The slowdown of EV sales in the United States is a problem created by automakers who were unwilling to see the looming threat of China and are now unable to build a competitive and affordable EV product. This was only exacerbated by a government slow to adjust to the looming new world order.
Of course, the same is true in Europe, where European automakers and policymakers have also been caught flat-footed. With the Geneva Motor Show underway, we’ve got a sense of what the Europeans are doing about it and, also, what China plans for Europe.
Chinese automakers, however, aren’t exactly in a great position. Subsidies can’t last forever, and China desperately needs new markets for its products. While China has the biggest EV market, there’s not enough demand to sustain the country’s EV industry. China has to do to the rest of the world what the rest of the world did to China in the ’90s and ’00s.
Mexico is the key, and a new report from an American manufacturing non-profit says we need to cut off Chinese EV automakers at the border or face an extinction-level event for U.S. automakers.
‘Motherfuckers just haven’t been paying attention’
If we tore down all the tariffs and just let anyone sell electric cars here would we be suddenly overrun with cheap Chinese cars? Probably. Most new vehicles aren’t affordable and a $15,000 EV with 250 miles of range like the BYD Seagull could absolutely smash here.
Are there major software and quality issues with Chinese electric cars? So far the biggest issues have been with American electric cars. The Chevy Blazer EV has been on a stop-sale for weeks after a raft of problems and now shipments of the F-150 Lightning have been halted.
There’s a great piece in Business Insider that goes into the rise of Chinese automakers, and it allows me to point out this great quote from Tu Le of Sino Auto Insights:
“The thought that Chinese-quality engineering and design are not as high quality as the legacy carmakers — that should be put to bed,” Tu Le, the founder of Sino Auto Insights, a consultancy focusing on the Chinese EV market, told me. “Right now, the legacies don’t have competitive products. There’s a vacuum. If China EV Inc. were allowed to enter the US today or next year, the legacies would be gutted.”
We are witnessing a shock to the global automotive order unseen since Japan barreled into the market in the 1970s. China’s EV ascendance has sparked a fight that is forcing companies to stretch the limits of their technological capability and policymakers to reimagine the ideological underpinnings of decades of trade strategy. What’s at stake is nothing less than a US industry worth $104 billion, about as much as Angola’s national GDP, and all the 3 million jobs that come with it.
“It’s a global game. It has been a global game,” Le said. “Motherfuckers just haven’t been paying attention.”
That could be a quote from The Wire and honestly, I’m not sure it isn’t. Someone check that for me. I had Peter put it in Stringer Bell’s mouth for our top photo because it’s an extremely Stringer Bell thing to say.
It’s true that the American car industry, by and large, did not see it coming. Nor did the European car industry. The article opens with a mention of Elon Musk laughing about BYD in 2011 and I’ve put the video up at the start of this article because Elon Musk is saying pretty much exactly the opposite now.
Here’s what Musk said on an earnings call earlier this year:
“Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world.”
I’ve brought this up before, but I got to go on a test drive in Detroit with BYD Chairman Wang Chaunfu in 2008 and his point was that China was actually ahead of everyone else because it was building cars, building infrastructure, and building scale.
He was mostly laughed off, but no one is laughing now.
The most brutal part of this article is the suggestion that the American automaker strategy is “making EVs that are just like combustion-engine cars but about $10,000 more expensive.” That’s an oversimplification, but it’s not entirely wrong.
The Chinese government has made no secret of wanting to be the most important global player in the 21st century, much in the way America was the most important global player in the 20th century. China is using its “Belt and Road” strategy of putting money into countries around the world, helping those countries develop infrastructure, much in the way America did in the middle of the 20th century.
To what end? It gives Chinese manufacturers new sources of commodities, new places to offshore manufacturing, and new customers. It also puts foreign governments in the position of owing money to China and, potentially, gives China new avenues for military development.
For the Chinese EV industry, new markets are an absolute necessity. As the CNBC article pointed out earlier this year, the Chinese EV industry is at risk of eating itself alive:
Competition is intensifying in the Chinese EV market, with BYD, Li Auto and Geely meeting their sales targets for 2023, and Xpeng and Nio falling short.
“Competitive landscape will be more challenging, and pricing pressure to ensue. Although EV demand is set to remain resilient, the industry will confront three major challenges on the supply side: overcapacity, new model launches and the rise of new tech entrants such as Huawei and Xiaomi, which point to growing competition,” Bernstein said in its note.
The answer, my friends, to Paraphrase Horace Greely is:
“Go West, young [EV Industry], go West and grow up with the country.”
Going West into the United States is a challenge for Chinese automakers, specifically because there’s what amounts to a 27.5% tariff on the import of Chinese electric cars into the United States.
China’s Moves In Mexico Are An ‘Existential Threat’ To America’s Auto Industry: Report
There’s no mincing of words today from the Alliance for American Manufacturing, which is a non-profit think tank created by the United Steelworkers union and American manufacturers. They call China’s plan to expand its footprints in Mexico a threat to the United States so real that it could wipe out our automotive industry.
Here’s a link to the full report, which I’ll quote from here.
It begins by going through much of what I reviewed above, specifically that:
- Chinese EV automakers are far ahead of the United States in terms of supply chain, investment, and product.
- The Chinese government wants/needs to build out manufacturing capacity and markets around the world
- The United States would be a great market for Chinese EVs if they could get here.
- Tariffs make that difficult.
So why is this such a big threat?
“The introduction of cheap Chinese autos – which are so inexpensive because they are backed with the power and funding of the Chinese government – to the American market could end up being an extinction-level event for the U.S. auto sector, whose centrality in the national economy is unimpeachable,” according to the report.
How does Mexico fit into all this?
For one, America and Canada have a trade agreement with Mexico that started with NAFTA and then was modified with the United States-Mexico-Canada Agreement (USMCA). While USMCA was designed to help fix imbalances in NAFTA, it also may have the indirect effect of helping Chinese automakers enter the United States via plants in Mexico.
