In 2024, BYD threw a big event in Mexico. The Chinese electric vehicle company was celebrating one year in the country. Executives took the stage to announce a new model, and the CEO of BYD Mexico talked about a hybrid SUV that sold out in the country in just a few weeks. He also set a big goal — to sell 50,000 BYD cars in Mexico by the end of that year. These days, industry executives estimate that BYD is selling closer to 80,000 cars a year in Mexico, capturing a huge chunk of the country's EV market. Chinese vehicles overall make up a quarter of total car sales there. But if you're in the US, you might have missed the hype. That's because here, all of these cars are effectively banned. Still, as more Chinese vehicles show up in America's backyard, more US drivers are taking notice. These cars aren't sold here right now, but what's clear is there is more interest. Our colleague Ryan Felton covers the auto industry. There's routinely sightings now of these cars in border towns. And so you just kind of have this small pocket of the US that is not just being exposed to these cars online, but like they could actually see them around town on American streets, even though they can't buy them. Welcome to the Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, June 3rd. Coming up on the show, will Chinese cars come to the US? And what will it mean for the car industry? When China first entered the global car market back in the 80s, the US auto industry didn't think much of it. They saw it as a place to sell cars. But Chinese automakers weren't considered serious competition. And for decades, that was the status quo. That carried over into the 2000s when companies that were launched on their own started trying to think about coming to America. I remember I had a conversation with one former executive at a domestic automaker who said that when they showed up at the Detroit auto shows for the first time in the 2000s, they were kind of just laughed at, more or less. Why? What was that? Because of the designs of the cars? Yeah, the designs, just the way that they drove. I mean, it was just everything from the top down. They just weren't viewed as serious contenders. I mean, BYD was trying to get the car to be a car. I mean, BYD was trying to come over to the US as early as 2010. And there's a video of Elon Musk being asked at that time about BYD. And he literally just burst out laughing. Why do you laugh? Trying to compete. Why do you laugh? Have you seen their car? I have seen their car. Yes. I think it's just fair to say they just weren't taken seriously at all. But China kept investing in its auto industry, and the designs and software have advanced quickly, turning a lot of skeptics into converts. There's a common story that's shared by a lot of American auto execs who during the pandemic weren't traveling to China during the early years. And then when China reopened and held its first auto show in like 2023, a lot of automakers went there and were just kind of blown away by what they saw. Like it's just this period where everyone in China just kind of really accelerated and ramped up. And I think a lot of it ties back to the country's overall investment prioritization of building up that supply chain. These days, there are more than a hundred car brands in China. So the bigger players, brands like BYD, Gile and Great Wall Motor, are taking their product overseas. These companies are exporting hundreds of thousands of cars, electric, hybrid and gas, to places like Europe, Southeast Asia, all over the world. Canada is also opening itself up to Chinese car imports. And the electric vehicles and hybrids have performed especially well. Elon Musk may have mocked them back in the day, but customers are raving about them now. This is China's best selling small EV and at $10,000 US, I can understand why. And on a full charge and a full tank of gas, it can do well over 650 miles. It's a total spaceship with a big rotating touchscreen, great driver interface. You get a head up display, you get massage seats that recline and have this lovely leg rest. Amazing. A good example, there was an SUV by the company Gile. And it was just kind of gobsmacking when you see the kind of numbers that they're putting out, which is something like 800 miles a range in total, something like well over 100 miles. That's just all electric. That range goes beyond any plug-in hybrid on sale in the US today. And when you think about just what that means on a day to day for most people, I mean, you could go several weeks without actually having to re-up your car in any way. And besides performance, are there other features these cars have that you maybe don't see in the US? There certainly are the kind of more outside of the box kind of technologies that we don't see like rotating center dashboards, you know, screens or like fridges in the back. Like the like karaoke machines. Yeah, like the karaoke thing is so common. I mean, like, so there's these things that I think are atypical and, you know, clearly not a part of our car market. But I think they have everything now. And, you know, we talked to some executives who are competing with them in other countries. And that was a big point that, you know, I think came away from it was it's not just about EVs. They're competing on everything now. What's maybe most attractive to buyers when it comes to China's cars is the price tag. Simply put, it's like they're priced aggressively in many cases, very affordably. Wherever China's automakers have gone around the world as of late, they've really sort of immediately gobbled up market share and won over locals where they've where they've gone, which is pretty much everywhere else, but America at this point. And US car companies and the government want to keep it that way. Would you say this is the biggest threat they've seen what in a generation? Yeah, I mean, I don't think it's any question. What efforts to keep Chinese cars out of the US look like is after the break. Don't have this on your playlist? Let's change that. Discover the breathtaking landscapes of Japan and falls a horizon six. Experience stunning contrasts of rural and urban in this open world driving adventure. Explore diverse