Volvo’s EX30 is expected to arrive at U.S. dealers this summer, and may even qualify for tax breaks, as the company appears to have found a way to avoid U.S. tariffs.
Over the past few months, we have been sounding the alarm about what’s next. what happens It warned that the entry of cheap Chinese-made cars into the U.S. market could lead to “an extinction-level situation for the U.S. auto industry.”
Well, it looks like that moment is just around the corner.
recent Reuters report Volvo is about to start selling the EX30 to American consumers. His EX30, a compact electric sport utility vehicle, is comparable in power and efficiency to Tesla’s Model Y, but at a price of $35,000, he is $8,000 cheaper than the Model Y. There’s also a loophole in the Inflation Control Act, so if a consumer chooses to lease an EX30 in the first place, its cost could drop to his $27,500.
Swedish-born Volvo is now owned by China’s Geely, and the EX30 is manufactured in China. Currently, cars from China are subject to a 27.5% tariff, a trade enforcement mechanism that has previously prevented Chinese-made cars from entering the US market, but Volvo will maintain its car factories in the US. We are in a unique position. Including South Carolina. This manufacturing presence allowed the company to avoid tariffs, Reuters explained.
In order to shift more manufacturing to China, Volvo will have to counter punitive tariffs enacted by Republican President Donald Trump in 2018 as part of a massive trade war and later supported by Biden. Ta.
At the time, Volvo’s lobbyists wrote in an October 2018 letter that the tariffs would cause economic harm to consumers and autoworkers and requested exemptions for the company’s midsize SUVs imported from China. The U.S. Trade Representative rejected Volvo’s request, as well as a similar request from General Motors.
Although the lobbyist’s letter does not name specific models, Volvo was importing the XC60 multi-purpose vehicle from China at the time. To avoid tariffs, production for the US market was shifted to Europe.
Now, Volvo has found another way to avoid tariffs on the EX30 through the U.S. Tariff Relief Program, which dates back to 1789. The program originally refunded duties paid by companies when they used imported raw materials to produce finished goods for export. It is now possible to offset taxes on similar imports with a wider range of exports.
For Volvo, this means exports of the large EX90 electric sport utility vehicle produced in South Carolina can offset imports of the EX30 from China.
But thanks to the IRA loophole mentioned above, the cost of the EX30 could drop even further.
The bill reauthorized an existing $7,500 tax credit for EV buyers, but blocked subsidies for cars with parts from countries deemed to be economic or security threats, including China. .
But then the U.S. Internal Revenue Service determined that the leased EVs qualified as commercial vehicles and were eligible for a similar $7,500 subsidy without the Chinese content limit.
This could bring the effective lease price of the EX30 to $27,500. Volvo says it has a range of 275 miles and can accelerate from 0-60 mph in 5 seconds, which is an attractive price for a five-seat electric SUV. The EX30’s specifications closely match Tesla’s Model Y, and Volvo dealers are touting the comparison. (Model Y has more cargo space.)
There is already strong interest in the EX30. A sales manager at a California dealership told Reuters he had already received a deposit for each EX30 he planned to sell. Tesla also appears to be feeling the pressure, cutting the price of its Model Y by $2,000.
While the EX30 is very competitively priced, at least in part due to access to Chinese government resources, its price is significantly higher than some plans. other Chinese state-owned and supported automakers include: Electric SUV available for an astonishingly low price of $14,000. This artificially low pricing is sure to drive American automakers, which abide by strong labor and environmental laws, out of business.
This is not a question of whether American automakers can innovate and compete.as We noted in the recent Collision Course According to the report, the Chinese government is investing huge amounts of money and resources into the automotive sector, with plans to dominate the global industry.
Policymakers are taking note. Some are calling for higher tariffs on Chinese-made cars.; Recently, Sen. Sherrod Brown (D-Ohio) came out in support of a complete ban.. There is little doubt that stronger trade enforcement is needed. Other policy instruments This is to counter the existential threat posed by Chinese car imports. The question now is whether policymakers are up to the task.
Either way, one thing is very clear now. That is, this is no longer a theoretical exercise. The U.S. auto industry ushered in a new era when the first Chinese-made EX30 was introduced to U.S. auto plants.
