The chinese manufacturers seem to be the only ones willing to make cheap decent EVs. They are scaling like crazy, I hope they keep it up, might turn out to be one of the biggest forces in mitigating emissions. The legacy auto companies who only sell expensive luxury EVs deserve to be crushed by BYD and friends, I have no sympathy left at this point.
Some Chinese auto manufactures are pretty good, but a lot are startups in the worst sense of the term: a couple of months from shutting down.
Cars are not disposable, so you kinda want a 15-years of support. Which isn’t just the brand keeping the lights on, it’s a whole service infrastructure.
That’s where Tesla fails, and where a lot of Chinese manufacturers fail: they don’t build one. In that, they aren’t very different than Tesla.
What do you mean by this? I get more support from Tesla than any other car I’ve had. Bug fixes, new features, all OTA.
In terms of service infrastructure, I can open a ticket from my phone, chat with a service person and have an appointment booked. They will even send someone out to the car to fix any issues. I had my window realigned and never even interacted physically with the person.
You have complex software in your car regardless if it was purchased anytime in the last couple decades. The difference is whether you receive updates when it's brought in to a service center, or OTA. I personally prefer the former, even as someone whose job is simplified by the latter.
My car doesn't have critical bugs. And instead of making software more complicated, it should be made simple to reduce the chance of a critical bug to zero.
Has your car never had a recall, or are you simply unaware of any software recalls that have been done to it? Recalls are often done with software updates these days, so if you're not applying updates you're deliberately choosing not to apply safety fixes.
Last year there were five major recalls. One was a software fix for backup cameras not always working. Two were Tesla software issues. Two were non-Tesla hardware issues. I think if I avoid a Tesla, I don't have to worry about software updates for a while.
There were dozens of recalls in December alone. Every manufacturer has software bugs that need recalls, or fixes for hardware issues that involve software workarounds.
> Each vehicle on the road contains around a hundred microcontrollers (MCUs) to operate lower-level functions, such as electric seats, transmission changes, and range reporting.
The software that runs on these microcontrollers is not bug free. At the very minimum, having an OTA update fix a bug reduces the number of journeys with the bug by one vs driving to the service centre and wasting your own time.
Also, I realise it’s a common hn trope to want a technology-free car, but having a coffee at lunch time and watching Netflix on the big screen is one of the few times I get to myself in a post-child world. All of the infotainment technology is great to be honest, from the charging experience to the Apple Music integration.
I understand the value of a large screen. I don't understand the value of it not being a dumb monitor. My cellphone can play Netflix on the screen just fine, thank you. And it is far more likely to have interesting non-Netflix entertainment options as well.
And yes, code on microcontrollers can have bugs. But bugs mostly occur with advanced features or having those features hook into more basic ones.
The general public can’t handle non vertically integrated things. My mum will never, ever know how to switch inputs on a display despite growing up with the first TVs and using one every day. My wife can just about do it.
Also it’s not just Netflix, it has other integrations and a full browser.
> And yes, code on microcontrollers can have bugs. But bugs mostly occur with advanced features or having those features hook into more basic ones.
It’s much worse than you think. Legacy car makers treat each micro only as an item on a BOM, software and all. It’s getting better now, but you would have a vendor for each of those microcontrollers with no coordination between any of them. The path from bug fix to rollout was non existent for a lot of them.
Not to mention the microcontrollers themselves are probed / final tested using VBA in a piece of “software” built on top of Microsoft Excel. No, I’m not joking.
I’m also still getting extra safety features added to my Tesla. I now get cross traffic alerts when reversing.
> I know it's more than just Netflix. But I'm sure it is in all ways inferior to the offerings on the smartphone.
Bigger picture and better sound in the car, which is 100% of the audiovisual experience.
> Your Tesla is getting extra features on a system that I don't want at all.
That’s fine. In your original comment you expressed your ignorance on two topics and people have tried to educate you on both. We seem to have bottomed out on this one which is fine. Not wanting extra safety features or immediate bug fixes is definitely an opinion to have and I’m sure we could find some others who share it.
On the other topic you have also expanded your knowledge on why software needs updates, although your conclusion that your car doesn’t have any critical bugs needs a citation.
What about hardware? If a part breaks, how long do you have to wait for a new one? (Insurance
costs for Teslas are extremely high because parts take so long to acquire).
How often does it break? (Tesla notoriously don’t use automotive quality parts, which reduces costs, and increases MTTF).
And who can fix it? Can you get service manuals for it?
Not every car is a Hilux, notorious for being extremely fixable, but every serious car manufacturer had a whole infrastructure for serious after sales support.
Tesla is still not there, and by choice. That was never a priority for them.
