Last week, Donald Trump claimed that letting in electric vehicles (EVs) from China would result in a “bloodbath.” Here are his words:
But if you look at the United Auto Workers, what they’ve done to their people is horrible. They want to do this all-electric nonsense where the cars don’t go far. They cost too much. And they’re all made in China. And the head of the United Auto Workers never probably shook hands with a Republican before they’re destroying — you know, Mexico has taken, over a period of 30 years, 34% of the automobile manufacturing business in our country, think of it, went to Mexico.
China now is building a couple of massive plants, where they’re going to build the cars in Mexico and … they think that they’re going to sell those cars into the United States with no tax at the border. Let me tell you something to China. If you’re listening, President Xi, and you and I are friends, but he understands the way I deal, those big, monster car manufacturing plants that you’re building in Mexico right now, and you think you’re going to get that, you’re going to not hire Americans, and you’re going to sell the cars to us, no. We’re going to put a 100% tariff on every single car that comes across the line, and you’re not going to be able to sell those cars.
If I get elected. Now, if I don’t get elected, it’s gonna be a bloodbath for the whole, that’s going to be the least of it. It’s bloodbath for the whole, that’s going to be the least of it. It’s going to be a bloodbath for the country. That’ll be the least of it. But they’re not gonna sell those cars.
What he was getting at was his regular theme: we should look at the obvious effects of imports on jobs of competing American workers–the bloodbath–and ignore the large gains to American consumers. His point was that if Biden were to be reelected, those cars would come in from China or from Chinese factories in Mexico.
But there’s a way to help American workers while having no restrictions on cheap EVs from China or Mexico.
That way is to end, at the federal and state levels, all EV mandates, all EV subsidies, and all subsidies to EV charging stations. Then people could go on buying cars with internal combustion engines (ICE cars) and hybrid vehicles. I predict that the vast majority would do so. Prices would be lower than they are now. Why? Because the mandates cause the car manufacturers to artificially raise the price of ICE vehicles so that fewer of them will be demanded. This is much like the effect of CAFE regulations: even in the 1980s, auto manufactures raised the prices of large gas guzzlers and lowered the prices of small fuel-saving cars to avoid paying the federal government’s CAFE fines. I’ve written about that numerous times and actually my first piece on CAFE, which I wrote after ending my time as the senior economist for energy with Reagan’s Council of Economic Advisers, was in 1985. In it, I predicted the demise of station wagons.
But there would still be substantial demand for EVs. And then, instead of those vehicles being easily affordable only to relatively wealthy people, they would be affordable to many people with little wealth. BYD, the Chinese EV producer, sells cars for less than $20,000, a price that is virtually unheard of any more in the U.S. market. So we might get, say, 30 percent of people driving EVs, up from under 10 percent today, with no subsidies and no mandates. And, as a bonus, a lot of U.S. auto workers could keep their jobs.
The pic above is of a BYD Tang.
READER COMMENTS
Grand Rapids Mike
Mar 23 2024 at 9:26pm
Speaking of Blood Baths, the Hertz CEO resigned due to the Blood Bath Hertz took on its transition from ICE to EV cars.
Ahmed Fares
Mar 23 2024 at 10:08pm
It’s half that now.
BYD’s Seagull EV Now Costs Under $10k, The West Is Doomed
A good review of the car on YouTube.
The EV Detroit is Dying to Benchmark – BYD Seagull
Scott Sumner
Mar 24 2024 at 2:13am
I rode in BYD cars while traveling in China last year. I was told they sell for about $14,000, and are pretty high quality.
MarkW
Mar 24 2024 at 7:31am
What would a BYD EV that met all US regulations have to sell for? I doubt it could be done for $10K (or even $20K). Still, I think there’s an unexploited EV niche for very cheap, very low-range cars intended for local use (essentially, e-bikes that keep you safer and out of the weather). If we ultimately buy an EV, it will be a second, auxiliary vehicle not intended ever to be taken on road trips. My wife loves her e-bike and a cheap car that could be used similarly would be fine — but only if it was really cheap.
steve
Mar 24 2024 at 8:36pm
There are a number of reviews on Youtube where you can see the car. It looks pretty complete. One of the reviewer suggested it would cost another $3k-$4 to make it street legal in the US. Add the tariff and probably hits $20k. Agre that it would be nice to have some small, cheap cars. The huge majority of our trips are less than 30 miles so it would make a good 2nd car.
Steve
JV
Mar 24 2024 at 2:40pm
Fossil fuels, too, right?
