Biker16 Posted August 12 Share Posted August 12 What Happens If China's Automakers Build Here? My thoughts are that the benefits for the American consumer outweigh the risks to the domestic auto industry. The key is to replicate what the Chinese did for foreign manufacturers 20 years ago mandating domestic investments and Joint ventures with legacy automakers to protect the legacy automakers. We don't want Chinese vehicles; we want their technology. Quote We've addressed that question before. As InsideEVs contributor Ed Niedermeyer wrote recently, affordable EVs don't just happen; perhaps there's a way for China and America to work together in ways that are both mutually beneficial and stabilizing. After all, think of the jobs that manufacturers like Toyota, Hyundai and BMW have brought to America with their factory options. Could BYD do the same over here? In a best case scenario, that could lead to tie-ups where American automakers get some EV knowledge (much as China once did when ramping up its industry) and maybe even defuse some tensions between two major geopolitical rivals. Also, it was Trump, of all people, who suggested China's automakers just come here. I did not have that development on my bingo card for 2024. But we're too probably too divided to go for it, and that stretches across party lines in America. A recent article from Hong Kong's South China Morning Post illustrates the Chinese perspective on all of this. (I'd add that the Post has had its independence from the ruling party questioned in recent years, but I'm including it here with that caveat so you an read it and make up your own mind.) Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted August 12 Share Posted August 12 1 hour ago, Biker16 said: We don't want Chinese vehicles; we want their technology. The Chinese don't offer anything inherently better technologically over what is in the USA-the vast majority tech is invented here and built in China due to its cheaper labor force. The other issue is the Chinese are going to "blow up" in the next 5-10 years. The consumption rates are dropping because the population is aging and they are looking to dump products in other markets like the EU and US since their is demand there...and of course both are pushing back on that. If you follow any pundits about this-things aren't going to get better-expect shortages and inflation on items because of the great decoupling of using the Chinese as the worlds manufacturing workshop. Quote Link to comment Share on other sites More sharing options...
Biker16 Posted August 12 Author Share Posted August 12 56 minutes ago, silvrsvt said: The Chinese don't offer anything inherently better technologically over what is in the USA-the vast majority tech is invented here and built in China due to its cheaper labor force. The other issue is the Chinese are going to "blow up" in the next 5-10 years. The consumption rates are dropping because the population is aging and they are looking to dump products in other markets like the EU and US since their is demand there...and of course both are pushing back on that. If you follow any pundits about this-things aren't going to get better-expect shortages and inflation on items because of the great decoupling of using the Chinese as the worlds manufacturing workshop. I disagree, 10-15 years you would be correct, but not today. EVs are far less labor-intensive to build than ICE vehicles, reducing the benefits of Lower labor costs Economies of Scale drive battery costs; the more you make, the lower the cost per unit. The Chinese make more batteries than anyone and have leveraged that to lower costs and drive innovation, Especially in LFP batteries. Which is why Ford is licensing CATL technology in their battery factory. Battery technology is only the beginning; much like Tesla, the Chinese have leveraged insourcing and optimization to reduce assembly costs. As shown in the BYD Segull. Quote Link to comment Share on other sites More sharing options...
morgan20 Posted August 13 Share Posted August 13 7 hours ago, Biker16 said: My thoughts are that the benefits for the American consumer outweigh the risks to the domestic auto industry. Yea, the Chinese companies offer more advanced technology at lower prices. American consumers want affordable high tech EV and no political maneuvering will stop the Chinese from fulfilling consumer demand Quote Link to comment Share on other sites More sharing options...
akirby Posted August 13 Share Posted August 13 4 minutes ago, morgan20 said: Yea, the Chinese companies offer more advanced technology at lower prices. American consumers want affordable high tech EV and no political maneuvering will stop the Chinese from fulfilling consumer demand Same reason so many people shop Wal-Mart. 1 1 Quote Link to comment Share on other sites More sharing options...
morgan20 Posted August 13 Share Posted August 13 15 minutes ago, akirby said: Same reason so many people shop Wal-Mart. Yea, exactly. Chinese companies are very successful with many non-automotive consumer goods sold to American shoppers at retailers like Walmart, Amazon, Target, Kohl's, Home Depot and the like. Nothing will stop Chinese automakers from doing the same with affordable EV Quote Link to comment Share on other sites More sharing options...
