Decoupling from China: A Case Study of Electric Vehicles and Implications for Europe and the US

Absztrakt

The electric vehicle sector has emerged as a critical component in the global shift towards sustainable mobility. However, the industry’s reliance on Chinese supply chains and manufacturing capabilities presents a significant concern for many countries, particularly given the ongoing geopolitical tensions with increased tariffs. These tariffs represent protectionism, potentially causing inefficiencies and higher consumer costs, leading to significant delays in the reduction of carbon emissions, which many developed Western nations have committed themselves to. As a result, the concept of decoupling from China has gained traction, presenting both opportunities and challenges. This paper explores the feasibility and implications of decoupling from China in the EV sector. The paper found that if a complete decoupling from China in the EV sector were to happen, it would require significant investment, lead to increased costs, and potentially disrupt supply chains. Partial decoupling, maintaining some economic ties while investing in domestic capabilities, could mitigate risks. The paper suggests a balanced approach, collaborative initiatives between China, US and EU could be more effective.

JEL-codes: L62, H23, R41, Q58