Ciudad Juarez, Mexico – Just 5 miles from the U.S. border, a bustling commercial strip here offers Chinese car brands currently blocked from the U.S. market. Geely dealerships have the all-electric EX2, a sleek compact that starts at just $20,000. A heavy hybrid pickup truck sits next to a charger outside a BYD dealership. Great Wall Motors has some gas-powered sport-utility vehicles advertised with the slogan “Become more tanky”.
Geely salesman Luis Hernandez said he has attracted many old Ford and Chevrolet owners with cheap sticker prices and groundbreaking Chinese technology. He recently sold two Geely Emgrand sedans to a Mexican family for their two daughters to go to college in El Paso, with prices starting at about $17,000, where the sleekest Chinese cars are now commanding attention.
“If they were allowed to be sold in the United States,” Hernandez claimed of the Chinese models, “they would destroy the American car market.”
American automotive executives don’t entirely disagree. Without a clear plan to deal with Chinese competitors, some of them said in interviews, the arrival of cheap, high-tech Chinese cars could hurt a U.S. industry that contributes $1.3 trillion to the economy every year.
“I’m telling you, it’s very difficult to compete – not to say impossible,” said Jose Munoz, chief executive of Hyundai Motor. “In the market we operate in, we cannot compete on the same price as the Chinese. Otherwise, we will lose money.”
So far, many Chinese car companies that want to expand in the US have been turned away. The US has imposed steep tariffs on vehicles imported from China, and regulations make it almost impossible for such vehicles purchased in Mexico to be registered in the US. A trio of senators have said urged the Trump administration this month banning Chinese vehicles sold and registered in Mexico and Canada from entering the country; several dozen House MLA Sent a similar letter this week. A Senate bill is being prepared to prevent Chinese car manufacturers from making cars in America.
“Whenever there are challenges in the market, the reality is that we have to find a way to adapt to it,” said Brian Gu, vice president of Chinese carmaker Xpeng. “But our long-term goal is to make our products available to as many customers as possible, including U.S. customers.”
It’s no secret that Chinese EVs match up well to their American counterparts. After test driving the Xiaomi SU7 MAX, a Wall Street Journal columnist wrote in January wrote a love letter For a car that is not yet available in the US
But it’s not just Chinese EVs that keep American car executives up at night. Some of China’s largest automakers have expanded into gas-powered and hybrid vehicles that are tailored to the U.S. market.
“For me, this is not just an EV problem,” said Christian Meunier, president of Nissan America, which competes with Chinese carmakers in Mexico.
The threat to the US car industry, which recorded sales of more than 16 million new vehicles last year, is unlike any it has faced in decades. Happen Mass abandoned budget cars Years ago, Detroit’s Big Three now rely heavily on expensive SUVs and pickup trucks that turn big profits. At the same time, lower entry-level models are being introduced for car buyers. No new car offered in America today costs less than $20,000. The Chinese have vehicles ready to fill that gap in the market.
Auto executives and lawmakers say China has created an unfair playing field with heavy government subsidies and extremely low labor costs. In addition to imposing tariffs, the US government banned Chinese-linked software in new cars.
BYD, Geely and Great Wall Motors are now among the world’s largest carmakers. They are capturing market share in Europe and other parts of Asia. Chinese vehicles account for a quarter of total sales in Mexico. Soon, Canada will allow thousands of affordable Chinese EVs to be imported.
Senator Bernie Moreno (R., Ohio) said the bill he plans to introduce would “limitedly seal off” the US from Chinese automakers. Chinese cars from Canada or Mexico could not be driven into the country. American car companies could not form joint ventures with Chinese automakers. Chinese car companies that own American brands such as Geely-controlled Volvo and Polestar will have to divest themselves of those brands by 2030.
cheap and smooth
However, American consumers are increasingly preferring Chinese car alternatives. About 30% of U.S. car buyers would be willing to buy a vehicle from China, up 15 percentage points from a decade ago, according to a survey by market-research firm Strategic Vision.
Federal regulations allow Mexican residents and people with dual citizenship to drive their own cars in the US, even if their vehicles do not conform to the relevant standards. It’s giving Americans living across the border a first-hand look at Chinese competition. Every week, 21-year-old Dario Araiza drives his Chinese BYD Song Pro plug-in hybrid across the border from Ciudad Juarez via El Paso to attend flight school. It is an attractive four-door SUV.
BYD combined that with affordability. Ariza last paid a BYD dealer about $31,500 for the vehicle. The cabin technology is intuitive, he said. Airbags are labeled in both English and Chinese. Karaoke apps—a hallmark of Chinese cars—are available for use while driving.
Ariza said no other automaker came close to offering something with so much value at that price. “The cars that cost $35,000 were worse than the cars I had before,” he said. At Casa Auto Group, an El Paso car dealer network, salespeople said potential buyers have begun asking why they don’t offer cheaper prices like Chinese cars sold just a few miles away in Mexico.