David Henderson
Mar 26 2024 at 11:34am
Yes. Be aware, though, that U.S. subsidies to fossil fuels are quite small, especially compared to the subsidies to EVs.
Michael David Sandifer
Mar 25 2024 at 9:19am
Obviously the approach to incent EV and hybrid adoption is pretty inefficient. A refundable carbon tax would be much better, but we shouldn’t abandon incentives for carbon reduction in the industry entirely in absence thereof.
Thomas L Hutcheson
Mar 25 2024 at 1:23pm
I agree about the subsidies and mandates, (subsidies to charging stations might be a solution to a valid collective action problem) but it should be done in the context of a tax on net CO2 emissions. Let’s not replace a superoptimal subsidy with a suboptimal tax.
David Henderson
Mar 26 2024 at 12:04pm
You write:
That comment surprises me. I thought you would favor moves in what you regard as the right direction even if it doesn’t go as far as you would like. I guess not.
David Hamilton Russell
Mar 25 2024 at 4:12pm
This whole AGW hoax has led us to make dumb decisions all the way down.
Mike Burnson
Mar 26 2024 at 7:03am
The entire premise of EVs is the problem. There is no “threat” to our well being from the critically essential gas, carbon dioxide. Take away forty years of corrupt propaganda about “global warming” and its evil twin “climate change” (because warming stopped 25 years ago!), and the very premise of EVs collapses. For those who want an EV, fine: let the market decide, not government.
Human activity is 1/3 of 1% of so-called greenhouse gases. Our total emissions since the dawn of the Industrial Revolution remain far below a single year of nature. Further, the warming effect of CO2 is effectively topped out at just 300 ppm; anything more than that is nothing other than plant food. No life form has ever been “threatened” by an increasing food supply, the actual, scientific result of higher CO2.
BobK
Mar 26 2024 at 11:04am
Would it have been prudent to buy Volkswagens from Nazi Germany?
Does the analogy hold?
Is that the sticking point beyond free and fair trade considerations and regulatory overreach considerations?
Dylan
Mar 26 2024 at 1:13pm
I don’t normally have a car, but for the last two weeks I’ve been in California and driving a Tesla and, even though there are things I don’t like about the design, it is hard for me to imagine not buying an EV as my next car, whenever that may be. The driving experience and convenience is just so much better. Even only charging the battery to 50% still gives a 200 mile range. And man, the performance is just insane! It almost feels like they invented teleportation, see someplace you want to be, step on the accelerator and after a brief moment of disorientation, there you are.
I met a friend while I was here who bought one of the Audi EVs a few months ago, and liked it so much they decided to get a 2nd one to replace her husbands car. And, I’ve heard similar stories like that a lot here. I’ve no doubt that the subsidies have helped spur adoption a lot, but the second vehicle they bought was completely without a subsidy, and they still didn’t even consider a non-EV.
Richard W. Fulmer
Mar 26 2024 at 1:34pm
Have any of the government-imposed global warming “solutions” actually reduced emissions? Even environmentalists agree that CAFE standards, corn-based ethanol, and biomass have all made the problem worse.
The jury is still out on wind turbines and solar farms because they require traditional power plants as backup and lots more transmission lines, and they come with serious waste disposal problems. Ditto EVs, which increase particulate emissions and require more mines and more power generation.
Government has largely eliminated the nuclear option, which is probably the cleanest option.
The biggest gain in the U.S. was due to the switch to natural gas from coal, but that was driven by the free market and largely opposed by the government.
Maybe, just maybe, freedom is the best solution, as it is for so many other problems.
James W Oliver
Mar 26 2024 at 6:03pm
And as far as CAFE goes:
David Henderson
Mar 28 2024 at 6:24pm
Thanks for the link.
David Henderson
Mar 28 2024 at 6:26pm
Actually, I just read it. I realized that this was an old study that I used in my energy economics class in the middle of last decade.
I’m not putting it down: it’s just nice to know that I’m not as behind as I thought. 🙂
Jose Pablo
Mar 31 2024 at 2:05pm
For a man that has outsourced even the making of his own bed all his live, he seems to have a hypocritical believe in the “doing it yourself” approach.
Or maybe he is just trying to get political benefits appealing to the well documented anti-foreign and make-work voters’ biases.
It is interesting that presidents get a Council of Economic Advisors. They are voters the ones who need it!
Ahmed Fares
Apr 2 2024 at 3:29pm
Soon on the higher-end cars also:
Xiaomi SU7, The Smartphone Maker’s First EV, Sold Out For 2024 In 24 Hours
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