs to maintain the Commerce Department’s Biden-era prohibition on importing certain technology and software from China, which effectively bars the import of vehicles from Chinese manufacturers.

In recent comments, corporate executives have reinforced this messaging.

EV maker Rivian has a big year ahead with the launch of its entry-level R2. While short-term issues like cost control and EV demand are more top of mind for the company, the threat from China isn’t far off.

Rivian CEO RJ Scaringe noted that, in the long term, two important factors need to be recognized.

“It’s not like there’s magic happening in the Chinese cost structure. It’s really two things you can follow very clearly,” Scaringe told Yahoo Finance last week.

“One is their capital cost structure is much lower than ours. In most cases, it’s near zero. It’s a highly subsidized industry where plants and manufacturing complexes are paid for by the local equivalent of the federal government.”

The second factor is labor, with Chinese automakers’ costs at a quarter to a fifth of those faced by U.S. companies. Scaringe said that, at the moment, tariffs in place “equalize” the cost of those vehicles, protecting U.S. manufacturing — but only for now.