Next trans-Atlantic trade split: Chinese-made cars

Presented by Chevron: Your guide to the political forces shaping the energy transformation

Jun 26, 2023 View in browser   By Arianna Skibell Presented by Chevron POLITICO illustration/Photos by iStock The push to phase out gasoline-powered cars and trucks in the United States and Europe has created an opening for China — and Western countries are deeply divided on how to respond, write David Ferris and Joshua Posaner. The U.S. is trying to keep China out of its emerging EV market, while Europe has created a welcoming environment for Chinese carmakers with lower tariffs and subsidies for battery-powered imports. On both sides of the Atlantic, the threat of China cornering yet another global market is at the center of policy debates about trade, jobs and the climate fight. China has become a true rival for Western auto giants, with the manufacturing capacity to lock up market share for electric cars around the world. Or, as Ford CEO Jim Farley put it at a recent finance summit, “The Chinese are going to be the powerhouse.” As of last year, 5.4 million electric vehicles — two-thirds of the world total — were registered in China. BYD, a Chinese maker of both clean cars and the battery cells that power them, sold nearly 2 million cars in 2022, far more than the 1.3 million that Tesla reported. A growing foothold in the West  Chinese companies are gaining ground even in the U.S., despite Washington’s trade barriers — though not under their own brand names. The Chinese carmaker Geely, for example, owns the Swedish automobile manufacturer Volvo and its luxury EV affiliate Polestar, which is building a factory in South Carolina. Still, U.S. tariffs have made the country almost three times more expensive for China-built vehicles than the EU market. European bind  In contrast, the European Union’s comparative openness is stirring fears about how a flood of inexpensive imports from China would affect the bloc’s economy, as well as a rift between France and Germany on whether to explore potential tariffs against Chinese-made EVs. Cars are Europe’s largest industry and biggest employer, accounting for 10 percent of manufacturing activity. China’s advantages, including its huge domestic market and mastery of battery cell technology, will be hard to overcome. “[Chinese companies] are leveraging their specific product know-how over incumbent European brands that employ a lot of people to make engines,” one automotive manager told David and Joshua. To match that kind of efficiency, the manager said, “VW would have to lay off half of its staff.”   It's Monday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Arianna Skibell. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to askibell@eenews.net.   A message from Chevron: At Chevron, we’re striving to lead the way in the energy transition. That means producing renewable fuels to make an impact today and working to develop other fuels for tomorrow – all while working to reduce our carbon intensity. That's energy In progress.   Listen to today’s POLITICO Energy podcast Today in POLITICO Energy’s podcast: Gloria Gonzalez breaks down the process of climate gentrification, what’s driving this trend and how activists and local politicians are fighting back.   A message from Chevron:   Power Centers James Hand wipes sweat from his face while overseeing a parking lot asphalt resurfacing job last week in Richardson, Texas. | LM Otero/AP Photo Living and dying by the sun In Texas, a surge in solar power generation is helping the state’s primary grid operator navigate an ongoing and stifling heat wave, writes Benjamin Storrow. Despite the sun-powered boost, analysts say the state’s electric grid remains unprepared for a warming climate in which intense heat waves will become more frequent and severe. 'Out there rotting' The developer of the Mountain Valley pipeline now has a clear path to finishing the project. But the company also has tons of aging pipe that has been sitting out in the elements for as long as six years, writes Mike Soraghan. That’s a potential safety problem, according to experts, manufacturers, safety advocates and opponents of the pipeline. Sunlight and rain degrade the epoxy coating on the pipes that prevents corrosion. Damage to the coating increases the risk of ruptures and explosions. Underestimating flood risks New research suggests the federal government is relying on an outdated weather model that is putting hundreds of billions of dollars in infrastructure spending at risk, writes Zack Colman. State and local governments are required to consult a federal prediction model that research firm First Street Foundation says vastly underestimates the likelihood of flooding. That means many new projects could face flooding threats far earlier than expected, requiring unanticipated and costly maintenance. In Other News Extreme tipping: If you're ordering from a delivery app during extreme weather, you're likely not tipping enough. That's fishy: Thousands of dead fish have washed up on a Thai beach. Experts say climate change may be to blame.   LISTEN TO POLITICO'S ENERGY PODCAST: Check out our daily five-minute brief on the latest energy and environmental politics and policy news. Don't miss out on the must-know stories, candid insights, and analysis from POLITICO's energy team. Listen today.     Subscriber Zone A showcase of some of our best subscriber content. Washington state's King County Metro Transit got $33 million in federal funds to upgrade its bus fleet. But many transit agencies seeking grants this year were rejected due to huge demand. | Ted S. Warren/AP Photo The Transportation Department was forced to reject a staggering 345 applications from transit agencies seeking funding to buy cleaner buses even after Congress allocated record funding this year. The International Sustainability Standards Board has unveiled its final climate-related disclosure standards, moving closer to a global baseline for companies to report on how climate change affects them. The Mountain Valley pipeline received its final permit Friday, more than five years after federal energy regulators initially approved the project. That's it for today, folks! Thanks for reading.   STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.       A message from Chevron: To meet society’s energy demands, we’re scaling up our operations while scaling down our portfolio carbon intensity. We’re investing in the fuels of tomorrow, while also staying focused on developing lower carbon alternatives to meet the needs of today. That means producing things like renewable diesel and renewable natural gas to fuel existing engines and help reduce the lifecycle carbon intensity of the transportation industry. Meeting today’s energy needs, while forging new paths to the future - in ways that are affordable, reliable and ever cleaner. That’s energy In progress.     Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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