EVs are about to get more affordable, but the question remains, who will make them?

As electric vehicles become more ingrained into the American marketplace, demand for them will continue to rise, especially as more models at lower price points become available. In fact, according to the Business Council for Sustainable Energy the U.S. EV industry grew 50 percent last year. The upward trend continues into 2024, not only in the US but worldwide.

That’s good news, right?

Well, given the global nature of this automotive sector, U.S. manufacturers must compete not only with US-based companies, but the growing number of EV manufacturers emerging around the world. That’s where things get complicated for American automotive manufacturers.  

This New York Times opinion piece outlines a number of the competitive challenges for the US EV industry. 

“The biggest threat to the Big Three comes from a new crop of Chinese automakers, especially BYD, which specialize in producing plug-in hybrid and fully electric vehicles. BYD’s growth is astounding: It sold three million electrified vehicles last year, more than any other company, and it now has enough production capacity in China to manufacture four million cars a year. But that isn’t enough: It’s building factories in Brazil, Thailand, Hungary and Uzbekistan, to produce even more cars, and it may soon add Indonesia and Mexico to that list. A deluge of electric vehicles is coming.”

This sentiment is echoed in other reporting. Writing in Foreign Policy magazine, columnist Howard W. French outlines how BYD has surpassed Tesla as the world's leading maker of EVs:

“In short, the Chinese state has provided massive support to companies in industrial sectors, such as the electric vehicle segment, that it has deemed strategic. This support comes in many forms, from subsidized loans to research support, land breaks, and tax incentives. And this has brought new manufacturers flooding eagerly into the automobile and other sectors, seeking to grasp a historic opportunity for industrial success at greatly reduced risk. This is what has driven the price of EVs in China down to levels unimaginable, say, in the U.S. market. Eventually, many of these novice firms will fail or be absorbed by others, but for now there is no end in sight for the pricing race to the bottom.”

For its part, BYD has stated that it has no immediate plans to sell its EVs in the U.S., but it is eyeing a plant in Mexico.

It’s important to remember that the Inflation Reduction Act, and its clean energy provisions, continue to offer critical support for the U.S. electric vehicle market. Over the next 1-2 years, we could see a rapid transformation in one of clean energy’s signature fields.