How China’s EV market could endure higher tariffs

12/27/24 • 6 min

It’s fair to say China dominates in electric vehicle sales. The country is the world’s biggest consumer of electric cars and has dozens of automakers competing in the space. Last year, Chinese companies sold about 9.5 million EVs and plug-in hybrid cars.

But the industry faces mounting trade pressures. The Biden administration imposed a 100% tariff on Chinese EVs, which President-elect Donald Trump is expected to continue. Meanwhile the European Union recently raised tariffs up to 45%, citing concerns that Chinese government subsidies give its companies an unfair advantage.

Subsidies certainly help, but there are other factors giving Chinese EVs an edge. Marketplace’s Meghan McCarty Carino spoke with Marketplace’s China correspondent Jennifer Pak about how those factors could keep Chinese EV makers competitive, even in a more restrictive global market.

The following is an edited transcript of their conversation.

Jennifer Pak: There are multiple factors, and different people will emphasize different points to it. So one of the things is China has a complete supply chain. It has cheap labor. There’s fierce competition amongst all of the Chinese companies here. There’s a big demand, a big market and subsidies. According to a consultancy, Automobility, they say that batteries account for over half of the cost of the EVs. So if you can imagine, China controls the processing of the raw materials all the way down to the assembly, it means you can negotiate good prices, especially if you order in massive quantities. So if you, you know, have more volume, then prices per unit comes down. And then there’s also cheap labor. So for example, in the U.S. last year, it was $28 per hour for an autoworker, whereas when we went to Central China, at one of the BYD factories in Changsha, we spoke to assembly workers who said they earned about $1,000 a month, which is pretty good for factory work in China, but because of the amount of overtime they have to put in, it works out to at best $3.60 an hour. So that’s quite a difference from $28 an hour.

McCarty Carino: And when we say that Chinese EVs are cheaper, we should specify, I mean, there are several models that are less than $20,000, right?

Pak: Yes, for sure, but a lot of the companies want to get a higher profit margin, so in fact, they want to sell the higher end ones. And what we’ve been told by experts is that even if they compare to their relative peers, you know, it’s still cheaper because they have better features, or they put more features into the car.

McCarty Carino: As it becomes kind of increasingly difficult to sell to Western markets, do you think these competitive advantages hold up down the road?

Pak: Yes, for the simple reason about the battery, that supply chain being locked in China right now is really essential to keeping prices low. The labor cost is less so because actually wages have become higher and higher, and factories are becoming more automated, so that’s becoming less of a factor. But the other thing that we were talking about is value for money, right? So Chinese EV companies are not really looking to export its cheapest models. Certainly, certain countries would want that, but what they want is to get higher profit margins. And China has an advantage in that it doesn’t just manufacture EVs, it manufactures quite a lot of things that go into the EVs. Like, for example, I went into one of the cheaper models. It was $18,000, it’s the BYD Qin, and it’s super basic, so basic that in the back there’s no air vents, there’s no entertainment system, but now the replacement model comes automatically with an app where you can remotely start the air conditioning. It has some voice control functions. So it’s these sort of “braggable” features in an EV which would prompt consumers to buy and I think as we go further down the road and as more companies start producing EVs, I think that might be one of the f...

The following is an edited transcript of their conversation.

McCarty Carino: And when we say that Chinese EVs are cheaper, we should specify, I mean, there are several models that are less than $20,000, right?

McCarty Carino: As it becomes kind of increasingly difficult to sell to Western markets, do you think these competitive advantages hold up down the road?

Previous Episode

Yelp helped change the game for online reviews

As we close out the year and look ahead at 2025, we wanted to mark an anniversary of sorts: 20 years ago, the online review site Yelp was launched — the name reportedly a mashup of “help” and “Yellow Pages.”

It started as an email service to send personal recommendations to your friends, then in 2005 morphed into the standalone review site we now know. Yelp wasn’t the first in the online review game, but it has been among the most popular and enduring.

Andrea Rubin has been at the company almost from the beginning. She joined in 2006 as the first community manager in Chicago. She’s now the senior vice president for community nationally.

