A top Toyota executive has one key problem with Chinese automakers
The Japanese automaker fears that cheap Chinese EVs have this advantage over their cars.
Chinese automakers have been feeling a lot of pressure from trade groups and politicians at the national level, including President Biden, who fears that they might introduce an unfair level of competition and pose national security risks.
Another figurehead sounding the alarm bells is none other than the North American head of a major Detroit Big Three rival - Toyota, (TM) who fears its company might be at a disadvantage against its Chinese competition.
Related: Pres. Biden says Chinese EVs can pose a national security threat
In a recent interview with Automotive News, Toyota's North American CEO Ted Ogawa said that the threat of Chinese automakers like BYD (BYDDY) entering the American auto market by way of Mexico was one of the "biggest challenges" Toyota and other automakers will face in 2024.
Ogawa fears that Chinese cars' steeply lower prices will undercut products from existing brands in the market, as what he observed in the Mexican auto market.
"Their product is so competitive, including the tariffs, [in Mexico]" Ogawa told Automotive News. "But China also saw, for example, labor cost is increasing [and] material costs as well. So that's why someday, they'll be in the same condition [as other automakers operating in North America.]"
"Our dealers ask us every day how [we will compete with China in the U.S.] Still, we have the better product. However, it's unclear how to keep competitiveness in terms of the MSRP or price area."
Ogawa's comments come one day after President Biden initiated a Department of Commerce investigation into the possible national security threats that cars made by Chinese automakers pose.
Though the measure was packaged as concerns revolving around "connected cars" being tools of espionage for Beijing, official statements made by the president strongly indicate that the move was a protectionist one.
"China is determined to dominate the future of the auto market, including by using unfair practices," President Biden said in an official statement on Feb. 29. "China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch."
More Business of EVs:
- A full list of EVs and hybrids that qualify for federal tax credits
- Here’s why EV experts are flaming Joe Biden’s car policy
- The EV industry is facing an unusual new problem
Just one day before on Feb. 28, Sen. Josh Hawley (R-Mo.) introduced a bill containing legislation that would apply drastically steeper tariffs on cars made by Chinese automakers.
In the "Protecting American Autoworkers from China Act," Sen. Hawley proposed raising base tariffs on cars from China from the usual 2.5% applied to all imported cars, to 100%. When including the additional 25% tariff that former President Trump imposed on Chinese cars during his tenure, all imported cars from China, as well as cars made by automakers of Chinese origin, regardless of manufacture location, will be subject to a total penalty of 125%.
Related: Veteran fund manager picks favorite stocks for 2024
What's Your Reaction?