From the report:
As such, following trends in other industries, including steel and aluminum products, production chains oriented around Chinese-owned and -affiliated companies are increasingly penetrating North American automotive supply chains via Mexico. It benefits from the USMCA’s liberal methodology for calculating regional content, which in turn can qualify it for the consumer tax credits that subsidize EV purchases in the United States. While Chinese auto part imports to the United States fell by 17% between 2017 and 2023 after a sustained period of growth, imports from Mexico grew by 20% during the same time.
The data strongly suggests that Chinese inputs are beginning to circumvent U.S. tariffs by entering through the southern border. “The leakage problem undercuts U.S. and North American workers by pitting them in competition against non-USMCA producers without commitment to the same worker, environmental, and consumer safety standards and without extending reciprocal market access to similar U.S.-based producers,” wrote the Economic Policy Institute’s Adam Hersh. “What’s more, the subterranean content can qualify for U.S. taxpayer subsidies under Inflation Reduction Act policies.”
The implication in this report is that not only could Chinese automakers overcome the current tariffs, but they could also potentially build vehicles in Mexico that could qualify for the $7,500 tax credits designed to encourage the development of the American EV auto industry.
So What Can America/Europe Do About It?
The report linked above makes the case that the “backdoor left open to Chinese auto imports” should be closed “before it causes mass plant closures and job losses.” In that report are specific adjustments to the USMCA, the enforcement of existing laws, and an increase in tariffs on both Chinese EVs and Chinese ICE cars.
Is anyone going to listen? Yes. There are many people making this point.
A bipartisan group of U.S. lawmakers has urged the Biden administration to hike tariffs on Chinese-made vehicles and investigate ways to prevent Chinese companies from exporting to the United States from Mexico.
A group of lawmakers urged U.S. Trade Representative Katherine Tai to boost the 27.5% tariff on Chinese vehicles and said her office “must also be prepared to address the coming wave of (Chinese) vehicles that will be exported from our other trading partners, such as Mexico, as (Chinese) automakers look to strategically establish operations outside of (China).”
You know what group probably also benefits here? The United Auto Workers and its members. The group has been extremely vocal in its fears of EV production being a race to the bottom in terms of wages.
Likely Republican presidential nominee and former President Donald Trump has already said he would impose a 60% tariff on all Chinese-made goods and implied that it could be higher for Chinese automobiles.
That’s all well and good. Most people on both sides of the aisle, in labor and in manufacturing, seem to think that cutting off Chinese cars in Mexico is a smart policy.
Is that enough? America may be able to keep China at bay in Mexico, but that doesn’t mean those same plants in Mexico can’t reach into Latin America and the rest of the world. American, European, Japanese, and Korean automakers can’t just rely only on tariffs.
If global automakers need to survive they need to be global, which means they need competitive products in markets outside of their own.
Geneva Motor Show Is A Mix Of European And Chinese Hybrids And EVs
While the American government is likely to slow its EV car rollout, the same may not be true in Europe where both the local geography and local car tastes make EVs a little more palatable to a larger population.
The Geneva Motor Show kicked off this morning and on display were a few interesting vehicles.
There’s the BYD Seal U DM-i, which is an attractive hybrid crossover using the company’s “Super DM” technology, which is the grandchild of the car I drove with the BYD Chairman back in 2008. This is a small (probably 1.5-liter) gasoline engine and maybe a 26ish kWh battery pack good for more than 50 miles of all-EV range. We don’t have any tech details or costs, but this is something that BYD could maybe sell in the $30-40k range, if not a little cheaper.
Then there’s the MG3 which comes from MG, the now Chinese-owned carmaker. This is another interesting hybrid, offering a mix of pure EV or hybrid modes:
Producing a combined 143kW, the MG3 Hybrid+ returns economy figures of 64mpg (4.4l/100km) and 100g/km CO2*. This is aided by a 1.83kWh battery, allowing for an extensive electric-only driving range – significantly boosting efficiency.
The all-new MG3 features a 75kW 1.5-litre petrol engine and 100kW electric motor, as well as separate generator motor which enables a wide variety of powertrain operating modes. This not only provides class-leading performance figures for a hybrid B-segment hatchback, but also allows for flexible running no matter the driving environment.
The interesting thing here is that the car has both a regular motor for driving as well as a generator motor. This isn’t a plug-in, unlike the BYD Seal.
And what of the European automakers? The new Renault R5 EV leaked this weekend. We’ll have more on that later, but it’s a “right-sized” EV offering about 249 miles or 186 miles of range at a cost that’s more competitive with Chinese offerings (about $30,000 before any incentives).
Europe is an important market for the Europeans, obviously, but also for Chinese automakers, with BYD in the early stages of its Hungarian production operation.
What I’m Listening To While Writing TMD
Chinese rock band Queen Sea Big Shark seemed like a good fit for this morning. No reason.
The Big Question
Would allowing Chinese automakers to funnel cars in via Mexico be an extinction-level event for American automakers?
“Would allowing Chinese automakers to funnel cars in via Mexico be an extinction-level event for American automakers?”
I don’t think so. I don’t think they have a product mix of excessively large vehicles that will appeal
However, they will do well with smaller vehicles and sedans… a segment that the legacy US automakers have mostly abandoned.
Let’s also not overlook that companies like GM have done decently well in China. And they continue to somewhat decently with the Buick brand… though their recent sales have been falling because they’re behind on BEV tech.
Oh no! We created laws that let our domestic auto industry move all their production to Mexico, and sell the cars back to us, and now CHINA wants to do the same thing?! We must stop this in order to protect
corporate profits…uh…. our auto workers! Yeah, that’s it!Fuck em. I’d rather buy a Honda built in the US than a Ford built in Mexico anyway.
COTD nomination
Oh well, I guess we’ll just have to make better cars then. No competition, incompetent management, short-term thinking, different-but-not-better standards (time to sign on to the UNECE standards), unreasonable UAW demands, etc.