Never had a part break. I had a creaking noise from the boot trims and they were replaced quickly in a remote visit.
Waiting for parts seems to be an industry wide problem at the moment, and my anecdotal evidence supports this with many people I know waiting for parts for their non-EV vehicles. My colleague was without his Ford Puma for 2 weeks due to waiting on a part.
> Note that some people would not view that as a plus.
Those people would have the choice of driving to the garage and waiting if they wished to. I chose for the home visit then cycled to work and came home to a fixed car.
Keep in mind that China is on a completely different level when it comes to repair and the ecosystem around repair. What you might see as an unacceptable situation might be workable in China because of their freedom and ability to repair and remix parts.
I dont want to downplay your comment as there are also pictures of cars rotting in fields so despite the repair culture they dont have their incentives aligned 100%, i'm just trying to see both sides of the issue.
I was under the impression that Tesla has put a lot of effort into building out support infrastructure? My perception is a bit clouded by the fact that I live a few miles from a service center.
Try to get spare parts for teslas. Or fix them at a non-Tesla owned shop. Both are 100x more complex and expensive than any other mass produced car made in the last decade 20 years. And it is like that by design: it was never a priority for them.
PRC subsidy is like $2000 per car and decreasing, substantially lower than US domestic subsidies per vehicle. They're also selling for 2x PRC MSRP abroad, i.e. Euro EVs like 15000-20000 more expensive. Explicitly to avoid dumping and to make up thin margins in competitive domestic market. They don't need to dump to be competitive, reality is western automobile industries currently can't remotely compete, hence tariffs to buy time until they can, or forever because they simply can't.
Not sure where you are getting the subsidy figure. China's EV subsidies have been around since 2009, extended and renewed every 2-4 years. The last consumer "direct purchase subsidies" ended in Dec, 2022, but was extended as tax credit for another 4 years for an estimate cost of $72+B in June of 2023. That's in addition to China's provisional ICE-to-EV conversion subsidy of ~20,000 yuan to prop up slowing EV sales, started in May, 2024 and ends December 31 2024, today.
China's cost competitiveness comes from China's protectionism and subsidies past decade. The EU Commission has already conducted an antisubsidy investigation against Chinese EV imports and imposed countervailing measures earlier this year (see EU's Implementation of Regulation 2024/1866) based on prohibited export subsidies given to Chinese EV makers (or MIC EVs).
> The EU Commission has already conducted an antisubsidy investigation against Chinese EV imports and imposed countervailing measures earlier this year
The outcome of that investigation was predetermined.
The French government began pushing for tariffs. The Germans opposed the idea, but France turned out to have more political support on this issue. The EU needs a technical justification for tariffs, so the Commission launched an investigation. That investigation came to the conclusion it needed to in order to justify the policy that had already been decided on at the political level.
The conclusions of the report are petty ridiculous. China has a much more competitive EV market than the EU does, and Chinese manufacturers are much lower cost as a consequence. When Chinese companies export EVs to Europe, they sell them at a very substantial markup, which is the exact opposite of dumping.
The types of subsidies the EU is complaining about are the exact same types of subsidies that EU countries themselves (and US states) give. They're things like government funding for charging infrastructure and sales-tax exemptions.
I shared office with an enterprise salesman for a year. We talked over lunch. Among the things he said: If you want to sell to someone in the long run, then be honest with them. Don't give their competitors better prices and lie about it. It's okay to tell someone that their competitors get better pricing because of volume or for other understandable reasons, but lying is not okay, because people will find out eventually and then your long-term relationship goes sour.
CATL clearly wants to be a really big battery vendor and sell to lots of battery purchasers. I consider it very likely that they treat Ford well.
Not sure if that's the best way to describe China's business model/practice. WRT, EV batteries in particular[1]:
... China requires auto makers to use batteries from one of its approved suppliers if they want to be cleared to mass-produce electric cars and plug-in hybrids and to qualify for subsidies. These suppliers are all Chinese, so such global leaders as South Korea’s LG Chem Ltd and Japan’s Panasonic Corp. are excluded.
... Foreign batteries aren’t officially banned in China, but auto executives say that since 2016 they have been warned by government officials that they must use Chinese batteries in their China-built cars, or face repercussions. That has forced them to spend millions of dollars to redesign cars to work with inferior Chinese batteries, they say.
... “We want to comply, and we have to comply,” said one executive with a foreign car maker. “There’s no other option.”
1. Power Play: How China-Owned Volvo Avoids Beijing’s Battery Rules Car maker is allowed to use high-end foreign technology, while rivals are squeezed into buying local, Trefor Moss, May 17, 2018, the Wall Street Journal
I don't know any specifics of Ford and CATL, but it was always the Chinese gov't driving their growth either by protectionism or undercutting foreign competitors with subsidies which is why Chinese EVs are being pushed back by the trade regulators in EU/US/Turkiye/France/etc..
