China Makes Too Many Cars, and the World Is Increasingly OK With It

After years of Western governments raising alarms about Chinese automotive overcapacity and erecting tariff barriers, an unexpected pivot is now underway as major economies cautiously open their markets to Chinese electric vehicles, Bloomberg writes. Beijing itself has started acknowledging the problem at home. Chinese regulators last week warned of "severe penalties" for automakers defying efforts to rationalize pricing in the country's car market, and earlier this month a government ministry urged battery makers to curtail expansion and cutthroat competition. The European Union imposed steep tariffs on Chinese EV imports in 2024 and is now considering replacing them with minimum import price agreements. Canada's Prime Minister Mark Carney last week decided to allow 49,000 Chinese EVs annually at a 6.1% tariff rate, removing a 100% surtax. Germany announced this week that its $3.5 billion EV subsidy program will be open to all manufacturers including Chinese brands. Germany's environment minister Carsten Schneider dismissed concerns during a January 19 press conference: "I cannot see any evidence of this postulated major influx of Chinese car manufacturers in Germany, either in the figures or on the roads." BYD registered an eightfold increase in sales in Germany last year and pulled ahead of Tesla, though Volkswagen still registered around 2,300 vehicles for every one BYD sold.

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