We left a hole wide open for the Chinese to come into this market because of everyone else’s gouging, dropping the cheaper cars, and there was no reason for Mitsubishi to double the price of the Mirage over the past few years, just the competition going away. Do you really think tariffs will stop them? China will undercut ANYBODY, and they are NOT afraid to play dirty! This 15k BYD, and perhaps even a non-EV for under 10k is still possible.
I have absolutely NO sympathy for Detroit AT ALL. Decades of incompetence and they learn absolutely NOTHING while they keep getting bailed out. NUMMI, where Toyota taught GM how to make good cars, but GM didn’t learn shit!
If our auto industry is going to behave like that, then we don’t need an auto industry. They will not be missed.
The best car market is Mexico. They accept both US and UNECE standards.
Ford only cares about the F150. GM and Chrysler only care about their trucks as well.
America’s largest exporter of cars is BMW.
That BMW thing is a fact that’s been around for so long (I think they’re on a full decade now) that I barely register it. I wonder how many people also realize this?
BMW is the largest exporter from the US and while I can’t find statistics to prove it I would say more vehicles are produced in the USA by foreign company’s than the Big 3. Mexico is the largest exporter of vehicles to the US of any country, and it’s only increasing, that’s why recent talk how we imported more from Mexico than China, millions of junk items vs exp vehicles.
The Big 3 are so un-American, they should just merge into one big crappy company, then they can die, once their boomer loyalty is gone they will struggle even more.
> unreasonable UAW demands
When an automaker makes profits by the billions annually, the UAW’s demands are unreasonably low.
This whole thing is all kinds of messy. When the going gets tough, those at the bottom usually get thrown under the bus. I’m not even going to talk about the phrase in this article that really raised my eyebrows. I won’t buy any Chinese made/backed vehicle (Looking at you Polestar) as I know the long term game the Chinese govt is playing. Our home players are pivoting, but they aren’t doing it fast enough. Given the choices we are likely to have for elections this year, I’d bet that there will be increased tariffs either way.
It is really difficult to have sympathy for US automakers who are buying back their own stock and paying huge dividends and bonuses, all while complaining of impending doom. If they want to be valued like a startup company they need to act like one and channel all their profits back into R&D to invent better cars, cheaper cars, and more efficient ways to make them.
The problem Mexico is facing with Chinese cars other than legacy automakers losing sales, there are no parts at all. Get into a small accident or if you have a warranty claim, say goodbye to your vehicle for months. They don’t have the distribution centers and service availability current legacy automakers have for so many years.
The US is a huge country, what works in California may not work in Alabama. The only way Chinese cars will succeed in the US in the short term is with an alliance with a major automaker, how currently Polestar is under Volvo umbrella for parts and service. GM in Mexico sell a lot of Chinese cars under their brands, with the network of dealers already stablished.
I would love to see competition in the $20K price point, the way they can succeed is focusing in regional markets. They know the West Coast should be first. The big 3 have plenty of time to compete in that segment.
You can build the cars the market wants; or you can tariff the sh*t out of consumers and make them buy the trash they don’t want….
Ask Australia what happens when they discover that it’s cheaper to import cars than it is to manufacture them locally.
I give up, what happens? Koalas and Kangaroos start living together?
They no longer have an auto industry.
https://en.m.wikipedia.org/wiki/Automotive_industry_in_Australia
And? We no longer have a TV industry. We’re still here.
Are you comparing Television manufacturing to the auto industry? How large was that industry at it’s peak in the US before it’s demise?
I was just answering your question, not getting into the hyperbole what ifs as it’s outcome.
Please educate us with more details on your take and how this wouldn’t effect 1.5% of the US job sector.
Please educate us with more details on your take and how this wouldn’t effect 1.5% of the US job sector.
After decades of decline, American manufacturing entered what would be its worst decade at the turn of the century. Between 2000 and 2010, capital investment, output, and productivity all decreased. As a result, manufacturing jobs in America plummeted 34% – a loss of more than 5.8 million jobs.
https://boydbiomedical.com/articles/the-decline-of-american-manufacturing
Which is considerably more than the 1.1M US auto industry manufacturing jobs yet we’re still here.
https://www.bls.gov/iag/tgs/iagauto.htm
Can you talk about my initial questions regarding your first comparison of TV industry? I feel that will add more to this initial discussion then telling us that the US auto industry has shrunk (makes sense given the article’s comments about NAFTA and USMCA). Can you give us more context there?
I get job markets will shift, but what industries do you feel they will shift to? Do you think US should give up on an industry that we heavily influenced from the beginning to China? Like use TEMU over Amazon because you save 3%? Where will that put the normal, average working American?
TV manufacturing was simply one example of manufacturing jobs America lost long ago. America has lost 6.7M manufacturing jobs since 1979. Instead of imploding America has seen incredible economic growth since then.
Between 2000 and 2004 alone we lost 2M durable goods manufacturing jobs yet America did not implode, at least not for another four years and that implosion was not because of the loss of those jobs.
Where will that put the normal, average working American?
Right where everyone else ended up, in the service sector.
https://www.bls.gov/opub/btn/volume-9/forty-years-of-falling-manufacturing-employment.htm
You can’t bring up loss without bringing up gains. So again, I ask you: can you provide your US TV manufacturing statistics in comparison to the Australian auto industry? (My take: which came on industrially late, based on American funds, folded) – an antiquated reference to something that happened in the absolute middle of the automotive industry as it is. Keep digging for the comparison that will satisfy your initial argument.
My thought process here isn’t that change is inevitable (duh…), but to provide some context to where we think that’ll be. The Auto industry is always going to be important until it isn’t necessary…so what’s your end game. Give up and let China own that space??
I don’t get why this is so hard for you. Those TV building jobs are simply representative of the millions of US manufacturing jobs lost since 1979 yet the US economy has only grown since then.
If you want to complain the loss of US TV manufacturing is a poor analog to the loss of the Australian auto manufacturing jobs that’s fine. I will counter with the point I already made that the US has already lost more manufacturing jobs than Australia is shedding from its auto manufacturing sector yet America is still around.