I have no reason to believe that it was motivated China's altruism to pass the best price to their American customers.
For 1000kg of steel, bulk of raw input materials, we're looking at ~$500 price difference, i.e. negligible. If you want BOM for other materials, lazy napkin math: PRC auto is ~10% of gdp. PRC industrial subsidies ~2% of GDP. Even if you assume entire industrial subsidy goes towards auto, that still puts it at ~20% of industry. Can western manufacturers compete if PRC cars was ~20% more expensive. Can they compete if BYD seagull was was $12000, vs it selling for $20000 abroad. No. That's without considering west subsidizes the shit out of their auto, and downstream sectors, i.e. US energy.
I read you can somehow buy cheap version of car for internal market and hack it to allow operating outside China (and to translate UI text from Chinese to Russian). At least there are people offering hacking/localizing services. No need to pay more!
Your opinion. To me it seems like actual innovation, and delivery on the cost promise of EVs (vastly simpler internals, so they should cost less)
The west is going to screw around with tarrifs which will delay the inevitable for a few years, at massive cost to their consumers, while the rest of the world jumps ahead to cheap green cars.
Why should the green energy transition be bottlenecked by entrenched incumbent players' profit margins? Are their profit margins more important than averting global climate disaster? We have a green technology undercapacity, not overcapacity.
Why should Europe allowed China to attack and destroy its car industry, when China is also helping Russia destroy Europe militarily?
Good thing Europe woke up earlier this year. impact of the EU’s tariffs on Chinese EV manufacturers. In November, Chinese automakers captured just 7.4% of Europe’s EV market, a noticeable drop from 8.2% in October and their lowest share since March [1].
As for US, the 100% tariff has safely protected America from Chinese EVs thus far.
“Protected America from Chinese EVs” - aka, ensuring the long term irrelevance and stagnation of American car manufacturers. They will keep their sales temporarily while the rest of the world leaves them behind
What causes issues to Europe's car industry is not Chinese cheap EVs in Europe. There are not even many Chinese EVs driving around here, those tariffs will have very little impact.
What damaged the EU cae makers was that they had a very good market in China, and Chinese EV makers could step up and make cars that were more desirable/affordable for their domestic market. The loss of profits in China is what hurt everyone, because that country alone is a very large market.
> China is also helping Russia destroy Europe militarily
This is a disingenuous framing based on the mere fact that China continues to do business with Russia. China also continues to do business with Europe and Ukraine, so one can just as easily argue that China is helping Europe destroy Russia. Have you seen the number of Chinese-made commercial-grade drones used by Ukraine?
China is "destroying European carmakers" as much as your local supermarket A "destroying" supermarket B. It's called competition. As someone else said, Chinese subsidies have already declined, way way before the EU tarriffs went into effect, and the EU and US can also decide to subsidize their carmakers.
> Have you seen the number of Chinese-made commercial-grade drones used by Ukraine?
China Is Cutting Off Drone Supplies Critical to Ukraine War Effort [1]. China is reportedly making drones for Russia instead, according to multiple intelligence officials.
Today you sell a country a computer, engineering software, books, chips and industrial machines, tomorrow you have missiles pointed at you designed using that computer and manufactured using that machines.
The problem here isn't that we don't want to transition to clean green energy, but that China wants to monopolize that, not by market competition, but by mercantilist practices.
Sure, everyone wants to be next China and is busy "emulating" them. Biden passed the IRA in 2022 which requires local critical material sourcing/manufacturing and excludes any materials, parts sourced from China, inspired by China's anticompetitive practices since 2015. This practice is commonly called local content requirement (aka, LCA) in international trade lingo, and one of the two subsidies prohibitions under the WTO SCM Agreement.
Guess who's whining? China filed a WTO complaint (WT/DS623) against the US IRA earlier this year, accusing the US of violating what China has violated past 10 years.
The EU is also working on theirs, called CRMA approved earlier this year, but nothing that would match Papa Xi's blatant protectionism; or China's annual $270B fossile fuel subsidies to support cheap energy or overcapacity; or China's insatiable appetite for coals and carbon emission.
Sure, that's because everything China did since 2015 was just putting up more barriers to delay green energy development or EV transition for everyone else. China hates it when other do the same to promote their local clean energy development as it inteferes with their quest for domination.
Yep, exactly. It's not "sounds like" -- China's protectionist, mercantilist trades practices have no place in this side of the water. The world is really not too interested in China's weaponization of clean energy or resources.
