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The U.S. as well as Europe should definitely shift subsidies away from fossil fuels to renewables, and their industries could technologically keep up with China's. However, it wouldn't solve the problem here imo, as China has a structural overcapacity across the whole supply chain.

In a nutshell, China will do everything to flood the market with ever cheaper products. Its state policy has always been incentivizing lower prices for larger market share, but this policy has reached unprecedented levels (and not just in EV car market, btw.).

A major reason for this is Beijing's bias against a 'social welfare' state for the benefit of industry subsidies. During the pandemic, the government provided high company subsidies to keep people employed, but no household support (which left and is still leaving domestic consumption low). The federal and local governments provided their subsidies irrespective of firms' profitability. Knowing that the Chinese state-planned system traditionally rewards the mentioned scale of business over financial health, firms increased their production capacities even more, hoping to compensate lower margins with volume.

The result is now a massive and increasing overcapacity that can't be absorbed by the domestic market.

Sorry for the long post.

The US could easily match what China’s doing

Not with the unions in the US they can't. Part of the reason China is able to produce cheap cars is because they have cheap labor.

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One more recent investigation by Rhomberg Group refers to China's overcapacity and calling it 'structural', saying that

One last difference [between Chinese subsidies compared to U.S. and European subsidies] is how much support central and local governments have given failing enterprises with little consideration of profit and efficiency. In addition to generous credit and tax support measures, struggling companies were granted credit forbearances during COVID to help them face liquidity crunches and operational disruptions [while private household received nothing, leaving domestic consumption low]. Government support and prevention of market exit boosted the number of loss-making companies [...]. In a crowded environment, with loose budget constraints, firms lowered prices and accepted razor-thin margins to retain market share. Perversely, it also pushed them to build additional capacity in hopes of offsetting lower margins with higher volumes, and because they knew from prior episodes that if authorities ultimately forced a market consolidation, survival would be determined based on scale, not financial health.

[...]

Chinese firms are still using overseas markets to make up for lower prices, margins, or even losses on the China market. But this China-world price discrepancy also means that Chinese firms could lower their export prices further in the future to gain market access, weed out competitors, or make up for new tariff barriers in the EU or the US.

Another new study by German researchers in Kiel on Chinese subsidies has been posted by someone here just today on Lemmy.

According to DiPippo et al. (2022) and recent OECD studies, the industrial subsidies in China are at least three to four times or even up to nine times higher than in the major EU and OECD countries. According to a very conservative estimate, industrial subsidies in China amounted to around EUR 221 billion or 1.73% of Chinese GDP in 2019. According to recent data of 2022, direct government subsidies for some of the dominant Chinese manufacturers of green technology products had also increased significantly - the electric car manufacturer BYD alone received EUR 2.1 billion [in 2022, which is up from just EUR 220 million in 2020].

We have been observing a massive price war within China's domestic EV market for some time. Many EV car producer have already filed for bankruptcy or are on tbe bring of collapse. Consequently, many Chinese customers are unable to access after-sales and software maintenance services.