Now should the US give up and let China own that space? Yes unless US manufacturers are willing to build cars in that space on US soil. As it is they are not. They want to focus exclusively on high margin gas and diesel powered full sized pickup trucks and SUVs. US manufacturers only build anything else when absolutely forced to. If China can fill a market US manufacturers refuse to serve then yes let China in, just like the US did before with Japan, then Korea.
Why are you so rude and condescending? I can’t read minds… only trying to ask valid questions to points you raised, yet you treat me as dense. You are not worth trying to have an actual conversation with.
Bye
I truly don’t understand your confusion.
I truly don’t understand your lack of empathy.
Empathy for whom exactly? Executives who refuse to make affordable cars that Americans want to buy?
The Australian car industry was hardly sustainable, ever. The Button Car Plan in the ’90s tried and failed. Later government subsidies tried and failed. Ultimately it’s not possible to profitably build cars in a country with such high labor costs and such a tiny domestic market. Their best bet would have been to do local R&D and manufacture in Thailand, like Ford Australia do with the new Everest.
The Button plan delayed the inevitable, but going back to the 1970’s Australia was the 10th biggest car manufacturer in the world.
Renault, VW, Ford, Mitsubishi, Nissan, Holden, Toyota, Chrysler, British Leyland and so on all managed to make a dollar building cars in Australia for a period of time around then. Export markets were pretty good too, lots went to NZ, South Africa and all over SE Asia.
At least we still make a few trucks here, do a good bit of engineering and R&D for the likes of GM, Ford, etc. but that’s as good as it will get sadly.
Our auto industry should be the canary in the coal mine for the US industry. Yeah, you’ve got 300 million more people than us, you export shit loads more cars than we did, blah blah, I get that. But hear me out:
-Our 4 automakers were all building outdated products that people weren’t buying. Yes, enthusiasts say they want big, rear wheel drive sedans but that’s not what people were buying.
-We have high labour costs that once tariffs are removed, can’t compete with Asia.
-We all said, “no one will buy that Chinese crap, they’re built like shit and they are unsafe”. Quality has improved out of sight, they get comparable crash test ratings and people are buying them simply because they are cheaper.
-We are a geographically large country, with vast distances between towns, cities characterised by urban sprawl and shit public transport. City dwellers (most of us, despite what Australia looks like on TV) are flocking to Chinese EVs made EVs anyway. That includes Teslas model 3 and Y in our market.
Any of the above sound familiar? What you still have is a more protectionist government and cheap gas which will help for a while – neither can last forever though.
“Mustn’t let some Commie Chinese Car Companies ruin our US profits! Must put tariffs on them!”
Uh – Seems the so-called Commies are better at Capitalism than American Capitalists.
If the Chinese (French, Spanish, Japanese, Korean, Germans, Swedes, Mexicans) produce a product that’s more desirable than what the American Capitalists are putting out – and the American Capitalists don’t feel the need to compete in those market segments – I have no issue with those American Capitalists falling by the wayside.
The US bailed out Chrysler twice and GM once – and look what they’ve given us. Hellcats, Corvettes, $100,000 Luxury Pickup Trucks, a $300,000 very long sedan that nobody has driven – and a cancelled affordable EV.
I say good riddance to bad rubbish.
Chinese Capitalism is “Here’s billions from the government, we’ll do whatever it takes to make it work or we own you”.
American Capitalism is “Here’s billions from the bank, make it work or we own you”.
It’s a lot harder to fight a country than a bank.
That $7.500 tax rebate has nothing to do with banks. Only difference from China is that in the US it goes to the customers first before it reaches the manufacturers. In china manufacturers are subsidized directly.
The tax rebate only incentives buyers to buy American made products, it’s not a mandate nor are laws created to keep you buying 1 of 5 domestic products.
Perhaps if our US Government representatives thought in terms longer than next year’s election (and tonite’s post on X) like the Chinese – and US CEO’s thought in terms longer than next quarter’s numbers, stock grants and their own golden parachutes – The US would have better run and more resilient industries.
Or you realize that Chinese industry is inherently different to US industry due to their governance and ruling of industry. If the US operated like the Chinese, we wouldn’t be a free economy in any sense of the term. While US industries can influence tariffs and promote buying of domestic products, we don’t have to (as consumers) buy those products as we still allow the competition to exist. While China claims to do the same, the on the ground experience tells otherwise.
I’m not defending the US Automakers or their executives, but they are all global brands with massive influence on our economy and others. Chinese automakers have only had the bubble of China to live in, and they’ve grown exponentially faster with much more success with different rules to play by.
I personally believe that we, as consumers, should have the right to buy and drive whatever we want. We saw the same thing happen in the 70’s, when “Japan will kill us all” and we found the competition fixed the Big 3, killed AMC, and lead to a reliability revolution in our manufacturing (from Harleys to TV’s) that still lasts to this day. If the Chinese can come in and pull a Honda/Subaru/Toyota with manufacturing plants in the US, that’s a good thing. If we get cheaper, high quality, EV’s? Then that’s a good thing.
Only because people frown upon you when you attack banks with bombs and cruise missiles – though there are days I’d like too.
We could let the Chinese manufacturers in on the condition they make the cars here. It works well enough for the other foreign manufacturers (who might very well make more cars in the US than the domestic makers, ironically). That creates American jobs, and with the labor premium the prices rise to comparable levels to china-made + tariffs. This makes the US and China friends again and commerce can flow.
Protectionism never works. Amusingly it’s often the small-government, low-regulation folks who hide behind the government’s protections by way of tariffs. But god forbid the US government intervene in health care. But I digress.
