UBS analyst Joseph Spak asked clients on Sunday: Will there be Chinese cars in the US?
Spak pointed to comments from President Trump last week at the Detroit Economic Club, in which he said, "If they want to come in and build a plant and hire you and hire your friends and your neighbors, that's great. I love that. Let China come in, let Japan come in. They are. And they'll be building plants, but they're using our labor."
Trump's comments come after Chinese automaker Geely stated at CES in Las Vegas that it could make a major announcement about a U.S. expansion within the next 24 to 36 months.
"The big question for us is when and where we will go to the U.S.A.," Ash Sutcliffe, Geely's global communications chief, said in an interview last week at the Autoline Network at CES.
This also follows Canada's decision last week to allow up to 49,000 Chinese EVs per year at a low tariff rate. U.S. Trade Representative Jamieson Greer said the decision is "problematic for Canada."
"There's a reason why we don't sell a lot of Chinese cars in the United States. It's because we have tariffs to protect American auto workers and Americans from those vehicles," Greer told CNBC on Friday.
But Trump's comments suggest that if Geely or BYD Motors were to announce new manufacturing plants in the US, their products would avoid tariffs and be competitively priced with domestic car brands.
UBS analyst Spak offered his team's thoughts on Chinese EVs in the US market:
-
Currently, there is a 100% tariff on Chinese EV imports. But of course, this wouldn't be an issue if vehicles are built here. The bigger issue, in our view, is that the US bans Chinese software in vehicles starting in 2027, and then hardware in 2029. We believe that even for Chinese vehicles built in the US, they would want to leverage their software and hardware development.
-
Investors point to the recent rapid rise of Chinese vehicles in Europe, with their December share hitting 18% in the UK and 12% in Spain. For the year, Chinese share in the UK was up to 9.7% (aided by China owned MG brand which has UK heritage) from 4.8% in 2024, Italy 8.1% from 4.7%, Germany remains lower at 2.5%. But of course, this large inflection was aided by imports. And China exports grew meaningfully in 2025, to >1mm units, as they looked for global growth especially as domestic demand slowed and amid high domestic competition. In the US, the Chinese don't have the ability to test the waters or see early gains given exports to the US are tougher.
-
Building factories, supplier parks, dealerships, distribution networks, and service would take some time (though many dealers we have spoken to have indicated they would welcome selling them). Rental/fleet seems like a way the Chinese OEMs could first start to get a foothold in the US and test out the market.
-
So, as has been our belief for a while (we wrote this in 2023), it is likely only a matter of time before the Chinese automakers are in the US, a sentiment others such as Ford CEO Jim Farley have echoed. From Ford's 2Q25 earnings call: "We really see not the global OEMs as a competitive set for our next generation of EVs. We see the Chinese, companies like Geely and BYD."
-
However, because of policy, the US OEMs likely still have a protected window for a number of years. Moreover, in our view, if/when the Chinese come, they are less likely to compete with the D3 bread and butter (and major profit driver) of large pickup trucks and SUVs. These segments have very brand loyal customers and also, for now, are less likely to be electric. Thus, smaller cars and small/midsize CUVs are more likely at risk. These are already competitive segments but also areas where Japanese/Korean brands tend to be more successful as F/GM have pulled out of many of these areas. Chinese autos in the US would also be a headwind for TSLA, RIVN. Further, China seems to be a topic US voters are more aligned on than not, so we wouldn't expect the administration to move much on China auto investment before the mid-term elections.
-
And of course, there are still the political considerations as China remains a hot button topic. For instance, in response to a WSJ article which said Ford could buy batteries from BYD for hybrids for Ford factories outside the US, White House trade adviser Peter Navarro posted on X, "So @ford wants to simultaneously prop up a Chinese competitor's supply chain and make it more vulnerable...?" Recall, Waymo recently changed the branding of their Zeekr based robo-taxi to Ojai ("ohhi").
-
What about the US "back doors"? Canada just struck a deal with China to allow up to 49k Chinese EVs at a 6.1% tariff (had been a 100% tariff), and Canadian PM Carney indicated he expected the agreement would drive considerable Chinese investment into Canada's auto sector. This is likely to draw scrutiny from the US as they review/renegotiate USMCA, where rhetoric has become more adversarial. During President Trump's recent visit to Detroit, he called USMCA "irrelevant" and that Canada wants it but the US doesn't need it. However, given the complexity of current supply chains, this would cause challenges for the US auto industry. We also believe that as part of the US discussions with Mexico, the US is seeking ways to limit Chinese auto investment in Mexico. That said, we believe this administration may be thinking one way to close the back doors is to eventually open the front door.
-
Also, we found this article that the first "dark" factory could open by 2030 (our understanding is that the Xiaomi factory is already very highly automated) interesting, since if the Chinese do come to the US, it may also be a headwind to President Trump's stance that they will use "our labor" (though we believe US OEMs are also highly likely to continue to automate their facilities).
-
Key to the future of GM and F is what they do with strong profits during this period. We highlight F is still investing in their UEV platform, and GM CEO Mary Barra recently said EVs are still the end game.
-
Finally for suppliers, while they may claim this is an opportunity for new business, at a steady state, we believe this is at best case a neutral outcome (win with Chinese OEM replaces win with existing customer) with risk skewed to the downside as it could be a share loss, the win with the Chinese OEM could be lower content, and Chinese suppliers could also invest in the US (again political issues, but we are assuming a case where the Chinese OEMs come). That said, they may also have more time if we are right that initial Chinese vehicles in the US take share from Asian OEMs where the NA supply base tends to have less exposure.
To sum up, with Chinese EVs rapidly gaining market share in Europe and beginning to appear on roads in Canada and Mexico, it is likely only a matter of time before they reach the US. Trump suggested that building factories in the US could be their pathway to US consumers, a development that would pressure Tesla, Rivian, Lucid, and other domestic EV companies. It is likely Elon Musk would talk with Trump if there were any threat of a flood of Chinese EV imports.
