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U.S. Deputy Commerce Secretary Calls EU, UK, Japan, South Korea 'Dumb' for EV Subsidy Competition with China

  //automotive-transportation.news-articles.net/co .. -dumb-for-ev-subsidy-competition-with-china.html
  Published in Automotive and Transportation on Tuesday, December 2nd 2025 at 14:24 GMT by Detroit News

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U.S. Ally “Dumb” to Compete with China on EVs, Says Moreno
By: Detroit News Staff
Published: December 2, 2025

On December 2, 2025, the Detroit News published a provocative interview in which U.S. Deputy Commerce Secretary Carlos Moreno labeled several of the United States’ closest allies “dumb” for trying to compete with China on electric‑vehicle (EV) manufacturing. The remark, made during a press conference in Washington, D.C., was meant to underscore the United States’ own aggressive push for domestic EV production and to critique the “price‑war” tactics employed by rival governments. In what has sparked intense debate across the automotive industry, Moreno’s comments call into question the strategies of the European Union, the United Kingdom, Japan, and South Korea, and they highlight a growing tension between Western nations and China over the future of the EV supply chain.

The Core of Moreno’s Argument

Moreno’s statement was framed around the United States’ recent policy changes. The Biden Administration has earmarked $30 billion for domestic EV incentives, including rebates for consumers, tax credits for battery production, and direct grants to automakers that expand assembly capacity in the U.S. These measures, Moreno said, are “necessary to level the playing field” against a Chinese industry that receives generous subsidies from the Beijing government. In contrast, he argued, the European Union and its allies have “failed to act decisively” and are essentially “letting China win the race.”

Moreno’s “dumb” label focused on two key points:

1. Under‑invested Incentive Packages – The EU’s Green Deal includes a €30 billion fund for EV development, but critics argue it is split among many projects, diluting impact. Moreno accused European governments of “playing it safe” and “giving the Chinese a head start.” He pointed to the EU’s "Fit for 55" package and the "European Battery Alliance," noting that the latter still relies on foreign supply chains for critical minerals.

2. Over‑reliance on Imports – Japan’s “Electric Vehicle Innovation Strategy” and South Korea’s “EV 2030” plan emphasize importing lithium‑ion batteries from overseas, especially from Chinese suppliers. Moreno described these policies as “short‑sighted” and “counter‑productive” because they expose the U.S. supply chain to geopolitical risk.

A Broad Critique of “Price‑War” Tactics

Moreno also tackled the “price‑war” phenomenon that has intensified since China rolled out subsidies for EV makers. According to him, “China’s government has turned the market into a zero‑sum game,” driving down prices and undercutting U.S. manufacturers. He argued that allies who match China’s subsidies are simply engaging in a “dumb strategy” that harms long‑term competitiveness.

To back his claim, Moreno cited data from the International Energy Agency (IEA) showing that Chinese EVs now occupy over 25 % of the global market share, a figure that has exploded in the last decade. He warned that if other Western nations keep following China’s subsidy playbook, they could undermine their own domestic EV industries, leaving them dependent on Chinese production for critical components such as battery cells and electronic controls.

Industry Reaction

The automotive industry’s response has been mixed. General Motors and Ford welcomed Moreno’s remarks, framing them as confirmation that the U.S. needs to “take the lead.” A spokesperson for the European Automobile Manufacturers Association (ACEA), however, condemned Moreno’s tone, calling it “unprofessional” and “misinformed.” The spokesperson also pointed out that the EU’s "Green Deal" includes a €10 billion "Industrial Strategy" aimed at supporting battery manufacturing, and highlighted ongoing negotiations to secure a “strategic supply chain” for critical minerals that would reduce dependence on any single country.

Japanese automaker Toyota issued a statement noting that its EV strategy is “long‑term and globally oriented.” The company added that it “has no intention of engaging in a price war” and that it seeks partnerships that ensure sustainability and reliability in the supply chain.

Links to Further Context

The Detroit News article itself links to several additional pieces that provide a fuller picture of the policy environment:

• A link to a Reuters story on the EU’s “Battery Technology and Innovation Programme.” This article elaborates on the EU’s funding structure and the strategic emphasis on domestic battery production, giving readers insight into how the EU’s incentives differ from China’s.

• A Bloomberg piece on the “US–EU EV Deal” that outlines the bipartisan support for a shared framework aimed at decarbonizing the automotive sector. The article explains that while the U.S. focuses on tax credits, the EU emphasizes regulatory standards for battery safety and recycling.

• An insideEVs article that provides a deep dive into China’s “Made in China 2025” strategy for EVs, explaining the subsidies and industrial policies that have propelled Chinese automakers to the forefront of the global market.

These links underscore the complexity of the competition: it is not merely a battle of subsidies but a broader struggle over technology leadership, supply‑chain resilience, and regulatory frameworks.

Broader Geopolitical Implications

Moreno’s remarks reflect a larger geopolitical narrative in which the United States seeks to assert its industrial independence, particularly in the face of China’s Belt and Road Initiative that is already stretching into key supply‑chain sectors such as lithium mining and battery manufacturing. The U.S. Treasury has even hinted at imposing sanctions on Chinese firms that dominate battery supply, further escalating tensions.

Simultaneously, the European Union is grappling with internal disagreements about how aggressively to compete. While some member states, like Germany, push for substantial subsidies to boost domestic production, others, like France, focus on regulatory harmonization and carbon neutrality targets. These internal divisions, Moreno suggested, weaken the EU’s overall stance against China.

Japan’s position is also nuanced: the nation has long been a global leader in automotive engineering but is now looking to diversify its supply chains by partnering with Australia for lithium and Canada for nickel. Nonetheless, the Japanese government has opted for a more cautious approach, avoiding direct subsidies that could trigger retaliation from China.

South Korea, meanwhile, is rapidly scaling up its battery production under the "Smart Factory" initiative. The country has announced a partnership with Tesla to expand battery capacity in the United States, a move that could shift the balance of supply-chain power.

The Road Ahead

Moreno’s call for a “more aggressive” stance has reignited debate over how the U.S. and its allies should position themselves in the global EV market. While the U.S. remains the most vocal advocate for substantial domestic incentives, other nations may view the risk of escalating trade tensions with China as too great. Ultimately, the outcome will hinge on a series of intertwined factors: fiscal policy, technological breakthroughs in battery chemistry, regulatory standards for emissions and safety, and the ability of each country to secure a stable supply of critical minerals.

What is clear, however, is that the competition between Western allies and China on the EV front is no longer a “silent battle.” With public statements like Moreno’s, the industry is being forced to confront the stark realities of global supply chains, the limits of subsidies, and the importance of strategic autonomy. Whether the United States can “win” the race will depend on the coherence of its policy framework, the willingness of allies to align with U.S. standards, and the ability to manage diplomatic fallout from a rapidly evolving geopolitical landscape.

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