Casa Chief Executive Ronnie Lowenfield said new American cars now cost $50,000, citing customers curious about Chinese cars’ affordability. He said that this should be an alarm bell for domestic vehicle manufacturers.
“When manufacturers are not interested in affordability, and they have a financial interest – I would say, short-term financial interest – in producing very high-dollar vehicles, then I think it’s a slow death,” he said.
The American auto industry has been in this situation before. In the 1970s, Toyota and other Japanese car companies began to gain market share. The subsequent entry of Hyundai and Kia weakened any lead the domestic car makers had in the budget sedan market. The combined market share of General Motors and Ford Motor, once about 70%, declined rapidly, and Chrysler nearly went bankrupt in the early 1980s.
This was the time when China’s auto industry got off the ground with the help of joint ventures with Western automakers. In 2006, Geely appeared at the Detroit Auto Show with a luxurious sedan that was expected to sell in the US for less than $10,000 within two years. car and driver magazine Geely vehicles were considered “Desperately out of date.”
First, American industry shrugged off the new competition. In a 2011 interview, Tesla Chief Executive Elon Musk laughed when asked about an EV that BYD was hoping to bring to the US, “Have you seen their car?” Musk said. But China continued to invest in automaking because of access to critical raw materials needed to make components like EV batteries and windshield wipers function properly. Along the way, it continued to learn from American industry, through joint ventures Beijing required American carmakers to set up operations in the country.
“They have about 20 to 25 years of experience, and then it wasn’t a huge step for some enterprise-focused guys like BYD to decide to go into business on their own,” said Bob Lutz, a former senior executive at Ford, Chrysler, BMW and GM, where he was vice chairman.
Earlier this decade, Lutz said, he got a sense of how advanced Beijing had become when he bought a China-made Buick Envision crossover that GM exported to the U.S. It blew him away — the fit and finish, the absence of road noise, the vehicle’s “total silkiness and sweet refinement,” he said. “I thought, ‘Boy, if they know how to make Buicks like this in China, they clearly know how to make great cars.'”
export ambitions
In the mid-2010s, BYD brought several dozen street-legal EVs In the US as part of a pilot program for taxi fleets. Complying with US safety and emissions standards proved difficult, and repeated attempts to launch in the US proved unsuccessful At that time it was very difficult for the company and its Chinese counterparts.
Other brands tried to move forward. People familiar with the discussions said Great Wall Motors had drawn up a product plan to manufacture vehicles in the US, and it was preparing to launch before the pandemic hit. US tensions with China halted this effort.
With the US market closed, China’s carmakers began attacking other countries. BYD is eyeing Mexico, where it plans to start selling cars, as a manufacturing base for North America in 2023. Like Volkswagen and Nissan before it, BYD Thought of building a factory in MexicoAfter President Trump won the election that year, Mexico became concerned about the proposed project and BYD shelved the idea.
Geely gained a foothold in the US after acquiring Volvo from Ford in 2010 and later launched EV brand Polestar in the country. However, despite being one of the world’s 10 largest carmakers, its US presence is limited. jilly said earlier this year It may announce expansion plans in the US within two to three years.
Despite existing barriers to keeping Chinese cars out of the US, there is an outcry in the industry that they will eventually come. In some ways, they’re already here. Alphabet’s autonomous driving unit Waymo is currently fielding purpose-built robotaxis made by Geely-owned brand Zeeker, which are imported and put to work at an Arizona plant. Some Chinese-made Volvos have been exported to the United States Faraday Future, a California-based startup, has said it is trying to work with Chinese carmakers to help bring their cars in line with the US market by using its factory. According to trade-data firm ImportGenius, Faraday has imported prototype vehicles from Zeeker to do the work. This month, car-shopping platform Edmunds published a review As for the Geely Galaxy M9, a plug-in hybrid with three rows of seats that is made in China and is not for sale in the U.S., Edmunds put the vehicle through a 227-point evaluation process and was impressed, saying it will offer a premium interior and cutting-edge technology and compete powerfully at its price point. The vehicle gets over 100 miles of all-electric range – more than any plug-in hybrid on sale in the US today – and an estimated total of 800 miles after switching to hybrid mode.
“The question we wanted to answer is, is the American consumer missing out?” said Alistair Weaver, Edmunds editor-in-chief. “There’s nothing in the vehicle that would make you think it wouldn’t work in the US.”
Chinese cars are already in abundance on the streets of Ciudad Juarez, Mexico. On a recent weekday, a Chery Omoda 5 crossover passed a Great Wall Motors pickup truck.
At Geely’s dealership, salesman Hernandez said the store’s top seller is the entry-level, gas-powered Emgrand, which will compete against compact cars like the Nissan Sentra or Hyundai Elantra in the US.
Hernandez said he was in the process of selling it to a Mexican local who works as a lifeguard in El Paso. “People come, they see the difference, and they’re impressed,” he said.
This is exactly what American car executives are preparing.
“The Chinese are going to find a way to get into the American market,” said Meunier, chairman of Nissan America. “It will happen.”
Write to Ryan Felton here ryan.felton@wsj.com
