Elon Needs Protection from Warren

Investment Analysis Clubs Macro Economic Trends and Risks
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Musk’s comments come after Warren Buffett-backed BYD - with its cheaper models and a more varied lineup -overtook Tesla as the world’s top-selling EV company last quarter, despite the U.S. automaker’s deep price cuts through 2023.

“If there are no trade barriers established, they will pretty much demolish most other car companies in the world,” he said. “They’re extremely good.”

Does this mean you cannot compete Elon?

Tesla plans to start producing a cheaper, mass market compact crossover codenamed “Redwood” mid-2025 to compete with inexpensive rivals, Reuters reported on Tuesday. Musk on Wednesday confirmed that Tesla expects to start production of its next-generation EV at its Texas factory in the second half of 2025.

Too little too late?

10 new models! And with new technology such as fully-automated parking and autonomous lane changing.

Musk burst out laughing during a 2011 interview when the reporter suggested BYD as a potential rival for Tesla in the EV space.

Oops!

From 2011 to now BYD focused on creating their own efficient vertical integration by owning battery and chip production for their vehicles and sale to other manufacturers of surplus manufactures items. Thus a sale of a competitor’s EV sends some cash into BYD’s pocket.

Did Elon not know or forgot the concept of face in China?
Did the laughter spur BYD to push to become much more competitive?

Now the article’s title is too strong. The BYD executive does not taunt but did indicate that BYD is coming for Tesla. Look out Elon. The competitive juices are flowing within BYD management.

The EV manufacturing business is no longer a high profit margin business but a low margin endeavor similar to a grocery store.

“Electric vehicles in China becomes a consumer electronics [product]. It’s similar to the cellphone industry,” said Li Yi, chairman and CEO of Appotronics, a Shenzhen-based laser display company that claims to work with major automakers.

No longer are companies competing primarily on driving range. Instead, as they reveal new models at a rapid pace, they’re piling on a slew of features: in-car projectors, refrigerators and driver-assist, to name a few.

Tesla’s cars don’t come with those accessories, and Elon Musk’s automaker only offers a limited version of its driver-assist tech in China right now.

More than 100 new EV models are due to launch in 2024 in China, according to HSBC.

The above raises other questions.
Does tariff protection of US EV manufacturers slow the adoption of EVs in the nation and slow the fight against global warming?
Is China’s superiority in EV manufacturing temporay or permanent?

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Is it superiority or is it because the CCP is backing them with subsidies and flooding the market.

**Central and local governments in China are investing heavily in the development of Electric Vehicles. Businesses and governments all over the world are searching for technological innovations that reduce costs and increase usage of “environmentally friendly” vehicles. China became the largest car producer in 2009 and it is strongly investing in the manufacturing of electric vehicles. **

Andy

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So we should be opposed to this?

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We were discussing why Elon was asking for higher tariff’s on Chinese vehicles and why he might be asking for it. You said this.

I am just putting forth that they do not have superiority in technology but in subsidies. Here is a better article.

BYD, China’s leader in EV sales and set to surpass Volkswagen this year as the country’s top-selling auto brand, closely followed SAIC on the subsidy list. It received 1.78 billion yuan in the first half, or close to three times as much as the year before. It offered no details in filings beyond a statement that over 1 billion yuan of the total grants were provided for “autos and auto-related” purposes. The company also runs a sizable smartphone business.

Now if you are asking if we should be opposed to EV adoption that is another question altogether. But if you are asking if we should allow another country to undermine our industries I say no.

If you look at what the United States is doing they are giving subsidies to the consumers in their country. What China is doing is giving subsidies to their companies so they can make a cheaper product. While they are both subsidies how they are implemented is not the same and could be against trade rules and why Elon is correct.

Andy

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To be precise, the U.S. is giving subsidies to consumers in their country only for domestically-made cars. Cars without enough domestic content can’t get the full subsidy, and AIUI a pure import wouldn’t be eligible for any subsidy. Which also tilts the market towards domestic manufacturers - just not as much as the manufacturer-subsidy model.

This is likely to put enormous pressure on Green-Labour alliances in European nations. The larger European EV markets are phasing out subsidies, for the obvious reason that EV’s are no longer a nascent market and it’s really expensive to keep subsidizing them once they’re a sizable segment. So EV adoption growth rates are slowing. Allowing cheap Chinese imports would speed conversion to EV’s (something Greens believe is not only valuable, but literally necessary for the survival of the planet) - but could be devastating for domestic producers. High trade barriers (tariffs, domestic content requirements, etc.) can protect the domestic manufacturers, but will slow EV conversions compared to a “Chinese Flood” scenario.

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Yep China EV makers are subsidized as is Airbus in the EU. Yet Boeing manages to compete.

