PHOTO: AFP/FILE

REUTERS, Hong Kong

China’s electric cars have zoomed into a new era of battery-powered driving. Now models such as BYD’s Seal and Great Wall Motor’s Funky Cat face an international backlash. The US is quadrupling duties on imports of electric vehicles from the People’s Republic to more than 100 percent, while the European Union is lifting total tariffs close to 50 percent for some marques. The Chinese-made batteries that power the vehicles are an obvious next target for trade restrictions. But that battle will be even harder for the West to win.

China is a battery powerhouse. The $115 billion Contemporary Amperex Technology , and its smaller compatriots accounted for two-thirds of the global market for power cells used in electric cars in the first half of 2024, Bernstein analysts reckon. Companies from the People’s Republic are also growing faster: installations by SVOLT Energy Technology more than doubled in the period from January to June, while those from rivals CALB, Guoxuan, CATL and BYD all grew by more than a fifth compared to 2023. They’re profitable too, with CATL raking in more than 40 billion yuan ($5.6 billion) in earnings last year.

Much of that output is exported: the total volume of lithium battery units leaving China roughly doubled between 2015 and 2023, according to the International Trade Centre. The US and Europe have become major buyers of Chinese cells, squeezing local operators like Sweden’s Northvolt.

Now Western policymakers are pushing back. President Joe Biden in May laid out plans to hike tariffs on imports of batteries and their parts to 25 percent, from the previous 7.5 percent. His flagship Inflation Reduction Act, which subsidises electric cars by up to $7,500, from 2025 explicitly excludes vehicles for which battery materials were extracted, processed or recycled by a “Foreign Entity Of Concern, “. That term covers companies headquartered or incorporated in China, and firms where the government holds 25 percent or more of its equity, voting rights or board seats. Chinese manufacturers are also excluded from the Bipartisan Infrastructure Law’s $6 billion of credits for batteries and the critical minerals required to make them.

EU policymakers in Brussels are erecting similar barriers for Chinese-made batteries. They have not introduced additional tariffs, but a slew of guidelines on local and responsible sourcing makes trade increasingly costly and complex. So will the EU’s proposed carbon border tax, which will impose levies on emissions-intensive imports, including cars and related parts from 2030.

These efforts are likely to intensify as political relationships become testier. US efforts to minimise the country’s dependence on its main strategic rival have broad bipartisan support. Officials are also anxious about the presence of Chinese tech in so-called dual-use products that have military applications. Batteries are crucial for submarines and drones.

And although the IRA is one of Biden’s signature policies, Donald Trump would probably hesitate to reverse it wholesale if he returns to the White House. Battery-related investments spurred by the tax credit scheme are concentrated in Republican-leaning states, UBS analyst Tim Bush points out.

To successfully unplug from Chinese suppliers, however, Western countries will need to develop alternatives. Korean battery giants such as LG Energy Solution, SK On and Samsung SDI, which account for a combined global market share of 23.5 percent, are expanding in the US and the European Union. However, relying on this trio has downsides, because they lag larger Chinese rivals’ technical prowess. None have so far managed to ramp up mass production of increasingly popular lithium-iron phosphate cells, for instance.