China Is So Far Ahead On Electric Cars It’s Now Afraid America Will Steal Its Trade Secrets!

Sometimes you just have to laugh. Sometimes the only alternative to being consumed by the chaos is to give yourself just enough distance to separate the profound and important from the dumb and frivolous. This is why the Good Lord gave us irony. The car world has reached peak irony.

If this is your first time reading The Morning Dump, it’s ostensibly an automotive news roundup wherein one of us talks in a straightforward manner about which cars or executives are being recalled, what’s happening to car prices, et cetera. Occasionally, it goes a little off the rails because there’s some theme that emerges in the automotive world that’s worth talking about somewhat more obliquely.

Did you ever see the Lars Von Trier movie Melancholia? I wouldn’t exactly go out of my way to watch it, if only because the central irony of the film is almost too hard to bear. The crux of this eschatological narrative is that one sister, played by Kirsten Dunst, refuses to yield to convention and acts in a way that feels increasingly irrational. The other, played by Charlotte Gainsbourg, does her best to be reasonable and act rationally even as the world is possibly ending. The closer we get to humanity being wiped out the calmer Dunst is and the more freaked out Gainsbourg gets because it turns out that believing nothing really mattered and acting accordingly is, ironically, the only truly logical way to exist in a collapsing world. If you want a similar, but less dour version of this, you could watch Neon Genesis Evangelion, which has way better cars and cool robots.

That’s a big wind-up to a report that’s just come out indicating that BYD might not want to build a plant in Mexico because it’s afraid Mexico is going to steal its secrets. Ironic! Vice President J.D. Vance has been out claiming that pursuing cheap labor always has a cost to countries, which isn’t wrong, but is doing it at a time when the U.S. government is trying to de-invest in the development of advanced electric cars in the United States. Ironic!

Tariffs can work, and the huge Japanese investment in the US is probably the best example of this. Now President Trump is threatening to put even bigger tariffs on Japan, which is a little ironic because Japan actually has no tariffs against importing cars from the US and that seems like a fair and reciprocal tariff (which is the goal, right?).

There’s so much irony I’m going to burst at this point, but let’s toss one more on there. GM gets viewed as being behind the curve sometimes when it comes to technology, but GM is now pretty far ahead of it when it comes to electrified vans. The response? GM is maybe too far ahead.

The Irony Is Killing Me

There’s a narrative in the automotive world that the Chinese government allowed the whole world to bring in its manufacturing to China, only then to steal the competency necessary to build cars. That narrative exists because, in some part, that’s what happened. However, with electrification, it’s a little different. China pumped billions and billions of dollars into becoming a leader in electric cars and, while some of that foundational knowledge certainly came from places like Germany and the United States (and was gained via joint ventures, i.e. deals with western automakers, not always IP theft), they’ve gone ahead of Western automakers in many areas of electric car development.

BYD, like other Chinese automakers, has found a decent export market in Mexico and was planning to build a plant there. When this news got out, the American government freaked out a bit and slapped huge tariffs on Chinese-built electric cars and pushed Mexico to not make it any easier on BYD. That was back when the United States was a good trading partner with Mexico. The vibes may have shifted here a bit lately.

Now, though, it’s the Chinese government that’s worried about the plant. Why? According to a Financial Times report titled “China delays approval of BYD’s Mexico plant amid fears tech could leak to US,” China doesn’t want the United States to do to China what China did to everyone else:

“[D]omestic automakers require approval from China’s commerce ministry to manufacture overseas and it has yet to give approval, according to two people familiar with the matter.

Authorities fear Mexico would gain unrestricted access to BYD’s advanced technology and knowhow, they said, even possibly allowing US access to it. “The commerce ministry’s biggest concern is Mexico’s proximity to the US,” said one of the people.

Lol.

I will again reiterate that, when it comes to electric cars, China is the real innovator here and not the IP thief (even if the knowledge was built on stolen data), so the government’s concerns here aren’t entirely invalid.

‘Cheap Labor Is Fundamentally A Crutch’ VP Vance

Vice President JD Vance gave a speech to the American Dynamism conference yesterday that I’ve linked above, and you can watch it if you’ve got a half-hour to spare today. If you can’t, here’s a good summary via Nikkei Asia. The point of the speech appears to be to try to tie together President Trump’s industrial and immigration policies.

This part struck me:

“The idea of globalization was that rich countries would move further up the value chain while the poor countries made the simpler things,” Vance told the American Dynamism conference in Washington organized by venture capital firm Andreessen Horowitz.

He cited Apple’s iPhone, which is designed in Cupertino, California, but produced in locations such as the Chinese city of Shenzhen. Globalization assumed that if advanced economies like the U.S. lost manufacturing jobs, their workers could learn to design or learn to code and continue to prosper.

“I think we got it wrong,” Vance said. “It turns out that the geographies that do the manufacturing get awfully good at the designing of things.”