I would agree with that – but we have moronic governors and congresspersons who for purposes of rhetoric and performative politics wouldn’t even let Ford build new plants in their jurisdictions because of Chinese partners or Chinese tech (which was US tech before the US government withdrew development funding – forcing the sale of the companies and tech to the Chinese)
Let the free market that we pride ourselves in sort it out. Why are we protecting, and subsidizing legacy automakers who have proved time, and time again that they are incapable of making a truly competitive product? Stop squeezing consumers, i.e. everyday people, for every penny that they’re worth and let them vote with their wallet. If a company can’t exist without government protection, does it deserve to exist? In some cases I’d argue ‘yes,’ but in the case of legacy automakers, I would be much closer to the ‘no’ side of things.
Technically yes, but there is no guarantee someone in China cannot access all the data of EVs…. Or even block cars remotely
I would suspect that is even likely, but for $10,000-$15,000 I’m willing to bet most people would look past that.
The problem is the “competition” has been extremely heavily subsidized by their government. You are telling legacy makers that they have to go fight on a radically uneven playing field, and eh, if they lose who cares about the 3 million American jobs lost due to the unfair fight. They should have been better!
There is no such thing as a free market. Especially the auto market. The market has been strategically identified as a growth lever for Chinese interests. That’s not even being anti-China. It’s just recognizing that the Chinese government set up an industry apparatus designed to win price fights against literally everyone else.
I don’t understand this comment. There is no free market. Not in the US and certainly not in China. Do you think the Chinese automotive industry arose from market forces? Seriously?
You know what already is a literal extinction level event? Climate change. Although rolling out electrified vehicles is part of the solution, we need to seriously step up renewable energy generation and also electrification of industry. A global carbon tax which will only happen once things are way worse than we want them to be.
What could work? Changing from location-based tariffs to carbon-based. Basically, if your manufacturing doesn’t use a certain percentage of renewable energy the end product gets hit, and that percentage goes up over time. We are already subsidizing renewable rollout in the US, so we continue to help US automakers(and other manufacturers) use more and more renewable energy.
I’m sure this idea could be tweaked to be more effective, maybe percent renewable isn’t the answer but instead overall lifetime carbon footprint including manufacturing. Maybe this would be even better, as in the short term it will encourage more vehicles like really efficient hybrids and PHEVs that use less batteries to achieve GHG reduction, or even pure ICE vehicles but only as long as the manufacturing footprint is very low. It would probably require eliminating trading clean credits and footprint would have to be very well defined to avoid cheating and manipulation.
CARB is really playing right into the CCP’s hands with the ICE ban. Without that black cloud looming over the industry, you could easily let the market decide what it wants without onerous tariffs and it would probably work out OK for the US makers. Some people would buy them because they’re cheap and maybe use as a second car to commute with. This seems to be the use case for the high end EVs available now anyway. So the current makers in the US market could cede that 10% of the market, stop investing so heavily in EV tech that can’t compete with ICE, and keep making the ICE models people still seem to really want. All the while the CCP could bleed itself dry subsidizing cars that have limited appeal to US buyers.
We got into this catastrophic climate situation by letting “the market decide what it wants.”
So your solution is to sell the world to the CCP, who famously care so deeply for the environment. China alone accounts for half of all the coal burned in the world. Over 60% of their power comes from coal and despite your “catastrophic climate situation” they are installing new coal powered plants every year to keep up with the demand for electricity. Great plan you got there chief.
There’s a gulf the size of Jupiter between what I said and what you inferred.
Sorry, I keep forgetting. Following logical thought processes to reasonable conclusions is not the forte of the average internet climate activist. Maybe next time I’ll use bullet points for you, easier to follow.
My mind went right to Faye Wong’s Meng Zhong Ren:
https://www.youtube.com/watch?v=H3VpC8x3wL8
I say let capitalism sort it out.
The US manufacturers made their bed by focusing on trucks and SUVs and minimized resources spent on cars because of demand trends.
Then they only introduced high end EVs.
If they made the wrong bet, tough. You made money hand over fist last year. Don’t come crying about competition now that you have the wrong mix of vehicle types.
To address the inequities of competing with China:
Rejigger the tariffs to an amount that only levels the playing field for wage/environmental/safety and whatever else needs adjusted.
With the adjusted tariffs, let the consumer decide.
The “Too Big to Fail” crowd would like a word with your proposal…
/s
I think this is a reasonable stance for most consumer products, but IMO it’s a national security requirement that automotive manufacturing be kept viable in this country or at minimum in close allies. We’ve already proven ourselves too dependent on China and other geopolitical enemies for critical electronics and medical supplies. With the real possibility of a shooting war, I think it’s best not to make this mistake with cars too.
You mean make this mistake again (70’s oil crisis with OPEC).
Bingo and I’ve commented almost the same before but this where people have to take a step back. Auto manufacturing lines can pivot to other things if/when needed (war either to defend local/allies OR large scale infrastructure support). We can’t just go “let ‘er rip and things will work itself out”.
Yep! Does the term ” Arsenal of Democracy” ring a bell to anyone anymore?
Lest we forget!
They are fiduciarily obligated to maximize profit for the next quarter.
That is their only job. ANYTHING outside of that will not be considered.
This whole discussion falls completely outside of that VENN diagram. Their business model relies on them getting bailed out.
How else are we going to hit these bonus targets?? /s
That’s a cliche that’s not actually true. Corporate officers have a fiduciary duty to work in the company’s best interests. It doesn’t mean maximizing quarterly or even yearly profits. If that were the case, Bezos and Musk would have been fired years before their companies reached their critical mass.
The problem is short-term thinking, not the way corporate structures operate.
Interesting music choice today, but I kept hearing the lyrics to Charlie Don’t Surf by The Clash in my head while reading all this.
“Extinction-level” is a bit extreme but this exercise is academic anyway. Pretty much everyone on both sides of the aisle has taken the red pill at this point when it comes to free trade with nations that don’t share your values. It didn’t work in the past, doesn’t work now, and won’t work in the future.
