At the recent auto show in Shanghai, exhibition stands belonging to major automotive players from China, Germany, and Japan were busy, indicating a shift in strategic focus towards a global market less affected by steep U.S. import tariffs on cars and auto parts. This development comes as many in the industry are reassessing their strategies due to the 25% tariffs on auto imports imposed by the U.S. under President Donald Trump.
As the tariffs seem to necessitate reevaluation, some businesses view them as an opportunity for growth elsewhere. “Conflict at the government level trickles down to impact the businesses,” notes Ma Lihua, general manager at Soling, a Chinese company producing electronics for vehicles, including rearview camera displays. Soling, based in Shanghai, supplies automakers like Ford and Toyota and is also establishing a manufacturing unit in Vietnam, where VinFast aims to be the regional electric vehicle leader.
Numerous auto parts manufacturers at the Shanghai event operate in both Chinese and international markets. One such company, Gestamp, a producer of essential auto components like chassis and battery boxes, has faced slowdowns in the U.S. and Western European sectors but is concentrating on expansion into Asia and Eastern Europe. The new tariff complications lead to a degree of unpredictability. Ernesto Barcelo from Gestamp mentions that whereas supply chains used to be predictable, they now operate in an atmosphere lacking stability.
Political stability is a crucial factor for investment decisions, outlines Wei Jianjun, head of Great Wall Motor Co., who notes this concern when contemplating overseas manufacturing, particularly in places like Hungary and the U.S. under current conditions. High U.S. tariffs direct Great Wall’s focus towards markets like Europe, despite the EU’s tariffs on Chinese electric vehicles.
Leapmotor International’s CEO, Tianshu Xin, articulated that the American market is not their current priority, emphasizing their need to stay updated on regulations and addressing different consumer preferences across markets. Meanwhile, Nissan has ambitious plans to introduce ten new electric vehicle models by 2027 and expand investment in China, with flexibility in the U.S. to adjust production and counter reduced imports.
Despite facing higher tariffs, the automotive industry must navigate through national security limitations, especially regarding auto electronics. Wuhan Kotei Informatics, specializing in software for autonomous driving, adapted to these sanctions by assisting foreign clients in localizing software requirements. Ye Xiongfei from the company believes that while certain technology restrictions are warranted, over-regulation could negatively affect innovation in the U.S.
Some at the show speculate that Trump may eventually soften his approach. Yang Jingdi from LvXiang Automobile Parts Co. points out that the economic objectives behind the tariffs are likely short-term, suggesting that both countries need robust supply chains.
AOD Technology showcased a model of Tesla’s Cybertruck to highlight its ambitions to enter the U.S. market, albeit with awareness of the current difficulties. Claire Deng from AOD acknowledged the challenging circumstances but emphasized preparation for potential future dealings with American automakers. As the industry evolves, companies strive to stay ready for eventual changes.