How Will New China Tariffs Affect Tesla & Other EV Makers?

President Biden's new 100% tariffs on Chinese-made electric vehicles (EVs) aim to protect the U.S. EV industry and encourage domestic manufacturing. These measures are seen as a way to prevent market saturation from cheaper Chinese EVs, potentially fostering innovation within the U.S. However, critics argue that this could hinder the affordability and adoption of EVs, slowing down the transition to zero-emission vehicles.

The tariffs also extend to Chinese EV batteries, raising the tax from 7.5% to 25%. This could significantly increase costs for major EV makers like Tesla and Ford, affecting the pricing and production strategies of their vehicles. Tesla, for instance, might have to reconsider its use of Chinese battery cells in its Model 3 RWD to manage costs. The broader aim is to strengthen domestic capabilities and reduce dependency on foreign components amidst geopolitical tensions.