Tariffs imposed by the U.S. have made exporting to the country “impossible” for Chinese electric vehicle (EV) manufacturers, Xpeng's Vice President Zheng Yeqing said, adding that the company is enhancing efforts to tap into other markets, involving establishing assembly operations outside China and licensing technology. He explained that the sector was already subject to “an extremely high level of tariffs by the United States before this bout of the trade war”. “So if I do my math correctly, currently, the EV industry is subject to something more like 270%. It remains impossible for any Chinese car manufacturer, especially electric vehicle manufacturers, to export directly to the United States,” the Xpeng Vice President and General Counsel said.
U.S. President Donald Trump has imposed cumulative tariffs of 145% on all Chinese goods over a number of escalatory rounds, with the White House also revealing the figure to be as high as 245% on some goods. The Xpeng executive was speaking on a panel at an American Chamber of Commerce in Hong Kong event in the city, with the discussion centering on challenges facing China’s technology sector amid the new measures. He said most car producers had begun employing three strategies to navigate the uncertainties of the ongoing trade war.
The first was to aggressively pursue opportunities in other global markets.
Localization was the second tactic, which involved establishing manufacturing and assembly operations outside China. “By localization, it will avoid or at least help us enter into this kind of strategically important area,” he said. “We recognize that if we want to have a meaningful market share in any country, in any region, we do need to localize.” Developing local supply chains was also needed to further mitigate the impact of trade barriers and potentially gain better access to markets.
The third strategy was exploring “service, not goods”, primarily through licensing technology. He said this involved shifting away from direct vehicle exports and instead focusing on providing technological expertise and intellectual property to partners in other countries, including the U.S., for local manufacturing. He cited the example of battery maker Contemporary Amperex Technology's joint venture with U.S. car manufacturer Ford, with the pair building a plant in Michigan and using the Chinese company’s technology to produce low-cost lithium-iron batteries.
On the same panel, Denis Simon, a Bank of America visiting Chair in International Finance for Tsinghua University’s Schwarzman Scholars, said an unintended consequence of the U.S.’ increasing restrictions and “high fences” around narrow technological areas was that China had been pushed to advance its technology. He added that limiting China’s access to certain technologies and markets had “inspired” the country to “become more self-reliant, more self-sufficient, and more indigenous in innovation”, the South China Morning Post reports.
