The US tariff on EVs coming from China completely wipes out the 20% to 25% cost advantage China has because of lower labor costs, local suppliers and vertical integration. In Europe, the tariff on Chinese EVs is 9%.

The only way for the Chinese to sell EVs in the US competitively is to make them locally and make the batteries locally because of requirements in the Inflation Reduction Act. “Localization will be key and it will take time,” Arora said.

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