(Yicai Global) Sept. 16 -- Although the Inflation Reduction Act passed by the US government last month promotes the sale of US-made electric cars through tax incentives, the impact on China’s new energy vehicle exports will not be as severe as expected as they will still have a price advantage, the secretary general of the China Passenger Car Association told Yicai Global.

The Act, signed by President Joe Biden on Aug. 16, offers consumers a tax credit of up to USD7,500 on new energy vehicles that are manufactured and assembled in North America using local raw materials.

But, even with the tax break, the price of most US EVs is still higher than the majority of Chinese manufacturers, Cui Dongshu said. This is because China has formed a complete automotive industrial chain which creates an economy of scale effect, saving production costs.

China’s vehicle exports have grown rapidly in the past two years, driven by a big jump in overseas sales of NEVs. The country exported 1.8 million autos in the first eight months, a gain of 52.8 percent from the same period last year, according to the latest data from the China Association of Automobile Manufacturers. NEV exports almost doubled over the period to 340,000 units, accounting for 20 percent of total car exports.

Those automakers looking to enter the US market should focus on consumer demand, Cui said. US EV giant Tesla currently dominates the US market, but it only has high-end models. If Chinese firms export cars priced between USD20,000 and USD30,000, they may fill the gaps in the market left by California-based Tesla.

Editors: Dou Shicong, Kim Taylor