So you're saying Chinese protectionism prevents US and EU from developing green technology, and that's why US and EU will now also engage in proctionism, even though US and EU still don't have sizable green technology development after doing so, and that is also China's fault??
Sure, sometimes you fight evil with evil. I've also already cited multiple sources on how China delayed everyone's transition to EVs and now as a result both the US/EU in particular are now having to build their own supply-chain from ground up to counter China's weaponization of clean energy initiatives.
No need to pretend Papa Xi's mercantilism is all about original innovation, working 996, or Qian Xuesen's vision.
They have better technology. Better batteries, innovative drive trains, cheaper chassis, better product market fit. This is supposed to be a pro technology forum.
that is the problem they cannot deal with the truth if the car is better you have to recognize that regardless of where it is made. The Chinese absolutely dominate on batteries they also have unique IP on different types of batteries, they are cheaper, better charging cycles, the best energy density at scale. They are also competing in the luxury watches category which I am have a keen interest in I have a few collection that I have acquired apart from the ones I got from my fathers estate, the quality and cut of the sapphire they use on the watches, the jewels they use is getting better, the hairspring, the gear each category is getting better. I am telling you that the Chinese watch industry can now produce a better quality watch than the rolex detona including a better movement they only thing that people can argue against now is that they can't write the word "ROLEX" on it and that they don't have "Heritage" ( which they don't because they cannot go back in time, but I'll tell you want they can do they can go forward which is better), every measurable quality like finishing and polish everything better in every way physically other things like marketing and thing that exist in the customers mind they can't control.
That's not exactly how it happened. Sony of Japan was the first to successfully commercialize lithium ion batteries, most commonly used in EVs, in the early 1990's; quickly followed by South Korea -- most or 3/4 of all active lithium ion battery patents come from either Japan or South Korea.
China was very late to the EV battery game and LFP was more or less their only choice, which was deemed inferior for EVs due to its low energy density, but whose core patents were all about to expire -- ie, great for exports. They are effectively patent-free now.
In short, the Chinese gov't essentially forced all key EV battery industry leaders to waive their IPR to access China's local market; then effectively banned them and forced their customers, EV OEMs, to switch to local Chinese battery suppliers, who were still learning to make batteries under MIIT's Regulation on Power Standard since 2015/2016 (announced/enforced). That's essentially how China came to corner the battery supply-chain and scale up/commoditize their production at the expensive of everyone else past 10 years.
> China’s aid to domestic new energy vehicles amounted to roughly $5.6 billion until 2022 when the direct payments to manufacturers were phased out.
China doesn't pay out any direct subsidies to their EV manufacturer. They only has a tax rebate for new EVs now- just like the USA $7500 tax rebate for EVs. And USA companies like Tesla can get that rebate in China as well, so the playing field in the Chinese market has been even since 2022.
China has given a total of $5.6bil in subsidies over 13 years. Ford (by itself) has $36bil cash on hand in Q3 2024. Ford, by itself, can easily spend enough R&D money to match China. These are all numbers that anyone can read SEC filings to verify.
Talking about "Chinese subsidies" is just pathetic whining and propaganda by western car companies, to cover up for their incompetent mismanagement when they can easily do it themselves.
If you hear a car company whine about Chinese subsidies, that just means they want your tax dollars to pad their profits.
All of the excuses - subsidy, dumping, weak domestic consumption -> export overcapacity (despite % of auto exports lower than JP/SKR).
PRC is doing to EVs what Ford did to Model T (500USD when competition cost $2000). Anyone with a brainknows it's technically possible to make extremely cheap basic cars, but in most places with entrenched auto interests, not politically feasible.
We also know that most Chinese battery companies would have been crushed by foreign competitors from Japan and South Korea, had the Chinese gov't effectively not banned them and forced their customers to switch to local Chinese battery makers since 2015.
Usually no problem with subsidies as long as it is local (eg, GM bailout).
China's gov't subsidies to promote export in markets abroad or undercut foreign competitors are generally prohibited.(see Article 3 Prohitibion of the WTO's Subsidies and Countervailing Measures Agreement).
This is also seems to be the main factor in the exponential adoption of solar panels/energy.
Yes, it's a trade war with geopolitical implications. But not sure that it outweighs exponential adoption of solar energy. The same might be true here.
There's actually been a lot of research into this for PV that probably applies to EVs too.
After initial government support from western nations mostly it's been economies of scale and innovation that have dropped the price of PV.
Prices that have been called dumping (i.e. sold cheaper than they sell in the home market, which harms the foreign manufacturers in an unfair way) have repeatedly been further beaten by the next generation of panel.
I expect to see similar with batteries, the main component by cost of EVs.
