This year, global trade is undergoing major restructuring amid President Trump’s tariffs on America’s trading partners. The historically strong transatlantic partnership between the U.S. and Europe is now faltering amid the trade war. China might be looking for ways to pull Europe closer, especially with regard to electric vehicles.
Welcome to the Friday edition of Critical Materials, your daily round-up of news and events shaping the world of battery-powered cars and technology. Also on the radar today: Tesla has suspended sales of its U.S.-made Model S and X in China and Lucid is looking to take over select assets of bankrupt truck maker Nikola.
30%: Is Adversarial America Bringing EU And China Closer?
The European Union and China have deep trade ties, but their relationship hasn’t been smooth. The EU has been critical of China’s vast EV subsidies, which the bloc says gives the country’s automakers unfair advantages over their Western rivals. They also seemingly disagree on Russia and the war in Ukraine.
However, as U.S. policies become more aggressive towards its allies, China and Europe are opening talks to deepen their trade ties. Chinese EV makers stand to benefit the most from that. Instead of the steep tariffs the EU slapped on Chinese EV imports last year, the two trading partners are now looking to establish minimum prices for Chinese-made EVs.
Here’s more from Reuters this morning:
EU trade commissioner Maros Sefcovic spoke with Chinese Commerce Minister Wang Wentao in the last 24 hours and both sides agreed to look into setting minimum prices, the EU spokesperson said.
Sefcovic has previously said any minimum prices would need to be as effective and enforceable as the EU tariffs.
China's Commerce Ministry said in a statement that negotiations were set to start immediately.
While several Chinese automakers have already entered Europe, they face import duties of up to 45.3%, depending on the manufacturer. The EU tariffs include 17% on BYD, 18.8% on Geely, 35.3% on SAIC and a lower 7.8% tariff on EVs made by Tesla in China. All this is above the standard 10% tariff the EU imposes on all car imports to the bloc.
The German Association of Automotive Industry reportedly welcomed the trade talks. China is, after all, a huge market for German carmakers, accounting for a third of their sales last year. In response to the EU’s tariffs, Chinese automakers planned to expand on the continent by building local plants. BYD, Chery, Geely and battery maker CATL are all determined to establish a manufacturing footprint on the continent.
While Chinese EVs face steep tariffs in the U.S., European automakers remain heavily reliant on the lucrative American market for exports. The Trump administration’s 25% tariffs on cars and auto parts are still in effect, even as broader tariff measures are on a 90-day pause. Meanwhile, China is dominating the EV race, and if its ties with our allies across the Atlantic deepen, the EU could pull ahead, leaving the U.S. in the dust.
60%: Lucid Acquires Failed EV Truck Maker Nikola’s Assets
Lucid announced on Friday that it was taking over select facilities and assets previously belonging to truck maker Nikola. The transaction won’t include the company’s business, customer base, or the hydrogen fuel-cell technology used in its trucks.
The now-bankrupt producer of heavy-duty rigs made its foray into electrification with battery-powered trucks in 2014 and later pivoted to hydrogen fuel-cell technology. However, Nikola CEO Trevor Milton went to jail on fraud charges and was recently pardoned by President Trump. A series of fires with Nikola trucks and accusations of lies from the management led to a hard fall for the company.
Lucid, on the other hand, is on an upward trajectory. It will take over Nikola’s manufacturing facility in Coolidge, Arizona, and a Phoenix site, which was Nikola’s headquarters and product development center. According to a Lucid press release, the facilities also include battery and environmental testing chambers, a full-size chassis dynamometer and machining equipment, among other things.
The sites add 884,000 square feet to Lucid’s footprint in Arizona. The start-up will also offer jobs to over 300 former Nikola employees specializing in various engineering and software roles. The automaker indicated that the new facilities will help expand the production of the new Gravity SUV and aid in developing its upcoming mid-size platforms.
90%: Tesla Model S, Model X Sales Suspended In China
Tesla’s high-end Model S electric sedan and the Model X SUV are no longer available to order on the brand’s website in China. Both models are made at Tesla’s gigafactory in Fremont, California and are likely the latest casualties of the ongoing trade war started by the Trump administration.
The U.S. has slapped 154% tariffs on all Chinese imports. China responded with a tariff capped at 125%, saying these policies are a “joke” and that China will “disregard” further escalations by the U.S.
Tesla, however, only sold 1,553 Model X and 311 Model S units in China last year, according to Reuters. That's just a fraction of its overall sales, so it’s safe to say Chinese EV buyers won’t be missing these cars. Thanks to brands like BYD, Xpeng, Li Auto, and others, they have no shortage of high-tech, high-quality alternatives.
100%: Can Lucid Continue Growing?
Smaller players are likely to be more susceptible to the ongoing global trade war compared to legacy carmakers sitting on huge cash reserves. Lucid seems to have strong financial support from its ties to Saudi Arabia’s Sovereign Wealth Fund and also plans to enter the mass market mid-size crossover segment in the coming years.
Do you think the Gravity SUV will help it expand its business? Can it survive this brutal trade war? Leave your thoughts in the comments.
Contact the author: Suvrat.kothari@insideevs.com
