BAC Analyst Tells Big 3 Automakers;"Leave China ASAP"

It seems the future of the EV market space will be driven by low production cost & quality high technology of the produced EV. China appears to be on the cutting edge driven by demanding customers.

Thanks to a longstanding history in China via its century-old Buick brand, GM once minted money in the nation during the 2010s, earning upwards of $2 billion annually at its peak when it sold 4 million vehicles.

But the rising strength of homegrown rivals like BYD and Geely mean volumes and profits are drying up. GM sales in China dropped to 2.1 million vehicles in 2023, and it posted a loss of $106 million in the past quarter—only its third in 15 years.

GM however seems to have no intention of giving Musk or its Chinese competition that satisfaction. A spokesman for the company referred to comments from CEO Mary Barra in April that it remains committed to the market. While it has taken costs out, it is simultaneously adding to new products in China including plug-in hybrids and luxury imports like the Chevy Tahoe and GMC Yukon.

After years of losses in China, including $572 million in 2022, Ford meanwhile says it has now been profitable for the past three straight quarters and also has no plans to leave either.

Chinese consumers also have high expectations of their tech—spending a vast amount of time and money on seamless apps like WeChat—and so expect the same from their vehicles.

Indeed one of the reasons why the ID line of EVs sold by the Volkswagen brand—long the undisputed market leader in China—disappointed when measured against expectations was a perceived poor value-for-money. This largely stemmed from its barebones infotainment system and substandard software when compared to rivals.

On the other hand Tesla, which pioneered the concept of an electric vehicle capable of remote over-the-air updates, still remains competitive to this day by comparison—even as its hardware, i.e. the cars themselves, are already considered ordinary by Chinese consumers.

the recent deflationary downturn in China sparked by an imploding real estate market lead to a brutal price war that many western carmakers cannot or will not follow. It has even pushed homegrown brands to seek their fortune abroad in healthier export markets.

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Meanwhile, the luminaries at Ford have, essentially, given up trying to compete in the domestic Chinese market. Their stated intent, going forward, it to use China as a cheap production base for export. As of 2022, Ford was down to a 1.39% market share, vs 3.89% in 2016, vs GM’s 9.8% share in 2022, itself down from a 13.8% share in 2016.

Meanwhile, I see a lot of sturm und drang among USian “thought leaders” about the recent Putin visit to Vietnam, as 'Nam has been seen as the next really cheap place to make cheap stuff.

Steve

While the West had nothing good to say about technologies like giga castings, the Chinese copied Tesla ASAP.

Sweet revenge.

The Captain

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