Is it one of the numbers where someone has divided the cost of building a new factory by the number of items produced in the first year and arrived at a huge loss per item produced?
The Chicken Tax was initially a response to Europe's protectionist measure against American poultry imports. I see how it eventually turned into a protectionist racket, but most never seem to look at the source of the problem.
I feel that the same way about EVs, or EV batteries in particular.
> China’s aid to domestic new energy vehicles amounted to roughly $5.6 billion until 2022 when the direct payments to manufacturers were phased out.
$5.6 billion in subsidies over 10+ years. Ford has $29bil cash on hand Q3 2024. GM has $32bil cash on hand Q3 2024. Tesla has $33bil cash on hand Q3 2024.
This is all public data (legally required for all publicly traded companies) anyone can check.
American car companies don't need subsidies. They need to be less incompetent about spending their money, and whine less begging for USA government subsidies.
If you believe the USA should send more money to their car companies, you're a sucker who fell for propaganda from car companies who are asking for handouts to increase their profit margin.
Besides, reducing all of these achievements in EV technology to mere "subsidies" is being willfully blind. CEOs of incumbent car makers have been communicating for some time now how competitors such as BYD have a real technological edge thanks to research, innovation and having painstakingly built large, comprehensive and efficient supply chains. Subsidies are somewhat involved but not that much, especially considering that (1) subsidies are declining, (2) EU and US also subsidize. Have people ever looked at EV tax breaks in the Netherlands, or more in general tax breaks for any sort of R&D work (WBSO)? Nobody ever complained about that.
Cars such as by BYD are already profitable even without subsidies. That's why subsidies are declining.
One really has to ask oneself: if we subsidize incumbent automakers, are they really going to achieve the same level of competitiveness and innovation? Or will they just use it to launder more profits for shareholders? Be honest.
I think we should stop pretending that Chinese EV/battery companies can compete on their own without Papa Xi's big wallet or baton to keep out foreign competition.
What does that even mean? Direct EV subsidies are already gone. In the first place, they were meant to start up an industry, not to be sustained forever.
On a higher level, I find your thinking weird. Nobody ever said "let's not pretend $HIGH_SCHOOL_STUDENT can compete on its own without papa's wallet". Everybody thinks that it's natural to invest in a child's education until they can compete on their own in the world.
College enrollment rates have only recently reached a high level.
You’re delusional, Chinese car factories are way more automated and advanced than our own, and they’re just seeing the benefits pay off. I think we should stop assuming that Asians can’t produce quality work.
asians? - definitely make great stuff. chinese specifically? - they will have to prove that they can in fact make good quality products. I have bought hundreds of chinese products over the years and last thing I would subject myself to (and especially my wife and daughter) is chinese vehicle… they have a steep hill to climb to convince us that have bought many chinese-made goods that they can make good quality products
It's not just mere "subsidies," there is also blatant protectionism. CEOs of incumbents car makers have been warning against the Chinese gov't unsavory anti-market practices to protect their local battery companies and achieve market dominance past 10 years, such as:
1. Power Play: How China-Owned Volvo Avoids Beijing’s Battery Rules Car maker is allowed to use high-end foreign technology, while rivals are squeezed into buying local, Trefor Moss, May 17, 2018, the Wall Street Journal
... China requires auto makers to use batteries from one of its approved suppliers if they want to be cleared to mass-produce electric cars and plug-in hybrids and to qualify for subsidies. These suppliers are all Chinese, so such global leaders as South Korea’s LG Chem Ltd and Japan’s Panasonic Corp. are excluded.
... Foreign batteries aren’t officially banned in China, but auto executives say that since 2016 they have been warned by government officials that they must use Chinese batteries in their China-built cars, or face repercussions. That has forced them to spend millions of dollars to redesign cars to work with inferior Chinese batteries, they say.
... “We want to comply, and we have to comply,” said one executive with a foreign car maker. “There’s no other option.”
2. Why a Chinese Company Dominates Electric Car Batteries, Beijing gave CATL lavish subsidies, a captive market of buyers and soft regulatory treatment, helping it to control a crucial technology of the future. Keith Bradsher and Michael Forsythe, Dec. 22, 2021, The NYTimes
3. The Key to Electric Cars Is Batteries. One Chinese Firm Dominates the Industry. Beijing built the world’s largest EV market, then pressured foreign car makers to use its batteries, Trefor Moss, Nov. 3, 2019, WSJ
... China is by far the biggest EV market, and to boost its standing in the fast-growing industry, China began pressuring foreign auto makers to use locally-made batteries
... Auto makers weren’t pleased, but they fell in line. During a visit to CATL headquarters in 2017, three Daimler AG executives displayed their irritation shortly after the meeting started, recalled Jiang Lingfeng, then a CATL project manager who prepared a technical briefing for the visitors. One Daimler executive cut off his briefing, said Mr. Jiang. “We’re not interested,” the executive said, according to Mr. Jiang. “The only reason we’re here is that we have no choice, so let’s just talk about the price.”
