The Biden Bombshell: 3 EV Stocks on the Chopping Block Due to China Tariffs
- by Business Insider
- May 21, 2024
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Did President Biden just kill the electric vehicle industry? By enacting protectionist trade tariffs on Chinese-made EVs in a bid to boost domestic carmakers, the president may have signed the industry’s death warrant. He certainly put EV stocks at risk.
Biden is quadrupling the tariffs on Chinese EV imports from 25% to 100%, supposedly to protect the U.S. EV industry “from unfairly priced Chinese imports.”
Cut through the word salad the president offered in defense of his actions, and it means U.S. consumers will have to pay more for EVs. But as car buyers clearly stated, they don’t want expensive EVs.
Sales are dramatically slowing in part because of high prices. Keeping them artificially high won’t spur new sales.
Also, the Law of Unintended Consequences will come into play soon. From retaliatory tariffs on U.S. exporters to unrelated industries becoming collateral damage, Biden’s actions will probably have far-reaching negative consequences beyonf putting EV stocks at risk.
EV makers are desperately looking to grow sales in foreign markets, especially in China, because of slowing sales at home.
Hiking the cost of Chinese EVs here will invite a similar response overseas. The damage won’t be immediately apparent, but the three EV stocks at risk below may suffer the most damage from this boneheaded policy decision.
Polestar Automotive (PSNY) Ford (NYSE:F
) sells a lot of cars in China, both gas-powered and EVs. With 649,000 vehicles sold there last year, it is the automaker’s second-largest market behind the U.S.
China sales actually jumped 31% in 2023, a considerable achievement since Ford’s sales fell in every other market around the world, including the U.S.
Ford is surprisingly the second-largest EV seller in the U.S. with over 20,200 units sold in the first quarter. But the slowdown in the industry, despite big price cuts, is pushing the automaker’s EV plans back.
It recently said a three-row crossover won’t be released next year as originally. Instead, it will come out in 2027. In its place will be more hybrid vehicles.
The company, though, is another EV maker that relies heavily upon CATL for its batteries to keep prices affordable. Without access to the batteries, its dream of make its EV division profitable could go up in smoke.
While it is building a battery factory in Michigan, that is not slated to become operational until 2026. That is too far into the future to help with the immediate threat tariffs represent.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.
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