Earlier this week, Chinese electric carmaker Zeekr launched its U.S. IPO to the tune of a $6.8 billion valuation and a pop that raised $441 million for the Geely-owned company. This was the first major U.S. listing of a Chinese company since 2021, and while Wall Street met it with frothy excitement, questions about what this all means for Chinese EVs in the U.S. market remain. Can the surge in investor interest translate into consumer enthusiasm, especially in the face of the mounting U.S. tariffs against Chinese EVs?
The issues surrounding Chinese EVs entering the U.S. market are complex, multifaceted and deeply interrelated. This week, the Biden administration announced a 102.5 percent tariff on Chinese EVs, effectively banning their sale in the U.S. These tariffs, coupled with national security concerns, have created significant barriers for Chinese automakers. At the same time, there are no vehicles on the U.S. market that do not contain Chinese components, Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, notes, making legislating against Chinese EVs a thorny issue for the automotive industry.
“It’s a rabbit hole that the government is going to go down, and this is just the beginning,” Fiorani told Observer. It’s just going to get tougher and tougher to figure out a way to focus on the Chinese manufacturers and Chinese-based products.”
The main concern for U.S. automakers is that Chinese companies like Zeekr and BYD can build EVs for an affordable price, undermining big U.S. rivals like GM and Ford, which charge a premium for their EVs. With news headlines proclaiming that automakers with significant market shares in the U.S. market are “trembling” over the possibility, Fiorani said that he sees a significant gap between what the U.S. market wants and what it can actually support.
“The market for sub $30,000 EVs isn’t as big as everybody thinks,” he said, pointing out that the average new car price in the U.S. is around $50,000 and noting that Tesla has been selling its Model 3 for under $40,000 since last year and has had to continue to cut prices to move inventory. “When you get below $30,000, that’s not a large portion of the internal combustion engine market,” Fiorani said. “It’s not like people are buying a $25,000 car because they can’t afford a $25,000 EV,” adding that at that price point, most people are looking at used vehicles.
Preventing competition in the automotive industry under the guise of national security is only one of the significant obstacles to U.S. consumers embracing Chinese EVs, however. “Most Americans don’t know what the Chinese build,” Fiorani said. “If you ask the person who’s driving a Buick Envision or Lincoln Nautilus, chances are they won’t know that it comes from China.” Most American consumers are simply unaware of the scale and potential of Chinese EVs and the rapid improvement that Chinese automakers have made in the last ten years.
The combination of increasing tariffs, softening EV sales, and a lack of awareness and acceptance of Chinese EVs mean it is unlikely that the Zeekr IPO will lead to increased consumer interest and excitement for Chinese EVs, according to Fiorani. That doesn’t mean that the excitement over the Zeekr IPO will flag, however. “Zeekr is backed by Geely, and it has become a little more prominent than, say, a startup automaker,” Fiorani explained. “Everybody’s looking for that next Tesla. Investors just want to make sure that they’re on the ground floor when the next Tesla hits.” Geely, led by Chinese billionaire entrepreneur li shufu, is one of the largest non-state-owned carmakers in China. It owns several Western car brands, including Polestar, Smart and Lotus.