... Still, auto makers bridled at CATL’s dominance, according to Mr. Tsao, the former supply-chain manager there. CATL’s batteries also cost 25% more than those of leading rivals because the company was still learning to mass-produce cost-effectively, he said. “The price is high, and the service is slow,” he said, summing up CATL’s proposition to auto maker clients.
... “What the government did was a good thing for China,” said Mr. Jiang, the former CATL project manager. “Without its restrictions, I don’t think CATL would ever have been successful.”
Let's not forget that the EU also followed up with a WTO complaint against China for their NEV regulation that forced tech transfer (see WT/DS549) in 2018, and waited over 6 years to take a countervailing measure (2024/1866) against prohibited subsidies practices.
ironic comment, considering that the Chinese gov't fossile fuel subsidies's is by far the largest in the world -- or $270+B vs. $3B US (see the IMF's 2023 Fossile Fuel Subsidies Report).
All that to support cheap energy and overcapacity.
I want legacy EU/US automakers to pull their heads out of their a* and compete, but anyone who thinks BYD is succeeding only on CCP support is a clown. It's a real company that's brutally demolishing the competition.
(I have a Tesla, but looking at the market, my next car might be a BYD minivan unless someone finally BUILDS A DOMESTIC FULL EV MINIVAN FFS).
> BYD is succeeding only on CCP support is a clown.
their success is an outcome of a brutal competition in the past, orchestrated by the CCP. They're now obviously no longer "helped" by the CCP, but this company (and other companies, which might've died already) were definitely recipients of state support in the early days.
The current crop of ICE car manufacturers in the west did not see it coming, and assumed they'd always have a dominant position. They deserve to lose. However, in the event of a war, this sort of loss would've had huge impact on the industrial capacity of the US, and might directly lead to a loss.
The loss of industrial capacity for ship building in the US is already evident. Back in WW2, it's due to the US's shipbuilding (look up liberty ships) that allowed the logistics to sustain the war and ultimately win. It's due to having the car factories being available to convert to tank factories, that allowed the US to produce the masses of tanks and trucks and such required to sustain the war.
So if a WW2 scenario happens today, the US will not have such options any more. With the exception of perhaps, air power. But surely, china is not only encroaching but likely will succeed in having a domestic plane manufacturing base.
Sanctions, and export restrictions will not help. Tarriffs is only going to make cheap goods more expensive, but will not bring the manufacturing back.
As have many western companies which bailed out their automotive industries during covid and the Great recession as well as earlier instances.
The west should actually operate industrial policies more like China if the outcome is globally cost and quality competitive companies after govt supports have been removed, because it seems like after US bailouts auto companies fattened profits without improving cost quality or competitiveness
The issue is in Europe, not US. What China did was to copy what US does, except: Chinese private capital is not as strong as US, that's where the state capital comes into play. Tesla is an US company.
Europe is a very different story, the private capital is very conservative. They are not willing to gamble as US counterparts, and the states are not moving fast enough.
European countries actually had industry policies in the 60s and 70s. But countries like Korea and Japan were always going to be cheaper. The Netherlands lost a LOT of many protecting the shipyards.
US made like ~8 million cars post war, and now ~16 million.
IMO industrial base is not really issue (except shipping).
Issue is PRC with 4x more population and heavy coordination ability simply moved manufacturing dial to 11. Realistically 50, i.e. last year PRC shipbuilding produced comparable tonnage to entire 5 year US ship building program during WW2. It's not just loss of industrial capacity in some sectors, it's PRC is operating on an entirely different scale that US industry never had.
Building "back" in "Build back better" isn't enough, it has to be much "better" than US manufacturing ever was.
> ... their success is an outcome of a brutal competition in the past ...
We're in this really interesting era where it is hard to say whether the US or China has the bigger economy. There have to be enormous error bars around estimating how big an economy is since we're comparing incomparable.
Given that, hopefully there'll be some high profile discussion about what China is doing to achieve this level of success. The part I'm looking forward to will be the analysis of why very low interest rates failed to spur similar competition in the west. Where is the competition? We should have the advantage in this field, groups like YCombinator have a pretty strong track record showing that, if given the chance, private interests are great at building and navigating highly competitive environments.
Hindsight will give us a lot of information - if the automakers turn out to be uncompetitive then it will have been obvious to everyone in the field through the 2010s. Why weren't there competitors emerging in the west? I have a theory that easy credit encourages market centralisation but it isn't obvious where to go to find trustworthy commentary on the idea.
