The U.S. can't sit by and let China dominate the electric vehicle sector, Transportation Secretary Pete Buttigieg said during a panel with Axios. He argued that China's heavy subsidization of its homegrown EV sector was driven by a desire to dominate the future of the auto industry, and outcompete the West.
"It’s not fair competition," he said regarding China's EV push. "We’re talking about a, I can’t even call it an industrial policy, it’s really a market distortion policy, driven by China. By the way, not because the Chinese Communist Party is populated by environment buffs, right? I mean, they’re doing this because it is strategic. Because they understand the strategic value of trying to dominate the EV market, because the EV market is where the entire automotive sector is going."
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China's Lead In EVs
While the U.S. and its entrenched automakers debated just how much effort to put into the EV transition, China went all in. The result is that China has robust charging infrastructure, well-built cheap EVs and a pace of innovation that has exceeded most legacy Western automakers. The U.S. and Europe are racing to catch up, but we have yet to see how much the new wide-scale investments will move the needle.
He's right that the scale of support from the Chinese government was broader than most normal industrial policy. Adam Hersh, Ph.D., a Senior Economist and China-U.S. relations expert at the Economic Policy Institute, told me back in May that Chinese automakers received subsidies and advantages at every level. With many helped by cheap or subsidized land for factories, direct incentives from the government, regulatory rollbacks that minimized worker safety concerns and consumer incentives, China applied a sort of unified momentum to its market that's rarely seen in the more fractured programs you see in the West. Regulatory priorities also helped them avoid the biggest problem facing EV charger construction in the U.S.: An arduous permitting process.
Yet Buttigieg also blamed President Donald Trump's policy, saying the previous administration "all but deliberately gave China the advantage." It's true that EV investments have picked up under the Biden administration, but it'd be a stretch to say the Trump administration intentionally let U.S. firms fall behind. Most Western pundits, politicians and car companies were not taking the ascendant Chinese automakers seriously until recently. Trump's EPA was no friend to the environment and his policies certainly slowed down U.S. companies' ambitions, but much more climate-conscious countries like Germany have also lost ground to China despite much more aggressive pro-EV policies.
Still, Buttigieg's core point rings true. Rolling back emissions targets and EV plans will certainly allow China to build on its advantage. The Biden administration has stepped up funding for EV manufacturing and charging stations, and the results are promising. In the 11 years before the Inflation Reduction Act was passed, there was $91 billion worth of investment into EV manufacturing. In the 15 months after it passed, companies announced $82 billion of new EV manufacturing spending. Plus, the feds allotted billions for public charging infrastructure, even if the rollout is going slowly. These investments represent a dramatic increase in funding for the EV transition, and one that's needed to help avert the worst-case scenarios for the climate.
"Look, it took us 100 years to get the network of gas stations that we have today," Buttigieg said. "We just don’t have that long for EV charging network.”
We need clean transportation now. And if the U.S. doesn't build the solution to the problem, China has already proven that someone else will.