ColonelColt Posted August 13 Share Posted August 13 Walmart didn’t put local mom & pop stores out of business…the buying public did. Walmart, Target and similar companies offered regular day-to-day products at cheaper prices which were made overseas and the consumer decided where the product was made was unimportant. They voted with their wallet. While I don’t like the Chinese encroachment into American business it has become a fact of life. Only when the American consumer decides enough is enough…no amount of political whining or legislation will change things. 1 Quote Link to comment Share on other sites More sharing options...
tbone Posted August 13 Share Posted August 13 8 hours ago, Biker16 said: I disagree, 10-15 years you would be correct, but not today. EVs are far less labor-intensive to build than ICE vehicles, reducing the benefits of Lower labor costs Economies of Scale drive battery costs; the more you make, the lower the cost per unit. The Chinese make more batteries than anyone and have leveraged that to lower costs and drive innovation, Especially in LFP batteries. Which is why Ford is licensing CATL technology in their battery factory. Battery technology is only the beginning; much like Tesla, the Chinese have leveraged insourcing and optimization to reduce assembly costs. As shown in the BYD Segull. You don’t think that the American companies have the ability to reverse engineer Chinese products, exactly as they attempt to do to us. The major advantage the Chinese have is their control of the natural resources that go into those products. Cheap labor can be found in many places, but if you don’t have the necessary materials to build them. It’s a problem, and it allows the other party to control things. I’m hoping there is sufficient movement by the US to gain control of the necessary natural resources from a business and national security perspective. Quote Link to comment Share on other sites More sharing options...
akirby Posted August 13 Share Posted August 13 9 hours ago, ColonelColt said: Walmart didn’t put local mom & pop stores out of business…the buying public did. Walmart, Target and similar companies offered regular day-to-day products at cheaper prices which were made overseas and the consumer decided where the product was made was unimportant. They voted with their wallet. While I don’t like the Chinese encroachment into American business it has become a fact of life. Only when the American consumer decides enough is enough…no amount of political whining or legislation will change things. Agree on the consumer front. Too many people just want the lowest price and don’t care about anything else. However, there are major issues with both Wal-Mart and Chinese companies on the business side. WalMart bullies suppliers. They almost put Vlasic out of business by selling gallon jars of pickles as a loss leader. When Vlasic complained they couldn’t keep up with demand and it was hurting their regular business WalMart threatened to stop selling all their products. They finally gave in right before the company went bankrupt. Another time 3 guys showed up to bid on tube socks. Walmart put them all in a room and told them to fight it out to be the lowest bidder. That’s why I refuse to shop there. The problem with Chinese companies is in addition to cheap labor they are hugely subsidized by the government, so nobody can compete with that head to head. Thats why Tariffs and other restrictions are needed to simply level the playing field. 5 Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted August 13 Share Posted August 13 18 hours ago, Biker16 said: I disagree, 10-15 years you would be correct, but not today. EVs are far less labor-intensive to build than ICE vehicles, reducing the benefits of Lower labor costs Economies of Scale drive battery costs; the more you make, the lower the cost per unit. The Chinese make more batteries than anyone and have leveraged that to lower costs and drive innovation, Especially in LFP batteries. Which is why Ford is licensing CATL technology in their battery factory. The only way that China got that tech is because it was developed in the US. The Chinese are good at making things, not actually innovating with new tech. If that was the case they'd be actually able to build jet engine fan blades that could compete with what is done in the US or come out with CPUs that are in the sub 17nm segment that aren't kluges-they still depend on Western tech and manufacturing to do that. 1 Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 19 Share Posted August 19 On 8/13/2024 at 10:06 PM, akirby said: Agree on the consumer front. Too many people just want the lowest price and don’t care about anything else. However, there are major issues with both Wal-Mart and Chinese companies on the business side. WalMart bullies suppliers. They almost put Vlasic out of business by selling gallon jars of pickles as a loss leader. When Vlasic complained they couldn’t keep up with demand and it was hurting their regular business WalMart threatened to stop selling all their products. They finally gave in right before the company went bankrupt. Another time 3 guys showed up to bid on tube socks. Walmart put them all in a room and told them to fight it out to be the lowest bidder. That’s why I refuse to shop there. The problem with Chinese companies is in addition to cheap labor they are hugely subsidized by the government, so nobody can compete with that head to head. Thats why Tariffs and other restrictions are needed to simply level the playing field. If China gets a foothold in to America selling by super low cost BEVs made in Mexico, it won’t be game over for GL or Ford but this companies will be squeezed until they retreat to most profitable trucks and SUVs….that’s something nobody other than the Chinese wants to see. 1 Quote Link to comment Share on other sites More sharing options...