“I absolutely loved my city and loved local businesses, and I just loved being able to share my thoughts on these local businesses through the Yelp platform,” Rubin said. “I was like, ‘Well, if I love this, I know there’s many other people who are going to love it as well.’”

Yelp has now accrued almost 300 million reviews worldwide. And the site has helped usher in our current star-saturated era, said David Godes, a marketing and economics professor at Johns Hopkins University, noting “almost all of us, almost always check reviews when we’re making a purchase.”

More than 90% of consumers do so before visiting a new business, according to a recent survey from Capital One.

But as online reviews have taken on greater weight, Godes said there’s been a greater incentive to game them.

“I guess you could think of it sort of as white hat and black hat,” Godes said.,

The white hat, ethical version would be encouraging consumers who seem satisfied to write reviews or giving them some sort of incentive to do so. The black hat, more sinister version?

“Online networks of reviewers who get paid to write fake reviews,” Godes said. “This has been documented. Using AI to generate fake reviews, for example — lots of that going on.”

Yelp uses a combination of algorithms and user reports to flag suspicious review activity so it won’t get recommended to users or factored into a business’ star rating. Content determined by moderators to be deceptive is removed, and a business page might be labeled with an alert.

On average, about 10% of online reviews are fake, according to research from Dina Mayzlin, a marketing professor at the University of Southern California.

“But I just want to point out that’s true for all social media,” Mayzlin said.

The internet is full of trolls, conspiracies and misinformation, she noted. But people mostly find ways to filter through the noise.

“I think the calculation all of us make is that there’s enough, you know, authentic, useful information out there that you still want to listen to it,” she said.

Andrea Rubin, the senior vice president of community at Yelp, said the platform has remained relevant despite increasing competition from sites like Google and Facebook, thanks in part to constant innovation.

“When the iPhone launched, we were one of the first apps on the iPhone, and a really successful app too that millions of people use now,” Rubin said. Recently, Yelp launched an AI assistant that can provide business recommendations.

But Rubin said its biggest strength is still the community of dedicated Yelpers it cultivates.

“They’re just extremely passionate about where they live and want to share it with others,” she said.

Rubin herself still writes reviews. She’s tallied thousands of them over the years.

Next Episode

How content creators profit from rage-baiting

This story was produced by our colleagues at the BBC.

Have you ever found yourself angry or outraged at a piece of content on social media? A disgusting recipe or shocking opinion? It could be intentional.

Social media influencer Winta Zesu freely admits that she provokes for profit.

“Every single video of mine that has gained, like, millions and millions of views is because of hate comments,” she said.

The 24-year-old estimates she made $150,000 last year by exploiting an online trend known as rage-baiting.

“Literally, just if people get mad, the video is gonna go viral. I can make money on TikTok. Instagram is paying, like, YouTube pays you. So I was like, OK, I’m just gonna post everything on every platform.”

She’s part of a growing group of online creators making rage-bait content, where the goal is simple: record videos, produce memes and write posts that make other users viscerally angry, then bask in the thousands, or even millions, of shares and likes.

“The more content they create, the more engagement they get, the more that they get paid,” said Andréa Jones, a marketing strategist based in Toronto, Canada. “Even if, even if those views are negative or inciting rage and anger in people.”

Experts say its popularity is due to the way the algorithms are designed, which determine what users see.

“If we see a cat, we’re like, ‘Oh, that’s cute.’ We scroll on,” Jones said. “But if we see someone doing something obscene, we may type in the comments, ‘This is terrible,’ and that sort of comment is seen as a higher-quality engagement by the algorithm.”

But for Ariel Hasell, assistant professor of communication and media at the University of Michigan, the negatives are clear.

“One of the things that we see happen is that people are sort of overwhelmed by negativity in these environments,” she said. “The concern is that long term, we won’t be able to get anybody’s attention and get them to pay attention to the things that we hope that they should be paying attention to.”

We contacted the major social media platforms to see what they had to say about rage-bait on their sites. At the time of publication, we had no responses, but we do know it is on their radar.

In October, a Meta executive took to Threads to report “an increase in engagement-bait” on the platform, adding, “we’re working to get it under control.” But if rage-bait continues to pay, it’s likely to continue to appear in our social feeds.