The answer is simple, continue to tariff Chinese cars no matter where they came from. Yes, that might technically violate some provisions of treaties we have with Mexico (provided there aren’t national security exceptions written in). So what? In the immortal words of Dave Chappelle as Black Bush: “You know what you should do? You should sanction me!”. This sounds harsh, but China isn’t playing fair and BYD didn’t develop some breakthrough battery tech. It’s subsidies. Why would we play fair when they aren’t? The stakes are too high to be taken advantage of more than we already have
Thanks for saying this. A lot of people are on here making pretty nasty comments, almost giddy over the prospect of the Big three failing. But if they do, millions of people will be out of work. And it would be one thing if China was playing fair. But as you stated they are not and as such we shouldn’t be rewarding that behaviour.
Maybe risking a trade war, that could easily spiral into a proxy shooting war over resources instead of having the Big Three risk profit by competing on product isn’t the best idea. Cold War number 1 worked out alright, but Cold War 2: Chinese Boogaloo might not.
Electric Boogaloo would have also worked nicely in this instance.
Can’t have your cake and eat it too . . . wanna ‘mandate a switch to EV’s by a certain timeline? Great, let in foreign EVs without onerous tariffs. But oh shit, then that puts domestic EV manufacturers under the gun. Put up tariffs to protect American jobs.
The funny thing is that even with onerous tariffs, Chinese EVs might still be competitive. Hence why many are taking a zero-tolerance position on Chinese EVs in their entirety.
You know what’ll show them? Some Luxury pickup trucks, that’s what.
Detroit-3 have decided to just sit easy on massive margin trucks, SUVs, and CUVs – and completely vacate the entry-level market car.
It’s ok, though, the buyer that pays that premium into the Detroit-3’s pocket – until they don’t.
Your opening line is epic levels of LOL!!!!! BA-DUM-TISSSS!!!!!!!!!!!!!!!
The pickup truck market in its entirety is itself a market propped up by protectionism. The US automakers are just going to ask for more protected markets.
This x1000
It’s not extinction level yet. The Detroit 2.5 need to accept smaller margins on smaller cars while building smaller EV’s that aren’t penalty boxes. Tell that to the Wall Street chuckleheads that they’re generating long term value and brand loyalty by getting people onto showroom floors with less expensive vehicles. Then keeping them within the brand by offering more expensive vehicles as their earnings grow. Get back to Alfred Sloan’s “a car for every budget”. Margin is great but marginalizing themselves with ever more expensive vehicles is a self inflicted death sentence.
The system seems happy to reward the Detroit trio with this behaviour.
Trucks for profits; why care about the entry level? Poor people can pull themselves up by their bootstraps and buy luxury pickup trucks/SUVs.
I feel like this has played out before.
Detroit in the 70’s: Who would want to buy a tin can Toyota or Honda when they could buy GM’s new Battlestar Galactica or Ford’s USS Ticonderoga. Those Japanese cars will never threaten us.
The poors just aren’t trying hard enough… as usual. /s
It’s great that a Chinese spokesperson thinks their vehicles are up to snuff. I put about as much stock into his statement as I do into Kim Jong Un’s reported golf scores.
How many of the stop-sales and recalls happen to domestic automakers simply because we have NHTSA and regulations? Are quality problems addressed openly and forthrightly in China? Or are people who complain about screens flickering or charging failures dealt with in other ways? Pardon me if I’m skeptical.
I’m betting that too much complaining about Chinese car quality will impact your ‘social score’.
Skeptical or not, Chinese built vehicles are everywhere right now. Some of them are quite decent at building vehicles.
SAIC, for example, is not only just in partnership with GM to build Buicks for export, but has their own marques like MG which are worldwide brands needing to comply with standards in Australia, Europe, UK, and elsewhere.
Think of how Hyundai went from the Pony-Excel-Accent from the early 80’s (admittedly US missed out on the Pony, it was just UK/EU/Canada), and now imagine a company that is likely much more focused on cars, like SAIC, and how they could do it faster/better considering much of what they make is already reasonably competitive.
I’m not under the illusion that China will produce poor quality forever (Japan certainly didn’t) but for me it is going to require more proof than some Buicks assembled under contract and some vehicles that are only sold in other markets.
Polestar is Chinese assembled as well.
They are also not old enough IMO for any definitive statements about their quality to exist.
If we keep moving the goal posts, they’ll never make it!
To you and others arguing with me on this point I just want to ask a couple simple questions:
1- Do you find the general quality of non automotive products made in China to be as good or better than stuff made in first world countries?
2- The Polestar 2 has been on sale since 2020. Is 3-4 years enough time in your opinion to judge the reliability/durability of a vehicle?
It took Japanese companies a while to prove reliability. It took Korean companies a while to prove reliability (arguably they haven’t yet). I don’t think it’s some kind of gotcha to expect the same from Chinese companies.
It took Japanese companies a while to prove reliability. It took Korean companies a while to prove reliability (arguably they haven’t yet). I don’t think it’s some kind of gotcha to expect the same from Chinese companies.
And yet here they are. As long as China is willing to put the effort into improving their products like the Japanese were and Koreans are doing they won’t have a problem here.
Even Tesla is still getting their bugs worked out.
The British have been making cars for many years. As have the Italians.
Which reminds me of a joke:
Where do Land Rover drivers go to meet Alfa Romeo drivers?
At the bus.
But you’re missing the point. To Karen who leases a new car every two years, a BYD or SAIC MG will do exactly the same job as a Hyundai or Honda for a fraction of the cost. She won’t care if it’s as ‘reliable’ or ‘durable’ if it has all the flashy new features and at least keeps working for a while. Once the warranty’s up time to trade in for another one! That’s how they’ll get into the market. Very few people buy cars like we do anymore in terms of keeping them forever.
Sounds like the Chrysler business model.
1 is absolutely an easy yes. There are electronics and appliances manufactured in China that are first-rate — including the vaunted Apple products, and many other premium-positioned brands & products. (Apple is now making an effort to move production out of China, but it is a long & difficult process.)
Regarding 2, four years without any reliability or safety scandals in this day & age is pretty admirable. My only hesitance would be, “It’s not the years, it’s the mileage”. Polestar’s sample size is pretty small, and I’m thinking their owners’ average mileage may be less than the average ICE vehicle owner. An installed base of 100k-mile cars would go a long way toward assuaging my hesitance, but I don’t know if Polestar has that yet.
