Chinese EVs Took a Quarter of Britain's Car Market — Tariffs Won't Save Detroit

Chinese brands captured nearly a quarter of Britain's new-car market in September, and the Chinese-built Jaecoo 7 — nicknamed the "Temu Range Rover" — became the country's best-selling new vehicle that same month. That is the number Rick Lazio, former congressman and former Polaroid board member, wants American automakers and policymakers to sit with.

His argument, laid out in a Fortune commentary: Tesla's newly unveiled Roadster proves U.S. engineering is still world-class — the car can accelerate from zero to 60 in less than a second — but brilliance on the drawing board has never guaranteed commercial success. Give Tesla "an A for design innovation," he writes. The harder question is whether it can commercialize even the base Performance model, which includes the fan-powered suction system but none of the thrusters behind the headline-grabbing acceleration. Or will Chinese manufacturers, armed with state-supported supply chains and generous R&D incentives, make comparable technology affordable first?

What does the 100% tariff actually protect?

American buyers have been largely shielded from that competition. The United States imposed a 100% Section 301 tariff on Chinese electric vehicles in 2024, effectively closing the market to them and preventing heavily subsidized vehicles from undercutting domestic production.

The rationale is understandable, Lazio concedes. American companies in a market economy can't compete on equal terms with a state-directed industrial system. But the shield has limits. "Protection alone cannot make an American factory more productive, lower the cost of a battery, or bring a better vehicle to market," he writes. Tariffs have kept China's cost advantage out of American showrooms; they haven't closed the underlying price gap.

The gap is real and widening. According to the International Energy Agency, China remains the world's largest EV manufacturing hub, and vehicles shipped from China accounted for 40% of global electric-car exports in 2024. On cost: the average Chinese battery pack price dropped about 30% in 2024, versus a 15% decline in the United States — Chinese packs got cheaper at twice the rate.

Haven't we run this race before?

Yes, and the U.S. lost it once already. During the 1970s and 1980s, Japanese competitors won over American consumers with better fuel economy and higher quality, and found more efficient ways to build cars. One recent analysis cited by Lazio estimates the Big Three took between 10 and 15 years to catch up with Japanese advances in production efficiency.

Congress responded in 1981 by creating the federal R&D tax credit amid concern about declining private-sector research spending. The same principle applies today, Lazio argues: new discoveries matter only if companies have the incentive and capital to bring them to market.

He watched what happens when they don't while serving on Polaroid's board. Polaroid's scientists understood the future of digital photography, but the company couldn't bring the right product to market. Japanese manufacturers jumped in with both feet. Polaroid ended in bankruptcy.

What should change for manufacturers and policymakers?

Lazio's prescriptions are practical, not motivational:

• Build an advanced manufacturing ecosystem that includes smaller, nimbler companies — not just behemoths with access to capital markets and giant credit lines. Larger manufacturers can then scale the production solutions those firms develop.
• Fix state-level tax friction. Federal policy now allows businesses to deduct domestic research costs immediately, but some states have declined to adopt the rule over near-term revenue concerns — leaving businesses within their borders with less money to invest. "A dollar paid in tax cannot also finance an engineer's salary or a new production line," he writes.
• Note how China plays the same game. Its R&D super-deduction differs structurally from the American credit — the headline percentages can't be compared dollar for dollar — but the broader lesson is that countries rewarding research give manufacturers more reason to invest.
• Incentivize investment in robotics and advanced equipment on the factory floor, with particular attention to smaller suppliers who often lack the capital their largest customers enjoy.
• Set dependable rules. Companies can't plan a battery plant or a major factory upgrade around policies that may disappear; government should set a clear course and let businesses decide which technologies make commercial sense.

The British market shows how quickly consumers will consider a new competitor when the product delivers. American buyers will make the same judgment on quality and value — and, as Lazio puts it, protection may delay the competition, but it cannot determine the winner.