Chinese made electric vehicles (EVs) are gaining traction in the Gulf region. The US and EU are actively pursuing a policy of enacting trade barriers to prevent further advancements of Chinese EVs into their markets. This is opening the door for the Gulf to benefit more from Chinese EVs, which are seen as more affordable than American- and European-made EVs. 

China became the global leader in EVs production in 2023 – selling over 9.5 billion electric car batteries worldwide and accounting for more than half of global sales. Between 2018 and 2023, Chinese EV exports grew by 1,016% (approximately 1.6 million EVs), with EV exports value increasing by 12,334% – changing from $295 million (USD) in 2018 to $36.7 billion (USD) in 2023.¹ China’s leadership in the EV market came on rapidly, leading to its ability to consistently outpace the US and other players. In the early 2000s, China’s car market was in dire straits, leading it nation to take initiatives to manufacture battery-operated cars — a novel idea at the time. In 2001, Beijing began to invest in technologies related to the production of EVs and put their production at the top of China’s Five-Year Plan. In 2009, China began offering subsidies to EV manufacturers, with $29 billion (USD) allocated for subsidies and tax breaks between 2009 and 2022.² The combination of heavy investment and mass production has led to China’s current position as the global EV leader.

China’s rapid growth has prompted the US and EU to take additional measures in the form of tariffs and duties to curb Chinese advancement in their respective markets. Under (former) President Joe Biden’s Administration, the US implemented a tariff increase of more than 100% on Chinese EVs, effective from 1 August 2024. American buyers of Chinese EVs were also no longer allowed to claim a tax credit for them.³ Biden implemented the aforementioned tariff as a way to protect American carmakers and encourage US manufacturers to seek supplies from non-Chinese manufacturers.⁴ However, President Donald Trump overturned Biden’s executive order that encouraged US automakers to invest more in producing and selling EVs, leaving the status of American tariffs on Chinese EVs to be determined.⁵

Following suit, the EU imposed tariffs on Chinese EVs on 29 October, 2024. This action was preceded by member state’s approval. As a result, the way the EU conducts relations with China is now changed. Tensions between the EU and China had been rising prior to the implementation of the tariffs resulting from an increase in Chinese imports to the Union. Between the years 2020 through 2023, Chinese EV exports to the EU increased “ten-fold in value terms.”⁶ The EU had been one of China’s largest markets for internationalising Chinese EV companies, which started to affect trade relations as the EU was previously a net exporter to China. The surge in Chinese EV imports shifted the trade balance, giving China an advantage over the EU in a sector where the EU once held a surplus. This prompted an investigation by the European Commission, which revealed that Chinese-made EVs had increased their market share in the EU from 3.5% in 2020 to 27.2% by Q2 2024. Consequently, the Commission launched an anti-subsidy probe, confirming widespread subsidies in China, leading to the imposition of duties. Some companies that now pay the duties on EVs include, but are not limited to, SAIC which pays 35.3% (highest rate) and Tesla (China) which pays 7.8% (lowest rate). The EU’s implementations of duties is not as harsh as Washington’s imposition of trade barriers; however, China has been more insistent on the ruling of the EU tariffs. Chinese delegates visited and attempted to lobby against many EU member states, but the decision to impose tariffs was still agreed upon.⁷

The implementation of tariffs by both the US and the EU puts the Gulf region in an interesting position to emerge as a larger market for Chinese EVs. By 2024, more than 10 Chinese carmakers began selling EVs in the Middle East. This was partly due to the Middle East’s attempts at implementing greener “mobility” efforts.⁸ The UAE, for instance, ranked 7th globally and first in the Middle East in the 2023 Global Electric Mobility Readiness Index. This is largely due to the UAE’s commitment to diversifying its economy away from oil. The UAE’s Ministry of Energy and Infrastructure’s Global Electric Vehicle Market project is following this trend, with the goal of having 50% of its cars made up by EVs by 2050. Saudi Arabia is also investing in domestic EV production, with Chinese investors playing a major role.⁹

Chinese EV brands such as NIO, BYD, and Xpeng are becoming prominent manufacturers in the Middle East — particularly in the UAE and Saudi Arabia. In the UAE, local and federal governments have introduced subsidies, fee exemptions and the creation of charging ports to support their goals of growing the domestic EV market. These changes have created an ideal market for Chinese carmakers to expand their presence in the region and resulted in strategic partnerships with the UAE. NIO received a $2.2 billion USD investment from CYVN, an Abu Dhabi investment firm, in December 2023. The UAE is also attempting to build domestic EVs and increase its own production. The company NWTN has built a facility for these progressing attempts and in 2022 the Emirati investment firm, M Glory, opened an EV plant in Dubai.¹⁰

Saudi Arabia’s Vision 2030 has placed growing importance on its own sustainability initiatives and its growth in the EV sector. The government has begun developing charging stations and energy grids and Saudi Arabia’s Public Investment Fund (PIF) has invested in electric vehicle companies, like Lucid Motors, to create domestic manufacturing plants. The Saudi Ministry of Investment and Chinese EV manufacturer Human Horizons have also signed a $5.6 billion (USD) deal to expand their presence in the EV market. Lastly, Saudi Arabia’s strategic location places it as a centre for exports, making it an ideal nation for manufacturers to establish a presence.¹¹ 

There are challenges that arise for Chinese EV producers in the region, though. The UAE’s goal of reaching 50% of cars sold being electric vehicles by 2050 is a large task to undertake. In 2024, electric vehicles made up only 2% of the UAE’s car market. To meet this goal, Chinese manufacturers s must differentiate  themselves expand partnerships in the region. There are positives that come about from Gulf-Chinese EV partnerships, as well. Gulf-Chinese collaborations offer benefits, including job creation and economic diversification away from oil, as well as technological advancements, particularly in battery technology.¹² The EU and US tariffs on Chinese EVs may further strengthen ties between China and the Gulf, making the region more attractive for producers. This could positively contribute to the advancements that are already being seen and grow technological innovation in the region. Overall, Middle Eastern and Gulf states benefit more from partnerships with China. To keep this positive relationship, regional states should be open to expanding production of electric vehicles and growing the domestic market. Not only do electric vehicles positively impact the economies of states, EVs also advance a state’s green energy goals, giving it a competitive edge on the world-stage.