We can also use the Buick Envision as an example of a successful China-made car. It has been sold in the USA since 2014, and its reliability and build quality seems to be in line with the rest of Buick’s lineup. There have been no major blowups or scandals around the Envision, it’s just been out there quietly doing its thing for 10 years. However, it is an ICE vehicle so it’s not a direct analogue to Polestar.
1 – most of the crappy MIC goods are crappy because they are built to a price point, not because Chinese industry is behind. The original R&D and manufacturing prowess of some MIC goods are world-class. E.g. look at audio products like earphones or digital audio players.
Musical instruments tend to be “world products” or market-specific products (e.g. American guitar players won’t consider new designs or sounds that aren’t exactly the same as the legacy US designs, and then bash the Chinese manufacturers for only stealing US designs and not coming up with anything novel) (eyeroll), so they don’t necessarily show much original design or thought, but that’s hardly because they can’t–they’re building products they can sell, and making them with increasing levels of proficiency.
Western industry outsourced itself to China for the cheap labor and a blanket permission to pollute as much as they wanted. The result is that China learned how to beat us at our own specialties. Yes, sometimes by stealing IP, but at the same time if you go to China to exploit their labor force and make everyone sick with your emissions, and training them on your manufacturing processes, wtf do you expect they’ll do? Not learn and not take that training with them to their next job?
We did the same thing with Japan and Korea, Indonesia and Thailand and Malaysia and Indonesia and Taiwan (look up where your hard drives and memory chips are made). We are the ones who destroyed domestic jobs by moving manufacturing abroad. And now we’re going to do it again, because that’s what we do.
> It took Japanese companies a while to prove reliability. It took Korean companies a while to prove reliability (arguably they haven’t yet). I don’t think it’s some kind of gotcha to expect the same from Chinese companies.
The resilience (nay, the very existence) of Stellantis, or the massive size of VAG, indicates that millions of people don’t care about reliability.
1- Absolutely, this isn’t 2005 anymore. Chinese products are made exactly to what you pay them. If you tell them, “I want this to be a rock solid and reliable product” then they give you a price and they make it exactly that. If you tell them “I want a cheap as possible product to fill my inventory” they will do that as well.
Just because everyone uses Wish.com or Temu doesn’t mean that the Chinese don’t build good products. Look at Apple for instance, they made many iPhones there and they are the flagship product of that brand. It’s no surprise anymore that the Chinese can make a competent product.
2- It’s not really fair to call the Polestar 2 a “Chinese” product, considering the engineering team is a mixture of Volvo and Geely. But, I will say that ownership experience from most folks has been extremely positive and for such a small brand, they have really taken off lately. The expanded lineup will be the real test if Polestar’s quality dips, but I believe it won’t. Hell, most Tesla stans believe that the Chinese built Model 3’s are better quality than their US built counterparts.
Japanese reliability was earned over a time period when their manufacturing capabilities were essentially wiped out and they had to start from scratch. They quickly developed from copied British designs (which may have been part of the problem) to being the leader in automotive engineering and manufacturing.
Korea went through the same issues, albeit not to such a drastic extent. I’d argue that Korean reliability is more to do with them building to a price point than anything else, and even then I’d trust a Hyundai V6 over a GM 3.6 any day of the week.
China has an advantage here, they are mainly building EV’s. Reliability in EV construction is more to do with software and modules than motors and transmissions. What are the Chinese good at? Software and hardware modules. They get to walk into the market with most of the modern day ICE and PHEV issues behind them.
I was told by someone high up in the bike industry (I won’t say who, but his last name is a bike brand) that you were almost spot-on with point #1. The only thing is, and one that I see the Big 3 struggling with is that you need to be extremely explicit in your specifications and more diligent in your quality assurance and oversight because Chinese manufacturers tend to be “aggressive” in finding wiggle room. Just imagine, say Ford struggling with this…
I need to stress that this wasn’t bashing the Chinese, he spoke very highly of their skill and workmanship. He was just speaking to a reality you need to accept when you outsource.
Buell or Harley?
Chinese industry is very good at trying to break out of their sandbox to save a buck or a few minutes. If you’re strict in their QA and auditing, they’ll work well in that sandbox and stay in it. It’s why the government nationalizes the countries that find the best corner cutting to quality ratio.
Ford can’t handle quality issues in Illinois, let alone in another country. It’s something that will hurt Ford in the future, as Stellantis and GM have had the most experience and success with China and other Asian markets. Ford will be forced to make it work, one way or the other, in China.
> US missed out on the Pony
I’d rephrase as “US was spared and didn’t get the Pony”
The costs associated with getting approved under NHTSA rules are pretty extreme so I’d think the Chinese manufacturers would be fairly confident in their abilities to pass the minimum crash safety tests. I’m like you, I’d love to see some true, independent validation but like some others have said, they are selling them in the EU and other markets where the safety requirements are more stringent.
I think that this is likely due to the Chinese requirement that for any foreign automaker wanting to enter the Chinese market, they must partner with a domestic manufacturer. So in reality we’ve been teaching them a lot about building good and safe cars so they could do exactly what they’re doing. I am fairly cynical when it comes to China so I am of the opinion that it was a calculated move to do exactly this from the beginning.
Even if they are not ‘up to snuff,’ $10,000 covers a lot of flaws.
Who is the spokesperson? Tu Le is a former GM analyst who went to, like Michigan State. Just because he has a Chinese surname doesn’t mean he’s not a well-respected analyst. Calling him a “chinese spokesperson” is pretty misleading and ignorant.
The statement had nothing to do with his ethnicity (as you seem to be implying), and everything to do with his employer. Is “Sino Auto Insights” not a Chinese-affiliated organization? If it isn’t then I retract the statement, but surely you can understand the confusion.
