There are tipping points when technologies don’t need subsidies to progress. Has that tipping point arrived elsewhere?
First it was the announcement of the intent to terminate any federal and state financial support for electric vehicles in the U.S. Now, we’re on the eve of what could be the beginning of the Great Trade War with Canada, Mexico, and China (or just an alarming moment of bombast and brinkmanship).
This convergence has got me reminiscing. Bear with me.
I went to China in 2006 and encountered bike repairmen on every other street corner. That year, 7.2 million vehicles were sold in China. The vehicles I saw seemed at least 10 years behind the Western world in quality and technological advancement.
A year later I went to a trade show in which the keynote speaker was a host-journalist of a business cable network. He talked about “the threat from China” and reassured the audience that while China was developing its manufacturing might, it was sorely lacking in IP (intellectual property).
In 2008, Chinese manufacturer Geely tried to enter the U.S. market but failed NHTSA crash tests and didn’t meet EPA emissions standards.In 2009, the U.S. imposed a 25% tariff on imported Chinese vehicles. There was little talk of Chinese brands entering the U.S. after that.
In the meantime: By 2010, China had surpassed the U.S. in global patent applications, and by 2011, it had become the leading nation in patent filings.
I returned to China in 2017 to speak at a trade convention. The cars on the show floor looked a lot better. Total vehicle sales had increased to 28.9 million. Those bike repairmen had vanished.
Back in the U.S., the Inflation Reduction Act (IRA) of 2022 restricted federal EV tax credits for vehicles made with Chinese-sourced batteries and parts.
By 2023, China’s patent filings accounted for 46.2% of the worldwide total. And that year also, Chinese companies such as BYD, CATL, and CALB Group obtained 18 of the top 20 patents related to power battery systems.
China Is Growing Its Advantage in Auto Technology
Yes, China supports its automotive industry with subsidies for electric vehicles, while in the U.S., we’re about to turn our backs.
Granted, the subsidies and incentives in the U.S. are imperfect. They always are. How well did they work? That’s open for debate. But there are some big-picture takeaways from the Chinese market.
Of the 31 million vehicles sold in China in 2024, 46% were electric, and 87% of them were made by Chinese brands.
The patents are turning into products: The Chinese-made Nio ET7 uses a semi-solid-state battery to deliver a top range of 621 miles. It’s available in China today for about $59,000.
And then this: Ford CEO Jim Farley flew an electric Xiaomi SU7 from Shanghai to Chicago. “I’ve been driving it for six months now, and I don’t want to give it up,” he said in this interview. Let that sink in for a minute.
Clean Energy Jobs Are Colorblind to Red or Blue
The U.S. is still in this race. Clean energy jobs are surging in the U.S. and they’re colorblind to red or blue. In August 2024, 18 Republican Congressmen sent a letter to House Speaker Mike Johnson, urging the government to preserve EV-related tax credits.
The letter reads: “Energy tax credits have spurred innovation, incentivized investment, and created good jobs in many parts of the country — including many districts represented by members of our conference.”
San Jose-based QuantumScape is planning to release its first product, QSE-5, a battery cell that has almost double the energy density of most lithium-ion batteries, can charge from 10% to 80% in 12 minutes, and functions in temperatures as low as -30 degrees Celsius.
Yet QuantumScape’s stock has been on a roller coaster since the election, driven not by actual tariffs, but tariff speculation.
Even if QuantumScape is able to keep its jobs in the U.S., withdrawing our regulatory and financial support for ZEVs and building a wall of tariffs will stifle U.S. innovation. And taking Thor’s hammer to any and all vehicle incentives could kill any business those domestic battery plants need to stay open.
And now we’re ready to build a bigger wall made of tariffs.
There will be a tipping point when battery technology evolves to the point that an electric car is more attractive to own than a gas-powered one. And this will be true not just for the Left Coasters, but for the vast majority of anyone in any state.
For other parts of the world, that tipping point may have already arrived. We in the U.S. may not have been paying attention.
Technology marches on, with or without the U.S. Consumers and fleets alike should be afforded choice to consume the best-made products — no matter the brands’ origins or how high the tariff wall is built.
