Chinese car manufacturers have been forced to accelerate plans and build local facilities to localize their supply chain in light of various EV tariffs announced this year, according to EV research-house, Rho Motion.

This comes as Canada announces a 100% import tariff on Chinese EVs, in line with its trade partner, the USA. Rho Motion analysts expect the brunt of this to be felt by Tesla which needs to rearrange its production plan to ensure the supply of US-made vehicles to the North American market.

Chinese EV manufacturers have certainly had the fire lit under them this year to diversify their geographical supply chain, thanks to sudden increases in tariffs with the latest hike coming from Canada this morning. The result of which sees Chinese manufacturers are significantly accelerating their current plans and announcing fresh sites in new territories.

—Yu (Frank) Du, China Research Lead at Rho Motion

Meanwhile, Chinese OEMs are already bringing forward plans to build facilities in Europe, Turkey, Thailand, Mexico, Morocco and Brazil. In total, around a dozen new facilities outside of China are planning to open/ramp up in the next few years to deliver local, Chinese branded EVs.

Brands such as BYD, SAIC and Chery are among those manufacturers finding new sites to build cars and batteries. Tesla, which also has historically relied on Chinese manufacturing facilities, is equally looking elsewhere for their production lines, focussing in particular on their sites in Berlin and Texas.

The acceleration is in reaction to recent Chinese EV tariff hikes from governments in Europe, North America and Turkey attempting to protect domestic markets. Some governments are also dangling subsidy carrots for Chinese OEMs looking to open new production plants. Brazil, for example, is offering generous tax incentives, Turkey is proffering almost $10 billion to support EV and battery manufacturing there and India is reducing customs duties in return for commitments to localising supply chains.

The marked exception is China’s presence in the US, which remains minimal. Analysts point to the consumer sentiment towards Chinese brands, the trend in larger vehicle models in the USA and China’s lack of aftercare facilities deterring potential customers.