China making Detroit automakers 'underdogs' with huge EV push, experts warn

• China will build 30 million cars this year and is pursuing dominance across the global electric vehicle industry, including the U.S. market
• That’s making Detroit automakers ‘underdogs’ and threatens Michigan’s dominant industry, experts warned at Mackinac Policy Conference
• China’s push to own the new electric vehicle market poses both economic and national security concerns for the U.S., they said

MACKINAC ISLAND — China is becoming an automotive manufacturing "machine" that poses a growing risk to Michigan's dominant industry, experts and officials said Wednesday, urging further action to curb the threat.

“We need to confront this new reality,” Michael Dunne, CEO of Dunne Insights LLC, said during a panel discussion at the annual Mackinac Policy Conference. “... We are the underdogs, and we need to hustle.”

The warning comes the same month as President Joe Biden's administration announced new tariffs to help domestic manufacturers compete with low-cost electric vehicles, EV batteries and semiconductor materials from China.

Chinese automobile manufacturers have set their sights on global dominance and are expanding their market well beyond — and up to — U.S. borders. At the same time, China is still supplying much of the technology and raw materials used vehicles produced in the U.S., including electric vehicles. 

Related:

• Steep tariffs may block Chinese threats to Michigan's growing EV industry
• Jobs v. China: How politics, communist ties roiled $2.3B Gotion plan in Michigan
• Amid Gotion furor over China, Michigan vows to change how it vets firms

“We cannot rely on China, folks,” said U.S. Rep. Pete Stauber, R- Minn., chair of the Energy and Natural Resources Committee.

“COVID taught us a lot. If you depend on foreign adversarial nations for our critical minerals (for EV batteries), we are in trouble,” Stauber said to applause from the crowd attending the event organized by MichAUTO, a statewide auto advocacy group.

The discussion of U.S. competitiveness also included U.S. Rep. Debbie Dingell, D-Michigan; Michael Dunne, CEO of Dunne Insights LLC; and Kristin Dziczek, policy advisor for the Federal Reserve Bank of Chicago – Detroit Branch.

“China's playbook is simple, straightforward and powerful,” Dunne said. “They identify an industry, and they throw all of the national resources at it.”

That’s happened with solar panels, a market now 90% controlled by China, Dunne said. China has also targeted areas like shipbuilding and steel manufacturing, illustrating how the economic issues dovetail with national security concerns.

The Chinese growth in EVs has leapt forward, Dunne said. Examples include: 

• China today has the capacity to supply half of the world's demand for cars
• China will build 30 million vehicles this year, three times the U.S. total
• They're the number one exporter of vehicles globally, surpassing Japan in 2023

Further, China is the top supplier of vehicles to Mexico, Dunne said, selling 20 different brands. Among them: Chevrolets built by General Motors in China and then shipped to Mexico. 

The issue is not just EVs, Dziczek said, since one in five cars sold in Mexico is Chinese  built — not EVs but autos with internal-combustion engines (ICE). 

As a result, she said, the Chinese also continue to invest in advanced ICE technology so they can meet all auto demand.

Still, when it comes to EVs, China’s rise comes as U.S. auto manufacturers are racing to stake their ground by investing in battery production, manufacturing plants and EV research and development. 

American consumers so far are not embracing the vehicles as quickly as once projected. EV sales this year are declining after slower-than-expected growth at the end of 2023. As of April, EVs represent about 7.1% of the overall auto market this year — down from 7.6% a year earlier. 

The figures are prompting automakers to continue traditional auto production and look at hybrids, adding pressure on their cash outlays and investment strategies.

Still, Dingell said, “Michigan is competing in a global marketplace. If we are not moving to EVs, we are not going to be competitive.”

Michigan-based Ford Motor Co. and General Motors retreated from global markets over the past 10 years, including Europe and Japan, Dunne said.  They also tailored their models to high-profit vehicles.

“Ultimately what we have here is two companies that are very good at making large trucks and SUVs for North American consumers,” Dunne said. “We're not competitive outside of that market.”

In contrast, China maximized resources behind developing EVs, Dunne said, and “today we are confronted with a machine out of China the likes of which we've never seen before.”

Here in the U.S., the political polarization of EVs and environmental issues may hold back progress, panelists warned. 

“Sometimes environmental issues get more political than they should be,” Dingell said. 

Former President Donald Trump, the expected Republican nominee for this year’s presidential election, has promised to reverse pro-EV policies. Biden, the presumed Democratic nominee, is balancing mining and strongly pro-environmental policy. 

The result has been enough bans and restrictions that some warn the U.S. will not be able to supply all of the needed battery and auto components. 

One issue to solve, panelists said, is developing more U.S.-based sources for minerals like copper, nickel and taconite, which is mined and processed into iron ore to make steel.

“Some want mining stopped at any cost,” said Stauber, noting that the raw materials feed American production.

Stauber said he will visit Eagle Mine in Michigan's Upper Peninsula on Thursday. The mine, located northwest of Marquette, is the only source of nickel in America, but Stauber also wants to see mining allowed on the Minnesota shore of Lake Superior at the Duluth Complex, one of the largest undeveloped mineral deposits in the world. 

“We need leadership that allows mining to happen in this country,” Stauber said. “... We have to ethically and responsibly mine these minerals.”

Dingell said business leaders need to have a voice in leading the global awareness of U.S.-Chinese competition. It’s up to CEOs to influence policy, to use research and development to move batteries beyond critical minerals, and to mirror the world’s auto production so that American autos will be competitive around the world, she said. 

Otherwise, Dingell warned, “we're not going to be competitive in this country.”