> Given that, hopefully there'll be some high profile discussion about what China is doing to achieve this level of success.
This doesn’t take more than about 30 seconds of review. The CCP is making long term bets and demanding the private sector do as they’re told. It’s been obvious for a decade that renewable energy is the future. It’s been obvious that electrification of cars is happening whether legacy manufacturers like it or not.
The west can’t see past their next quarterly earnings result, and doesn’t have the stomach to make the long term investments the CCP has demanded of their own manufacturers.
Even Ford, who by all accounts is fully invested in electrification and is all in, has started to pull back because investors aren’t ok with an investment that might take a decade to pay off.
>The west can’t see past their next quarterly earnings result,
Assuming "the west" includes the US, the biggest companies in the US have very long investment timelines, much farther than the next quarter. Tesla, whose business includes making cars, lost money for 10+ years as a publicly listed company.
It's notable that this only happened because Elon held a controlling (or near-controlling) share and pushed for long-term vision against the wishes of institutional investors, bulling them as necessary. The "long investment timeline" did NOT come from wall street.
“Wall street” is the one rewarding Tesla with a market cap almost an order of magnitude more than Toyota, even though Tesla’s net income is not much higher than Toyota’s, and Toyota moves many more cars.
“Wall street” (or “the west”) is getting far more on Tesla’s long term ability to grow net income than on Toyota’s.
This is not the time to try for simple stabs in the dark, we really should make a serious effort to understand one. The west has been trying to get renewable energy working for more than 15 years, that was the strategy that has people talking about German deindustrialisation and having to read up on what the AfD's policies are. They dumped a lot of political capital into the Energiewende.
> ... because investors aren’t ok with an investment that might take a decade to pay off.
Sure. Why not? I'm happy making investments that take decades to pay off, I want to have access to machines when I'm old. What happened to all the investors who intend to live comfortably in their old age?
> What happened to all the investors who intend to live comfortably in their old age?
They got bought out by investors with shorter-term ambitions, because our economy is set up to reward short-termism, so those people end up with more capital (= market power), and this compounds over time.
Probably the problem with West are high wages and unions (especially in Europe). West could still win if it had advanced manufacturing and robotic equipment which nobody else has but this doesn't seem to be the case.
> China is not even that cheap in terms of labor anymore.
they're still cheaper than US labour. And their supply chain has proxity benefits that the US no longer has.
And the workforce is reasonably skilled now after a few decades of these skilled labour jobs (watch some YT video of how electronics are assembled there, if you want to see skill).
In cheaper production countries, you'd see similar, but china still has the edge. That's why the higher cost (compared to yester-decade) is not a factor yet, and only some of the manufacturing is being pushed out to places like vietnam, but not all.
The advantage china has is a similar type of advantage that silicon valley has for tech.
"Apart from this, with capitalist production an altogether new force comes into play — the credit system, which in its first stages furtively creeps in as the humble assistant of accumulation, drawing into the hands of individual or associated capitalists, by invisible threads, the money resources which lie scattered, over the surface of society, in larger or smaller amounts; but it soon becomes a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralisation of capitals."
why is the assumption that all control must be equally shared? I question the premise competely. If you made it, or invested in it, you own it. It just means that the US made, invested or invented the value that the market deems to be 40-50% of the global marketcap.
If you own and control more resources than anyone else, you can make things others can't.
But in any ecosystem where other species are growing faster than you are, its natural they will eat into your share, unless the entire ecosystem grows and creates space for everyone.
Age of Empires is a model that worked in the past when there were big difference in capabilities and information flowed much slower. Today it flows so fast, that by the time you develop capabilities to react to one thing, something new has already emerged. That doesn't mean people wont mindlessly try to control things like they did in the past. It just means they will fail, overwhelmed by the rate of change.
China is quite anti-competitive. BYD/CATL's success, which comes from their battery market dominance, is a largely outcome of the CCP's protectionism past ~10 years.
Tariffs are a 2-way street. It is very naive to presume the countries you raise tarrifs against will not enact similar tarriffs against you. And then they will do business with your competitors.
Except now you are limited to your local market, while the much larger and more dynamic global market will grow and evolve without you.
Would this work well? I mean there are many implications in devaluing USD. Would this potentially lower USD demand as a reserve currency in other countries?
US "convinced" JP, DE, FR, UK to appreciate relative to USD during Plaza Accords in 80s, those countries still got to sell cars/strategic hightech in US, just less of it. US has less leverage to "convince" PRC who has more autonomy to set their dollar peg. US unlikely to allow PRC tech regardless... sanctions/export control and all. PRC fine with devalueing alone with US to keep chipping away at RoW shares. Also consider this means PRC GDP increasing by 20-50% nominal, i.e. surpassing US band, not just on PPP terms but absolute terms.
