Is it a possibility that electric vehicles (EVs) in America will soon disappear completely? When President Donald Trump placed rather drastic tariffs on Chinese goods, China retaliated by acting up and leveraging its most important asset. China has shown that it has full control of rare-earth minerals. While the control of rare earth minerals does not sound like much of a train smash, it really is for the EV industry, which relies solely on rare earth minerals during the EV production process.
The EV market is under threat
It is no secret that Tesla has been under hot water for a while now. The Cybertruck is one example of how hard the EV market is having it at the moment. So much so that the Cybertruck’s resale value dropped by over 50% in one year. While depreciation is normal, this depreciation rate was all too much for Tesla.
Tesla, the leading EV brand in America, had their share price drop by half as well. While Tesla is finding it tiring to compete with other EVs from around the world, the tensions are escalating due to America having limited access to rare-earth minerals. International tensions are on the rise, and the tariff war means America will face drastic consequences.
How is China striking back?
President Trump’s tariff policy has impacted the EV industry the most. After initially increasing tariffs on imports by 34%, the White House delivered a larger blow of penalties of about 50% if China fails to take back its retaliatory measures. China is, however, not resisting and is striking back.
China realizes how valuable materials such as neodymium and dysprosium are for the production of the magnets needed for EV motors. With approximately 40 billion tons and the future of Earth in China’s hands, China knows that it has what America wants. Since America neither has a constant supply nor easy access to such rare-earth materials, America’s EV industry may face high costs. The alternative is that many leading American EV brands stop producing EVs on the whole.
Looking at the broader picture, America seems to be far more affected than China, with American automakers who rely on rare earths for EV production suffering the most.
The EV market in China is growing
Since America has declared war on China, it seems like China’s EV sector is expanding. During a current China EV100 Forum in Beijing, former Vice-Minister Su Bo pleaded with Chinese automakers to work faster on their strategies to tap into the international EV market. Despite Western resistance, the former Vice Minister argued that firms must invest in both exports and overseas manufacturing to secure a better financial future.
Certain brands like Build Your Dream (BYD) are already establishing bases abroad. China is looking forward to building lucrative relationships with international partners. Chinese EV brands are rising to the mark with the promise that EV manufacturers from China can find their place in the European, Southeast Asian, and Latin American markets.
While Chinese automakers are beefing up their EV retail strategies, American EV automakers will have to deal with the high expenses that will be associated with exporting the rare-earth minerals needed for EV production. America is realizing it needs to make advances towards securing its own rare-earth access. A war that America hoped would put it in the lead is now being dominated by China, which holds rare-earth minerals within the palm of its hand. America is now tasked with the challenge of rebuilding the EV market from scratch. The question is whether leading EV brands, such as Tesla, will be able to rise up to the challenge so that America can yet again be in the lead in the EV market.
