A made-in-China electric vehicle (EV) will hit US dealers this summer offering power and efficiency similar to the Tesla Model Y, the world's best-selling EV, but for about US$8,000 (RM38,228) less.
The EX30 from Volvo Cars, the Swedish luxury brand owned by China's Geely, foreshadows the fierce competitive threat US automakers could face from Chinese EV manufacturers that have surged far ahead of global rivals, especially on affordability.
The US$35,000 window sticker of Volvo's compact sport-utility vehicle (SUV) hits a sweet spot in the US market, where most buyers cannot afford most EVs. The competitive price reflects an unusual combination of Geely's China-specific cost advantages and Volvo's ability to skirt US tariffs on Chinese cars because it also has US manufacturing operations, according to interviews with four sources familiar with Volvo and Geely strategy and several US trade policy experts.
Chinese EV makers can undercut global competitors largely because of the nation's domination of battery minerals mining and refining, as well as its long-standing commitment to EV development, including heavy government subsidies.
In addition, Geely has slashed manufacturing costs by merging supply chains and sharing platforms and parts with Volvo and other Geely brands, according to two senior Geely managers, who spoke on condition of anonymity because they are not authorised to speak publicly.
Despite its aggressive price, Volvo is targeting hefty profit margins on the EX30 of between 15% and 20% globally, said a third Geely source.
China's EV dominance will be on display this week at the nation's premier auto show in Beijing. In the China market, the world's largest, dozens of domestic EV brands are fighting it out in a price war while foreign automakers have steadily lost market share. The intense competition has driven China's biggest EV makers, led by BYD, to accelerate exporting of EVs that can capture higher prices and profits in less competitive overseas markets.
The EX30 will be among only a handful of China-made cars sold in the US, none of them from Chinese brands. Vehicles from China currently face a 27.5% tariff and increasingly strident calls for higher trade barriers from US automakers and their political allies.
But Volvo is eligible for tariff refunds under a law that awards them to firms with US manufacturing operations — such as Volvo's South Carolina plant — that also export similar products, according to US trade law experts and a source familiar with Volvo's tariff-avoidance strategy.
The US government does not release details of tariff refunds to individual companies.
Asked about tariff refunds, a Volvo spokesperson said the company pays all legally required duties on cars and parts. She said Volvo, though owned by Geely, is independently operated and designs its cars in Sweden.
Geely declined to comment.