In light of the story above about BYD, this is a little funny, but I don’t think it’s entirely wrong. If you’re confounded by the large number of people who voted Bush-Obama-Obama-Trump-Biden-Trump I think you can go all the way back to the neoliberal trade policies of the Clinton Administration, China Shock, and the fact that we traded away a lot of jobs and industrial knowhow for the ability to buy cheaper crap from Walmart and, now, Amazon.

This left communities, especially in the industrial Midwest, hollowed out by plant closures and lost jobs. Where once there was a thriving middle class you’ll find poverty, drug abuse, and people looking for some kind of hope.

“Cheap labor is fundamentally a crutch, and it’s a crutch that inhibits innovation. I might even say that it’s a drug that the American firms got addicted to,” the vice president said.

Rather than investing in innovation, companies have found it more convenient simply to offshore factories to economies with cheaper labor or to import cheap labor through immigration to produce things, he said.

This is where the speech loses me a little. Cheap labor is a crutch, absolutely, and I don’t disagree that it’s a drug. That being said, the big idea here is that service jobs are somehow bad and that industrial jobs are somehow good. It’s possible, and even desirable, to let people transition from manufacturing jobs to something better.

It reminded me of something that the first Vice President, John Adams, said in a letter to his wife Abigail:

“I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain.”

Preach, brother.

That kind of moving up in the world from smelting aluminum to doing something easier that pays better requires investment and, unfortunately, the liberalization of trade didn’t come with any answer for those communities that would be losing jobs. Why? Because that requires, at some level, government intervention and, in the back-and-forth between Democratic and Republican presidents, we got the free trade part, but we didn’t get everything else that needed to come with it.

The CHIPS Act and the Inflation Reduction Act seemed designed to address some of this, hoping to stave off the threat of losing the innovation race to other countries by encouraging investment in more advanced industries here in the United States. Currently, the Trump Administration’s plan is to undo these acts, which could risk jobs and the US getting ahead in these critical areas, which is probably why even many Republicans are trying to save the programs.

On the immigration and labor question, I’ll just leave this quote I saw on the wall at Ellis Island in an exhibit there:

“Before I came to America, I thought the streets were paved in gold. When I came here I learned three things: The streets were not paved in gold, the streets weren’t paved, and that I was expected to pave them.” – unnamed Italian immigrant.

Japan Is The Biggest Foreign Investor In The United States, Will It Be Punished For It?

America has a 2.5% tariff on cars imported from Japan, but Japan has no tariff on cars imported from America. The caveat, of course, is that Japan has extremely strict homologation standards that make it difficult for American companies to sell cars there. While those barriers exist, the reality is that Japanese tastes run towards the kinds of smaller cars that America produces in such small volumes that it imports them in great numbers from Japan.

If the premise of the trade war is that we need fair and equal/reciprocal tariffs and we need to bring more jobs back to the United States, you’d think that Japan would be the one company that would get a break. Japan has been, historically, the biggest foreign investor in manufacturing in the United States. That’s not what’s happening and now Japanese automakers are trying to figure out what they’re going to do next as Automotive News reports:

At the automaker level, cutting back on output was one “theoretical” option, Katayama said. “It was mentioned as an example of what we should think about in order to protect the state of the automobile industry as a Japanese export base. It does not mean that production will be halted.”

In the meantime, JAMA wants the Japanese government to continue negotiating with U.S. trade authorities to win tariff exemptions. So far, such appeals have fallen flat, as the U.S. stands pat.

“We discussed with the ministry our response to the U.S. government, focusing on our sense of crisis as an industry,” Katayama said. “We call on the Japanese government to continue its efforts to ensure that Japan will be exempted from the application of the additional tariffs.”

This hits all Japanese automakers, but especially Subaru and Mazda, who import more than half of their cars from Japan.

Chevy BrightDrop Vans Are Piling Up In Ontario

The Chevrolet BrightDrop van might be the best electric van for sale in America right now. Electric delivery vans, also, are among the best use cases for electric vehicles given that they usually stick to small geographic areas, idle frequently, and are traditionally stored in a shared lot overnight.

So why isn’t Chevy selling a bunch of them?

From the Detroit Free Press, we get a pretty good explanation:

Sam Abuelsamid, vice president of market research at Telemetry Insights, said the extended range of BrightDrop vans far surpasses its market competitors — but so does its price tag. Before incentives, the vehicles cost about $74,000. Ford’s E-Transit van with extended battery range, for example, is $51,600 — more than $20,000 cheaper — even before applying incentives.

“There is a market for electric vans,” Abuelsamid said. “Just not at that price point.”

Hey, it’s Sam! Here’s an irony for you, while we’re on the topic. By building the best van did GM build the least popular one? Range, which is such an issue for regular car buyers, might not be a big issue for commercial buyers, who are cost-conscious and more specifically aware of how far their vehicles will actually go.

What I’m Listening To While Writing TMD

You knew it was coming. Is it ironic that Alanis Morissette wrote a song called “Ironic” that highlights a bunch of outcomes that are not, in fact, ironic?

The Big Question

What’s the most ironic moment in automotive history?

Top Photo: BYD/Happy Days