The Rise & Rise of China’s EVs & US Rules on Importing Them

Chinese electric car import to USA

The progress of the Electric Vehicles (EV) market has been astronomical, despite COVID-19 supply chain holdups and production cost hikes due to raw material prices. In addition, the drive to be less dependent on Russian oil, coupled with efforts to reduce global warming, has given the EV market much impetus. While China dominates the market, cornering many countries’ imports to meet local demand, the US fights the trend to import made-in-China EVs to protect and grow domestic EV production while striving to achieve its environmental goals.

Trend in figures

Global electric car sales increased to a record 6.6 million units in 2021, doubling since 2020 (51.8%). Global sales kept rising in 2022, with 2 million sold in Q1, up 75% compared to Q1 in 2021. China accounted for half the growth selling 3.3 million units in 2021 than the entire world had in 2020 and outpaced Germany, which was in second place, by almost five times. What about the US? The US market imported nearly 80% of the electric models sold in 2020. Of the 15 global top-selling models in 2020, three were produced in the United States, nine were produced in China, and seven were made in Europe. Why is China in the lead?

How is China winning?

Reasons for the exponential growth of China’s EV market include the government’s EV subsidies, a growing variety of mini electric vehicles, and more and more reasonably priced brands entering the market. Europe’s market is also growing, but Chinese imports are a crucial component of that growth, especially as EU countries adopt tighter CO2 emission standards and move towards zero-emissions vehicle directives. While US electric carmaker Tesla dominates the world in EV manufacturing, according to Statista, six of the ten top-selling plug-in electric models globally in 2021 were Chinese brands. However, Tesla produces its EVs in China, having constructed a massive assembly plant in Shanghai’s free-trade zone where it sources batteries from Korean and Chinese producers.

How is the US doing? In 2020, over 70% of US EV sales were domestically assembled or produced, which is less than the share of domestically-assembled EV sales in China (98%), Japan (79%), and Europe (76%). According to Motor Intelligence statistics, in 2022, US EV sales passed 800,000 (6% of total vehicle sales) – almost double that in 2021 (3.2% of total vehicle sales). Also, more automakers are joining the market – while Tesla Inc. still dominates at 65%, it held 72% of total EV sales in 2021. Now, Ford is at number 2, followed by Hyundai and Kia electric SUVs.

While attempting to boost its competitive edge and local EV industry, the US government again finds itself caught between domestic and international policies with China, as it does in the solar panels arena. The country’s environmental goals are in the mix, of which lowering carbon emissions is vital. However, its efforts to outpace China’s global EV dominance have failed, as has Europe’s and Japan’s. Why? Because no country has been able to beat China’s perfectly coordinated supply chain strategy, which helped it become the most significant global producer of EVs and core manufacturing components.

In August 2022, the US government introduced the Inflation Reduction Act (IRA). This EV tax incentive provides buyers up to $7,500 for new EVs and up to $4,000 for used ones. This tax should help the public buy everything from EVs to heat pumps and high-efficiency electrical appliances. In addition, according to the EV bill’s section 30D, eligibility for manufacturers requires that the final assembly of commercial EVs be in North US and that most materials are locally sourced or from a country with which the US has a free-trade agreement.

CBP import regulations

Despite a hefty 27.5% tariff on importing Chinese-made passenger vehicles to the US, Reuters recently reported that it still might be worthwhile given lower raw material prices in China, favorable currency exchange rates, and increasing US new-car prices.

There are numerous factors to consider if one intends to import EVs from China. First and foremost, as with all imports, are US Customs & Border Protection (CBP) directives to file an Entry Summary and ISF. The ISF form must include several elements to be filled out correctly by the importer, including the 6-digit Harmonized Tariff Schedule (HTS) number. The HTS determines the requirements of PGAs (Participating Government Agencies) under ACE – the Automated Commercial Environment system through which the trade community reports imports and exports, and the government decides if goods are admissible.

The HTS depends on the range rated by the EPA (Environmental Protection Agency) PGA for electric vehicles. The EPA HTS for EVs is generally 8703.80.0000 with 2.5% of the duty and an additional 25% of the value under the US-China tariff.

To clear EV imports, meeting the National Highway Traffic Safety Administration (NHTSA) PGA requirements is also mandatory. The agency develops and enforces the Federal motor vehicle safety standards (FMVSS), which establishes minimum safety performance requirements for motor vehicles, including those imported for sale, to be deemed lawfully compliant. The documents must also state the car’s vehicle identification number (VIN) – the identifying code for a particular automobile. A VIN comprises 17 characters (digits and upper case letters) that act as a unique identifier for the vehicle. Note that the first digit of the number is the country of origin or final processing plant, so the fact that the EV is coming from China is upfront.

It may sound complicated, but it may become the norm whether or not the US likes it. An article published in the Issues in Science and Technology journal, “How China Beat the US in Electric Vehicle Manufacturing,” sums up the situation in a nutshell: “Overall, this grab bag of federal and state policies has been enough to spawn Tesla but not enough to stimulate the growth of a robust US PEV industry, let alone counter China’s more strategic and persistent efforts.”

The eezy way to import

eezyimport enables importers to self-file and save time and money throughout the import process – regardless of the type of merchandise imported. Many car imports pass through eezyimport’s online system as importers sail through the customs import process. Take the driver’s seat with eezyimport!

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eezyimport is an online platform and is not a licensed customs broker. However, we work closely with a third-party licensed customs broker who can assist with any entry-related issues.

eezyimport is an online platform and is not a licensed customs broker. However, we work closely with a third-party licensed customs broker who can assist with any entry-related issues.

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