US Commerce Secretary Accuses China of Igniting Global EV Price War

Washington is firing new shots at China's electric vehicle industry. US Commerce Secretary Howard Lutnick revealed that Beijing relies on a massive state-backed production surplus, threatening European automakers and redrawing the global competitive map with prices that are hard to match.

An Economic Model Built on Production Surplus

The Commerce Secretary explained that the Chinese economy operates on a surplus-production model. Local governments across China are racing to establish EV companies with substantial state financial backing. Every province has at least two companies, and all are competing to produce the most successful one.

This approach didn't emerge from nowhere. China lacks sufficient oil and natural gas resources, making EV manufacturing a strategic priority. The result is a massive number of fiercely competing companies, all receiving government subsidies that allow them to significantly cut prices.

Prices Below Actual Cost

Government support allows some companies to sell cars at prices far below their actual production costs. A vehicle costing around $30,000 to produce may be offered in European markets for just $15,000. The goal is clear: capture market share and push competitors aside.

These policies are putting major European automakers under increasing pressure. Volkswagen is among the most affected, struggling to compete with Chinese cars on price despite their attractive features and specifications.

Market-Dumping Strategy

Lutnick stressed that China aims to export its production surplus to global markets through what he described as a "market-dumping" policy. This model, driven by intensive production and state support, has become one of the most significant challenges facing the global automotive industry today.