Americans poured hundreds of millions of dollars into a Chinese electric vehicle (EV) brand, even though its cars are not yet even available for purchase in the United States. Hangzhou-based automaker Zeekr made its debut on the New York Stock Exchange.
The company opened 24% higher than its initial public offering price. However, the news comes as an expected U.S. increase on tariffs for EVs from China is likely on the horizon.
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Zeekr’s U.S. launch is now planned for 2025. American investors already bet on the potential success of Chinese EVs in the U.S. market due to their affordability. Some of the company’s newest models have an average price tag of about $40,000. That is around $14,000 less than most U.S. buyers pay for their EVs. With the company now going public, Zeekr sold 21 million American depositary shares to raise $441 million.
However, the Biden administration is wary of the impact of Chinese EVs on the domestic market. The administration raised concerns that the affordability of Chinese EVs could undercut U.S. brands, leading to economic benefits for Beijing. Currently, no Chinese auto brands are available in the U.S. The federal government considered imposing higher tariffs on EVs from China to keep it that way.
A tariff of 27.5% served as a deterrent for Chinese automakers from exporting their vehicles to the U.S. However, the White House reportedly plans to increase that rate by as early as next week, potentially quadrupling the duty. Whether this proposed tariff hike will impede Zeekr’s plans for a U.S. expansion remains uncertain as the company prepares for its anticipated entry into the American market.