It’s a company that looks at the Chinese market, that doesn’t make it a Chinese-affiliated organization and I don’t believe it is. I don’t know him personally, but other journalists I know do, and he seems to be primarily reporting back on the Chinese auto industry for people in Europe and the United States. You seemed to read his statements as “look at how great China cars” as a brag, whereas he pretty clearly meant it as a warning.
In that case I disagree with his opinions but retract any criticisms or implications that he is untrustworthy.
Man, you are not going to like David’s upcoming article on the Chinese cars he drove in Germany.
Can’t wait to read it!
I can’t wait to read it either but I can get a pretty good preview of what DT has to say, based on other European car reviewers on YT.
Yeah, a lot of people aren’t going to like it.
We allow US automakers to take advantage of Mexican manufacturing. We would, presumably, require the same safety standards. If we decide that we can’t import vehicles made in Mexico, we’ll lose a lot of “domestic” vehicles, and if we decide to ban Chinese-affiliated companies, we’ll really have to be careful how we set that up if we don’t want to catch US companies in the mix (while still catching Mexican subsidiaries of Chinese companies).
It might hurt domestics, but it might not. People don’t necessarily trust the Chinese brands, and the brands currently around have name-recognition advantages. The people who want the cheapest vehicle aren’t a big profit for manufacturers, so they might not have much effect. I suspect that would be the case, at least for some time.
I think the Chinese EV invasion could create a massive rift between affordable Chinese EVs and large luxury domestics. If they just cede the affordable end of the market, domestics might make higher margins by simply staying in the upmarket larger vehicles.
I don’t know what the answer is. Do we just let them compete and see what happens? Or do we try to prevent a Chinese economic foothold in a way that may hurt American companies and consumers? Or is there another option?
I have so many questions. Like, how much of the modern US-made vehicle’s MSRP is covering the cost of the manufacturers’ wages? (and by comparison, what does China pay their workers?) Can China source enough not-china batteries to get the EV rebate? and many more. . .
But mostly, I am curious about build quality of a BYD and what the long-term reliability of these vehicles is? It’s all great if I can buy a cheap AF EV, but will it still be running in 5, 10, or 15 years?
Per car, it takes supposedly 18 to 35 manhours of work for each mass market vehicle that comes out of the production line.
https://jvis.us/2022/10/17/how-long-does-it-take-to-build-a-car-these-days/
If true, labor costs are not the issue, and the legacy automakers in the U.S. COULD make sub-$20,000 EVs with 200+ miles range that are competitive with what the Chinese currently offer, but instead paying 1st world labor costs to do it. The legacy automakers simply don’t want to. Every inexpensive narrow-margin car sold may be a high-margin CUV/SUV/pickup that goes unsold. And if the legacy automakers refuse to offer quality inexpensive products that people can actually afford, the Chinese ABSOLUTELY should be allowed in with their affordable offerings. It will force narrower margins onto the auto industry, but that’s a good thing. Every dollar a buyer pays to profit margin is a dollar that did not go into making the product better or pay the workers, but instead went to people who are generally rich and don’t work for a living, parasitizing off of the auto workers and indebted consumers. More dollars of profit margin paid to the manufacturer also yields a greater amount of interest paid to the financing companies. It’s like a snowball of debt.
There also shouldn’t be any bailouts. Adapt or die. The legacy automakers have more talent than the Chinese automakers, but they are outright squandering it and misusing it, all in the name of trying to force the market to bend to their will using government regulations written by lobbyists, which really isn’t that different from what the Chinese are doing, merely that the position of government and corporation are inverted.
> labor costs are not the issue
Labor costs are absolutely not the issue. It’s a canard used by corporations to blame their workforce for financial difficulties, which range from “we’re going bankrupt because instead of saving our profits we spent it on share buybacks” to “we only made $8Bn in profits this quarter because of those greedy UAW members.”
I’d be OK with a bailout that bailed out the workers and let the companies die. E.g. zero-cost job retraining or new degrees, zero-interest, forgivable loans or subsidies to tide them over until they find a new job, priority placement in government manufacturing jobs or subsidized placement in jobs with labor shortages, etc. The corporations die, the execs get nothing, and their bonuses are clawed back.
Extinction level? No I don’t believe it would quite reach that point. Endangered animal list? Probably yes. I do think it could result in the Detroit 3 being nearly full size vehicle (truck and suv) exclusive, with minimal entries in to other markets. This would likely last a number of years as they try to learn to compete against the new entrants. But the market for full size isn’t going anywhere, and no foreign entity has ever quite figured out how to compete in that very North American market. Are Tundra and Sequoia good? Yeah, the are. But did they dethrone Detroit? Not even close.
> the market for full size isn’t going anywhere
I wouldn’t be so sure. Two oil shocks and high interest rates killed off an entire category vehicles that was probably 3/4 of all vehicle sales. The same thing could happen to the huge work vehicles that are primarily not used for work.
“Would allowing Chinese automakers to funnel cars in via Mexico be an extinction-level event for American automakers?” No. Why? Because the real cheap EV’s will suddenly balloon in price once they hit the American market and then you have to convince HUNDREDS of THOUSANDS of people to buy them and I don’t see that happening for a long time, by which then the American market and American automakers will have already shifted while the Chinese economy collapses around itself.
Balloon? Yes, compared to what they may sell for in MX or China. In the US, they will still be cheap enough that they will sell and sell well. CCP considers this a strategic economic front that they are in the game to win. They will continue to subsidize either till the competition has been subdued or they run the risk of doing significant and lasting damage to the ‘party’.
The only thing that could kill this strategy is if there are extenuating conditions that makes the economic power of the CCP get reduced.
This guy gets it.
Worth saying again:
CCP considers this a strategic economic front that they are in the game to win. They will continue to subsidize either till the competition has been subdued or they run the risk of doing significant and lasting damage to the ‘party’.
I believe you are correct. About 10 years ago a guest on CNBC (can’t remember his name) said: China has central economic planning by engineers, scientists, and mathematicians, and the US has central economic planning by lawyers. Neither is good, but by definition they win.