There are echoes of the early 90’s in the Biden administration’s moves to thwart the American consumer from purchasing EVs manufactured by Chinese firms.

In 1991, the Big 3 from Detroit ─ General Motors, Ford Motor Company and Chrysler Motors Corp ─ filed an anti-dumping petition with the US government against Toyota Motor Corporation, Nissan Motor Corporation, Mazda Motor Corporation and Mitsubishi, accusing the Japanese groups of selling their mini vans in the US at prices that the Big 3 perceived were ‘unfairly’ low.

That petition only succeeded in riling up the American consumer who pushed back strongly against the proposed tariffs on cheaper Japanese cars. A car was then ─ as it remains even now ─ the second most valued asset on a household’s balance sheet (behind the primary home).

Unsurprisingly, a couple of years later, the Big 3 of Detroit quietly shelved their lawsuit.

And so, it’s with a sense of deja vu that I watch the recent announcements from the White House.

After passing the Climate Law last year, which included a tax incentive worth $7,500 for buying an EV manufactured in the US, the Biden Administration made some tweaks recently in the language of the legislation that bars US manufactured EVs from qualifying for the tax break if critical minerals or other battery components are made by a Chinese entity.

Now, with the battery pack making up roughly 40%-50% of an EV’s production cost it’s the early 90’s all over again for the American consumer as the significantly cheaper Chinese EVs have been walled out by the current administration.

Unlike the price variance in the 70’s/80’s (the Japanese manufacturers had priced their cars about 10-13% lower in the US than they did in Japan), this time around the price arbitrage is significant.

As per JATO Dynamics, the average retail price of an electric car available in China is now less than half the price seen in both Europe and the USA. In the first half of 2023, an electric car cost $33,000 in China, $70,700 in Europe, and $72,000 in the U.S.

The Chinese EV industry’s price onslaught on the rest of the world comes from a combination of sustained government subsidies (China has spent about $57 billion, between 2016 and 2022, to support the industry).

That and some clairvoyance.

Its telling that China has already ended it’s 11-year long purchase subsidy program last year, while the US still meanders through tax-incentive related legislations that have had a stop-start sense to them ever since the Obama administration first created the EV tax credit in 2009 to encourage adoption.

Meanwhile, the Chinese EV manufacturers, after already cornering half the global EV sales last year, are making rapid inroads into Europe with plans to expand to the Middle East, Asia, and Latin America over the next couple of years.

For the American car consumer, it’s the early 90’s all over again.