Heavy competition and a price war have resulted in electric vehicles (EVs) in China costing one-fifth of the price of an average new car in the United States. So, one could purchase five EVs in China for the same price as one new U.S. vehicle on average, Reuters reports. The list price of an average new car in the United States in March was $51,456, according to Kelley Blue Book. That compares to more than 200 battery-powered models in China, including hybrids, that cost less than $25,000, according to DCar, an information and trading platform. Using DCar data, Reuters compiled a list of the five best-selling EVs in China with starting prices under $12,000 — all small EVs with various driving ranges. One, the Geely EX2, priced at $10,060, has advanced features, including a front trunk, storage compartments throughout the cabin, a 14.6-inch central touchscreen, and a 255-mile range.
These vehicles are not available in the United States. Chinese car companies have effectively been banned from selling vehicles in the United States due to policies enacted by the Biden administration, citing national security concerns about the ability of Chinese vehicles to collect sensitive data on American owners. In 2025, the U.S. Department of Commerce finalized a prohibition on the import of Chinese and Russian connected vehicle software and hardware. And, legislation has been introduced in the Senate that would codify that Commerce Department ban. The Connected Vehicle Security Act, cosponsored by Senators Bernie Moreno and Elissa Slotkin, would fully ban autos, parts, and vehicle software made in China or in partnership with China from the U.S. auto market. The United States has also applied large tariffs to vehicles imported from China.
Via Reuters, in March, major auto trade groups urged the Trump administration to keep Chinese automakers out of the country, ahead of President Trump’s trip to meet with Chinese President Xi Jinping. In April, a trio of senators also urged the Trump administration to ban Chinese vehicles sold and registered in Mexico and Canada from entering the country. Several dozen House lawmakers also wrote the administration, the Wall Street Journal reports. Additionally, a Senate bill to prohibit China’s carmakers from building cars in the United States is being drafted.
But, according to the Wall Street Journal, five miles from the U.S. Texas border, Chinese cars are being offered for sale that are currently blocked from the American market. A Geely dealership sells the all-electric EX2 for around $20,000. A hybrid pickup truck is for sale by a BYD dealership. Great Wall Motor sells gas-powered sport-utility vehicles, one advertised with the slogan “Be More Tank.” Chinese vehicles account for a quarter of total vehicle sales in Mexico. Current regulations make it nearly impossible for such vehicles purchased in Mexico to be registered in the United States. Federal regulations, however, allow Mexican residents and those with dual citizenship to drive their cars into the United States, even if the vehicles do not comply with relevant standards, which advertises their existence to the American public.
These affordable, high-tech Chinese cars could upend the U.S. car industry, which brings $1.3 trillion to the economy each year. U.S. automakers largely abandoned budget cars years ago, earning higher profits by selling SUVs and pickup trucks that the American public wants. No new car for sale in the United States currently has a sticker price below $20,000.
According to the Wall Street Journal, auto executives and lawmakers claim that China has created an unfair playing field, due to heavy government subsidies and ultralow labor costs. Also, Chinese automakers learned from the American industry through joint ventures in which China required U.S. carmakers to operate in its country. Now, 25 years later, China is dominating the market for EVs, selling vehicles at home and abroad. According to Reuters, China’s next venture is to embed artificial intelligence (AI) in cars that will make the next generation of EVs not only network-connected, but self-reasoning machines running on Chinese chips and software. This is part of China’s most recent five-year plan for “AI Plus,” a national project to embed AI systems into manufacturing, healthcare, and almost every other part of the economy.
Canada Has Opened its Auto Market to Chinese Vehicles
Carscoops reports that Chinese auto makers are setting up shop in Canada. Geely, Chery, and BYD are moving into the Canadian market as new tariff rules sharply lower Chinese EV import costs. Chery brought two Jaecoo E5 all-electric SUVs to Toronto, equipped with Ontario manufacturer license plates. BYD is opening 20 sales locations in 2026, working with local partners to establish its stores. It is also considering building its own factory in Canada or acquiring one from an established brand.
China and Canada signed a new trade deal where tariff rates for 49,000 electric vehicles imported from China will drop from 100% to 6.1%. The 49,000 eligible vehicles will be allocated on a first-come, first-served basis, with 24,500 permits issued in the first six months of the program, which is the reason for Chinese auto manufacturers moving fast into the Canadian market.
Renewal or Revision of the USMCA
The U.S.-Mexico-Canada Trade Agreement (USMCA) will be reviewed later this year, and automakers are looking to see whether car parts from Canada and Mexico will be duty-free. President Trump placed a 25% tariff on the non-U.S. content of vehicles, citing national security reasons — parts that previously would have qualified as duty-free under the USMCA. Foreign-based automakers have warned the Trump administration that they would pull their cheapest car models out of the U.S. market if the USMCA is not renewed or is watered down. The Honda Civic and Toyota Corolla, for example, are made in the United States, but rely on parts from all three North American countries.
According to the Wall Street Journal, eight of the 10 cheapest new models in the United States are made by foreign-based automakers. The other two are small SUVs made by General Motors in Korea. Trump administration officials believe that any renewed USMCA deal must have tougher automobile rules that limit Chinese parts in qualifying cars and require more automobile and parts manufacturing in the United States. The Trump administration has provided some limited tariff relief to automakers, such as allowing automakers to recoup some of the tariffs they pay on parts. Recently, the administration allowed Canadian and Mexican steel and aluminum companies that supply the auto industry to apply for lower tariffs if they commit to building more manufacturing facilities in the United States.
Analysis
Chinese cars are competitive with those sold in the U.S. because of their low cost, but concerns about malicious software have led U.S. politicians to argue that they need to be kept out of the market. Although the national security concerns regarding this technology create a strong case for the regulations implemented by the Commerce Department and the bill proposed in the Senate, federal prohibitions will not be enough to fully protect the U.S. from the risk of a Chinese cyberattack. According to the Baker Institute for Public Policy, “the rapidly expanding ability of adversarial interests to attack microelectronics like those in vehicles, in order to undermine and threaten economic and national security in the U.S. and among allied nations, currently outpaces the country’s abilities to invoke broad, economy-wide anti-tampering tactics. Strategies are needed at the materials science level, including ‘smart materials’ research and development, to harden critical systems.”
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