fuzzymoomoo Posted August 19 Share Posted August 19 (edited) 30 minutes ago, jpd80 said: this companies will be squeezed until they retreat to most profitable trucks and SUVs Yeah but Ford already did that 5 years ago. GM is kind of in the process of starting that now. Edited August 19 by fuzzymoomoo Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 19 Share Posted August 19 1 hour ago, fuzzymoomoo said: Yeah but Ford already did that 5 years ago. GM is kind of in the process of starting that now. It’s kind of sad watching both of them slowly waste away, at least Bronco Sport and Maverick go against the tide Quote Link to comment Share on other sites More sharing options...
morgan20 Posted August 20 Share Posted August 20 On 8/13/2024 at 10:35 AM, silvrsvt said: The Chinese are good at making things, not actually innovating with new tech. For EV, China is the global leader for innovating with new tech. There was a report from an American technology and innovation organization that said, Chinese research institutions account for 65.4 percent of the high-impact publications for electric batteries, substantially outpacing the United States’ 11.9 percent. The Chinese Academy of Sciences is a stand-out performer in the Critical Technology Tracker datasets. It leads in six of the eight energy and environment technologies [and is] no. 1 globally for electric batteries. Meanwhile, Chinese entities’ global share of patents in the field of electric propulsion increased 11-fold from 2.4 percent in 2010 to 26.9 percent in 2020. Quote Link to comment Share on other sites More sharing options...
morgan20 Posted August 20 Share Posted August 20 18 hours ago, jpd80 said: If China gets a foothold in to America selling by super low cost BEVs made in Mexico It's not "if China gets a foothold in to America by super low cost BEVs", it's when. The head honcho big shot at Stellantis said tariffs on Chinese automakers are “trap” because you cannot stop the competition; you can only protect yourself with performance 1 Quote Link to comment Share on other sites More sharing options...
Chrisgb Posted August 21 Share Posted August 21 20 hours ago, morgan20 said: It's not "if China gets a foothold in to America by super low cost BEVs", it's when. The head honcho big shot at Stellantis said tariffs on Chinese automakers are “trap” because you cannot stop the competition; you can only protect yourself with performance There is competition and then there is dumping. 4 Quote Link to comment Share on other sites More sharing options...
Biker16 Posted August 21 Author Share Posted August 21 On 8/20/2024 at 11:54 AM, morgan20 said: It's not "if China gets a foothold in to America by super low cost BEVs", it's when. The head honcho big shot at Stellantis said tariffs on Chinese automakers are “trap” because you cannot stop the competition; you can only protect yourself with performance I think the best example of this has been the Chicken Tax. I feel it has weakened domestic automakers, making them uncompetitive in global markets, because of their reliance on Products protected by the chicken tax like large trucks and vans. the same thing could happen with EVs, where Ford and GM, retreat to Protected markets unable to compete outside the US. 1 Quote Link to comment Share on other sites More sharing options...
akirby Posted August 21 Share Posted August 21 19 minutes ago, Biker16 said: I think the best example of this has been the Chicken Tax. I feel it has weakened domestic automakers, making them uncompetitive in global markets, because of their reliance on Products protected by the chicken tax like large trucks and vans. the same thing could happen with EVs, where Ford and GM, retreat to Protected markets unable to compete outside the US. If the tax/tariff is higher than the actual cost difference then that absolutely allows the domestic company to increase prices. But with the Chinese government subsidizing R&D and other things combined with Chinese companies selling super cheap to get market share (possibly even below cost) not imposing some type of restrictions and/or tariffs would be completely suicidal. 3 Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted August 21 Share Posted August 21 5 hours ago, Biker16 said: I think the best example of this has been the Chicken Tax. I feel it has weakened domestic automakers, making them uncompetitive in global markets, because of their reliance on Products protected by the chicken tax like large trucks and vans. the same thing could happen with EVs, where Ford and GM, retreat to Protected markets unable to compete outside the US. That is a gross oversimplification bore out by Ford of Europe pretty much operating independently from Ford of North America up until 2010 or so, when duplication of effort was seriously cut back on. FoE had the lead on smaller products like the Focus and Fiesta, but yet they still shrank in sales and the Kuga/Escape merger left NA with a product that was too expensive to make money on and resultant decontenting hurt it. Its pretty bad when a 2017 Escape SE is more or less better equipped then a 2013 Escape Titanium, is the best example I think of FoE screwing FoA. Quote Link to comment Share on other sites More sharing options...
morgan20 Posted August 22 Share Posted August 22 7 hours ago, Biker16 said: I think the best example of this has been the Chicken Tax. I feel it has weakened domestic automakers, making them uncompetitive in global markets, because of their reliance on Products protected by the chicken tax like large trucks and vans. the same thing could happen with EVs, where Ford and GM, retreat to Protected markets unable to compete outside the US. Yea, exactly. Using tariffs to "protect" domestic automakers is a political "solution" to a business problem. There are better ways Quote Link to comment Share on other sites More sharing options...
