Considering China’s significant market share in electric vehicles, how might Beijing respond to the EU’s tariff increase on Chinese EVs?

The US made a similar move on Japanese cars back in the 1970s and 1980s, when they were taking over the market. It wasn’t a knee-jerk reaction; it was a strategic trade move.

Now, China (government or car companies, who knows?) will be watching Tesla closely. They might adjust their own prices, especially considering the different costs of living in places like Norway vs. the Netherlands or Britain. Gotta keep that market share, right?

My favorite example is still the BYD Seagull. This car costs around $10,000, which is super cheap. But here’s the thing, they want to sell it in places like the Netherlands, where people on average have $17,000 to spend on a car. That’s a bit of a gap, right?

So, what happens? Well, BYD might have to cut some corners to make the Seagull cheaper for these new markets. Maybe they’ll reduce the battery power or something. Basically, they have to somehow make it cheaper to compete, especially since Chinese cars are known for being affordable.

Another option is something called “cross-subsidies.” Imagine this: they sell the Seagull for $15,000 in the Netherlands, but then jack it up to $20,000 in Norway. That price difference? They can use that extra cash to subsidize the price in other countries, keeping it cheap and profitable. Now, I’m no economics whiz, so I don’t know the nitty-gritty details, but you get the idea. There’s wiggle room to play with prices to make a profit.

Actually, this isn’t some big secret. Governments can regulate this stuff. Remember how the EU stated that China’s import tariffs were 20% a while back? Now they’re 38%. That’s not as crazy as the US slapping a 100% tariff on Chinese cars a few years ahead. The point is, there are ways to adjust things so everyone wins. It’s what the Japanese auto companies did way back when, and BYD can probably figure it out too.

This isn’t some groundbreaking strategy, and I’m sure the Chinese government already has a plan, even if we don’t know all the details yet.