As you said, the players involved are different, but also the context of 2020's is much different than that of the 80's.
In the late 80's you had a crumbling USSR, a bunch of secondary markets slowly opening up to global trade, and a clear sole economic superpower prevailing.
Now things are a lot less clear. The US is speakig of tariffs (which is essentially restricting themselves from a lot of global trade) while China is more than willing to make trade deals left and right. They already have a large, educated, and skillful workforce.
Sanctions/Export control work to a point, presuming they can't build up their own capabilities and do their own agreements with other countries. It is something you can do well against minor players, not as well against other powerhouses.
> Would this potentially lower USD demand as a reserve currency in other countries?
We don't know, in the 80s, the devaluation of the USD did not weaken its position as the reserve currency, will it be same this time without USSR collapsing and Gulf War?
More importantly, will the PBOC cooperate with the US like the central banks of Japan and Germany did?
I don't know the answer, but I think it won't take too long to see the answer.
Direct cash injection is frequently the worst way to do this, so I don't think that failure is particularly indicative of a complete inability to achieve onshoring of manufacturing.
Tariffs certainly seem superior to me, especially if paired with tax cuts in other areas.
tariffs seems a roundabout way to try achieve something.
Why not directly invest in making manufacturing, if the US gov't wants that specific result? The US is deeply afraid of the idea of state owned companies, coz the past red scare have put off the idea.
Of course, private industry will cry foul - that they cannot compete on the wages that would've been needed to attract the workers, etc.
I think you should not sell advanced industrial equipment, electronic parts and computers to everyone willing to pay because they can be used to produce things (including things that shoot, fly and explode). Sell only what can be used for entertainment, not for manufacturing.
For example, make an export version of GPU that has very poor precision and makes mistakes in calculations. Nobody notices if the pixels in a game are colored little wrong, but you cannot do science on such a GPU.
Also restrict export of scientific data. Keep monopoly on manufacturing things.
> their success is an outcome of a brutal competition in the past, orchestrated by the CCP. [...] this company (and other companies, which might've died already) were definitely recipients of state support in the early days.
So, like VCs do in the US.
Look, I'm not a fan of state capitalism, but you have to admit, it's way more targeted/effective than classic capitalism or corporate capitalism. I wish that countries that do not have the US money do the same.
> I want legacy EU/US automakers to pull their heads out of their a* and compete
Honestly, what can they do? Labor is very expensive here, and would be loads of pushback for a fully automated assembly line. Plus safety, taxes, and other regulations would push the price up.
US manufacturers can get within 20% cost difference which tariffs can ameliorate. That's fine. A few extra environmental and labor protections won't break everything. TSMC managed it.
But right now it's... 100% or 200%, or infinity since they simply have no models for some form factors. That's just rank incompetence.
Well there's the VW, but it's not domestic (built in Germany).
The minivan segment is shrinking again though. Sales have been dropping and most of the work van models from established companies have been cancelled. Could be room for a new entrant to make a van that people want to buy?
FWIW the Dacia Spring is cheaper than the Byd Dolphin. The Opel Corsa and Astra and its Peugeot and Citroen counterpart seem decent and don't have any equivalent in the Byd Lineup, especially the wagon version (Astra Sports Tourer) which I could totally drive.
That’s the narrative I keep reading but meanwhile here in Europe the only BYD (and Chinese) EV models that are sold are luxury ones, mostly SUV. Where are these all these cheap decent Chinese EVs the market is supposed to be flooded with?
Also specifically where are affordable family cars? Seems Chinese are following the same playbook as other legacy manufacturers: you want a family car? That’s gonna be a SUV. Oh sorry you want non ridiculous cargo space? That means our biggest luxury SUV at 70k€ (that has the cargo space of a cheap small minivan from the 2000s).
Passing safety tests is mostly an exercise in designing for a target market.
If you want to sell a car for a global market, you design it to pass the tests that are required to sell it there.
The reason a $5000 Chinese microcar EV with 50 mile range and 45mph top speed probably isn't going to meet US safety standards because it's a pointless exercise. The car isn't designed for those buyers, and will never be sold there.
EVs built for western market export will be more expensive, but 'cheap' by western standards, and designed for those markets.
Do they pass American? As far as I'm aware, American safety standards are of the highest in the world, in part due to the amount of reckless driving here and general lack of road-sense.
This sounds like something you think should be true because it’s “just so”, but I don’t see any evidence that it actually is. NCAP seems quite strict, perhaps more than NHTSA