akirby Posted August 22 Share Posted August 22 7 minutes ago, morgan20 said: Yea, exactly. Using tariffs to "protect" domestic automakers is a political "solution" to a business problem. There are better ways You don’t understand the situation here. BYD is subsidized by the Chinese government. Their goal isn’t to make a profit. Their goal is to infiltrate the U.S. market and they don’t care if they lose money to do it. A normal company can’t do that but the Chinese government can and will. How can Ford or Tesla compete with a Chinese car that BYD is selling at a loss? It would be like the government paying Ford $20k under the table for every Lightning they build. Now Lightning is $20k cheaper than everybody else. Who would buy a $70k Silverado EV when Lightning is $50k? How can US businesses compete in that type of market? We have laws against companies doing that, but our laws don’t apply to what happens in China. So what’s your solution? 2 Quote Link to comment Share on other sites More sharing options...
Biker16 Posted August 22 Author Share Posted August 22 (edited) 1 hour ago, akirby said: You don’t understand the situation here. BYD is subsidized by the Chinese government. Their goal isn’t to make a profit. Their goal is to infiltrate the U.S. market and they don’t care if they lose money to do it. A normal company can’t do that but the Chinese government can and will. How can Ford or Tesla compete with a Chinese car that BYD is selling at a loss? It would be like the government paying Ford $20k under the table for every Lightning they build. Now Lightning is $20k cheaper than everybody else. Who would buy a $70k Silverado EV when Lightning is $50k? How can US businesses compete in that type of market? We have laws against companies doing that, but our laws don’t apply to what happens in China. So what’s your solution? I don't think BYD is selling EVs at a loss. https://www.cnn.com/2024/03/26/business/byd-profit-soar-after-beats-tesla/ The support China gives its Companies are not simply handout, it's part of a comprehensive industrial strategy, that even Tesla has taken advantage of. How did China come to dominate the world of electric cars? | MIT Technology Review Quote Before most people could realize the extent of what was happening, China became a world leader in making and buying EVs. And the momentum hasn’t slowed: In just the past two years, the number of EVs sold annually in the country grew from 1.3 million to a whopping 6.8 million, making 2022 the eighth consecutive year in which China was the world’s largest market for EVs. For comparison, the US only sold about 800,000 EVs in 2022. The industry is growing at a speed that has surprised even the most experienced observers: “The forecasts are always too low,” says Tu Le, managing director of Sino Auto Insights, a business consulting firm that specializes in transportation. This dominance in the EV sector has not only given China’s auto industry sustained growth during the pandemic but boosted China in its quest to become one of the world’s leaders in climate policy. How exactly did China manage to pull this off? Several experts tell MIT Technology Review that the government has long played an important role—propping up both the supply of EVs and the demand for them. As a result of generous government subsidies, tax breaks, procurement contracts, and other policy incentives, a slew of homegrown EV brands have emerged and continued to optimize new technologies so they can meet the real-life needs of Chinese consumers. This in turn has cultivated a large group of young car buyers. The US government has committed 245 billion in subsidies to Compete with China on EVs. Edited August 22 by Biker16 Quote Link to comment Share on other sites More sharing options...
morgan20 Posted August 23 Share Posted August 23 22 hours ago, akirby said: So what’s your solution? The solution biker16 mentioned at the beginning of the thread is better than tariffs on products from Chinese automakers. The key is to replicate what the Chinese did for foreign manufacturers 20 years ago mandating domestic investments and Joint ventures with legacy automakers to protect the legacy automakers. We don't want Chinese vehicles; we want their technology. 1 Quote Link to comment Share on other sites More sharing options...
morgan20 Posted August 23 Share Posted August 23 21 hours ago, Biker16 said: The US government has committed 245 billion in subsidies to Compete with China on EVs. Yea, lots of government support exists in the U.S. for its domestic auto industry. The American auto companies still have to do their part to compete, that means coming up with better technology at lower cost Quote Link to comment Share on other sites More sharing options...
akirby Posted August 23 Share Posted August 23 51 minutes ago, morgan20 said: Yea, lots of government support exists in the U.S. for its domestic auto industry. The American auto companies still have to do their part to compete, that means coming up with better technology at lower cost That doesn’t address selling below cost after subsidies. And what if China does it with other products? Do the taxpayers just subsidize everything? I agree with subsidies to help US industry especially battery production. I don’t think that’s enough to solve the problem. Quote Link to comment Share on other sites More sharing options...
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