biomes and beautiful landscapes and over 550 real world cars. Your journey to becoming a horizon legend starts now. Play for the horizon six premium edition on Xbox and PC. Japan awaits. Chinese cars are not explicitly banned in the US, but there are a couple of reasons why you don't see them here. First of all, they're a sky high tariffs in place. Those can get to be above 100 percent, making them just too expensive to sell here. And then there are national security concerns. The US government has prohibited the software inside the cars, basically comparing it to a Trojan horse. It's been an overriding theme for the last few years since the Chinese car industry really kind of took off and resulted in rules that are pretty stringent and stipulate that you can't have any Chinese, what they call connected vehicle software. And that's essentially anything in your car that's talking to the cloud. That can't be made by a Chinese connected entity. And then also in a few years, you can't have certain types of hardware in your car that come from China. And that's all been tied to national security. So you can't buy these cars here, but that hasn't stopped them from appearing on some American roads. As part of his reporting, Ryan went down to Texas and met up with a BYD owner named Dario Ariza. He's a dual US Mexico citizen who lives in Mexico near the border and regularly drives his BYD into Texas. Ryan says that Dario, like many others he talked to, purchased his Chinese car for one big reason, price. When he said he was going to look for a car, he had a particular price point of mind, which is in the low to mid 30s, $30,000. And he said it was just no contest when he actually saw the vehicle compared to others at that price point. It's a plug-in hybrid, which means it gets all electric range for driving. Plus has a gas motor as well. And there really isn't too many at the price they bought it, which was close to $30,000. So he said it was just it was a no brainer, particularly because of the price. And in your reporting, what did you learn about the appetite from American customers for Chinese cars? Are there a lot of like US based Darios out there? You know, one of the biggest surveys of car owners that's done every year, they will ask something like 250,000 people, would you buy your next car that's made in X country? And with China, that that number has steadily gone up, something like three 30 percent of car buyers would consider buying a car from China now, which I think is kind of extraordinary in this environment where you have pretty much everyone from industry to lawmakers loudly saying these cars shouldn't be let into the US. And that makes US car companies quite worried. What is at stake here, particularly for the American car industry? Yeah, I mean, it's if you take the car makers point of view, it's it's everything. They repeatedly described it as an existential threat to the domestic car industry. These concerns have bubbled up from a lot of brands from American stalwarts like Ford to importers like Hyundai. They feel like they would have a hard time competing on price if Chinese cars entered the US market. If I wanted to buy a new car here in the US today, how much should I expect to spend at minimum? So there's some that get listed for, you know, twenty one, twenty two thousand dollars. And those are the very compact SUV type cars. If you're looking for something like you're a family that you need something bigger, I mean, you're immediately going up to closer to, you know, 30,000 on up. And the average transaction today is, you know, fifty thousand dollars. And that's been pretty much consistent for the last few years now. Domestic car executives say there are several reasons why they struggle to compete with China's aggressively low car prices. Things like the country's cheaper labor, powerful government subsidies and efficient supply chain. Even as Americans show more interest in buying Chinese cars, US lawmakers are pushing for more restrictions. A new bill called the Connected Vehicle Security Act was recently introduced in the US Senate. Here's Senator Bernie Moreno, a Republican from Ohio, one of the bill's co-sponsors. This is about her medically sealing the US market from predatory Chinese companies that are funded by the CCP with one simple goal, which is to destroy the US sector, which is about 10 percent of our GDP. The bill would make it illegal to manufacture Chinese cars in the US. It would also mean American car companies couldn't pursue joint ventures with Chinese automakers and Chinese car companies that own US brands would have to divest themselves of those brands. A lot of the automakers immediately came out and said that they were supportive of the policy move. And that's, you know, the fact that the US government is not going to be able to not a surprise really at this point, because you have so many companies now have just been loudly saying for the past year that China coming here in some capacity would be unfair, given some of the points I mentioned about subsidies, for example. But I think part of that fear that was driven by the fact that these companies know how to make a really good car now, they feel like it would be an unfair competition. But these companies are all very impressed with the cars as well. So, Ryan, the US government is trying to safeguard American car makers with these policies. But how realistic is it to expect that they can keep Chinese cars out of the US indefinitely? I mean, is it inevitable that these cars will be sold here? I can't see it happening soon, especially if this legislation picks up steam, because the fact that it would also ban the manufacturing of cars, that really would sort of be a hindrance. That said, plenty of executives believe it's inevitable. The fact, I think that you have these companies still expressing a desire to come here, even with all this sort of opposition that's been building, I think that there's sort of this resignation that's developed that they're going to find away somehow. I think it's just sort of waiting to see that the dust settles politically. That's all for today, Wednesday, June 3rd. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