China is the low cost producer. And they are churning out many new models with technological gizmo that appeal to EV buyers.

Toward the end of a nearly 15-minute video, William Sundin, creator of the ChinaDriven channel on YouTube, gets off the highway and starts driving in the southern Chinese city of Guangzhou. Or rather, he allows himself to be driven. For while he’s still in the driver’s seat, the car is now steering, stopping, and changing speed—successfully navigating the busy city streets all by itself.

“It’s a NOA, [Navigation on Autopilot] function but for the urban environment,” he explains to the people watching him test-drive the XPeng G6, a Chinese electric vehicle model. “Obviously this is much more difficult than simple highway NOA, with lots of different junctions and traffic lights and mopeds and pedestrians and cars chopping and cutting lanes—there’s a lot more for the system to have to deal with.”

The system integrates several technologies BYD has developed in both vehicle intelligence and electrification, including cloud-based artificial intelligence, 5G network connectivity, smart driving and smart-cockpit features, enabling a car to perceive changes in the internal and external environment and adjust in real time to enhance driving safety and comfort, according to the company.

EVs with the latest digital technologies have become a trend in China because young drivers give priority to autonomous driving systems and digital cockpits when scouting for new cars.

Intelligence is measured by a car’s digital bells and whistles through built-in features such as voice-activated controls, facial recognition, over-the-air software upgrades, phone compatibility and self-parking.
Gizmos! Which seems to appeal to the EV buyer.

The EV is not about transportation but a environmental statement and about entertainment.

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When does Elon’s flying EV come out?
https://electrek.co/2024/01/09/xpeng-aeroht-flying-car-mass-production-pre-orders-q4-ev/

AeroHT is an eVTOL-focused entity of XPeng Inc., majority-owned by the company and its founder He Xiaopeng. Since 2013, AeroHT has conducted tens of thousands of safe flights en route to developing and implementing electric flying vehicles at scale.

That vehicle has come to be known as the “Land Aircraft Carrier,” and according to news from XPeng and AeroHT in Vegas today, will enter mass production in 2025.

Before then, however, the company will open pre-orders for the modular EV/ eVTOL combo beginning in Q4 of this year.

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The greater good. More humans benefit from the adoption of EV dominance in transportation.

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Of course but that is exactly my point. It goes to the consumer only in the US.

Andy

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Because Boeing gets government subsidies directly.

Tesla’s biggest plant is in China. They are not the low cost producer but they produce a lower cost car because of the subsidies.

Andy

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Boeing’s subsidies are dressed up as defense contracts.

Steve

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Well those too but they also get tax subsidies.

Andy

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Correct me if I’m wrong here, but 25% Chinese auto tariffs were imposed during the administration of then President Donald Trump and extended by the Biden administration. Wouldn’t BYD EVs have a steep tariff being sold in the US?

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Yes. The U.S. has some pretty robust protectionist policies that discourage Chinese auto imports. The EV subsidy trade barrier ends up impeding cars that are sourced from elsewhere that have high levels of Chinese content (esp. in the batteries) that otherwise would have been in the marketplace. But I think it has a greater impact on European imports (which is why the EU was so ticked off, especially about earlier formulations of the policy).

I mention it mostly to point out that the U.S. (like most nations) doesn’t have 99 44/100 percent pure hands when it comes to using trade policy to protect/encourage domestic industries. Normally the tradeoffs to that are mostly economic - purchasers lose access to cheaper foreign goods, some of that economic loss is captured as a benefit to domestic manufacturers. When that happens with EV’s, though, you have an environmental impact as well.

It’s a mixed environmental impact, to be sure. Cheaper EV’s mean more EV’s and fewer ICE’s (good for environment!), but cheaper EV’s from countries with poor regulations on manufacturing emissions and “dirty” power mean more emissions (bad for environment!). But on net, freer trade in EV’s is probably better for the climate. Which may lead to some interesting tensions within center-left coalitions, here and abroad.

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Like the tax subsidy that BA was given by Washington, to “save jobs”, then BA moved the “jobs” out of state anyway? iirc, Washington tried to revoke the tax subsidy, and Boeing “JCs” squealed like stuck pigs.

Steve

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Photovoltaic solar panels were developed by Bell Laboratories. Today, China has a monopoly on the market. This is due to subsidizing the high costs of manufacturing, the land, the construction of manufacturing sites, and even the cost of housing. There was no way that the industrialized countries could complete with that. China invested hundreds of billions of dollars into what they call the renewable manufacturing sector. Besides solar panels, its focus is on electric vehicles and lithium batteries. Given trends, China will soon be a monopoly in all three.

The good news? China has brought down solar panels by 85%. The bad news? There’s no incentive for innovation. The Chinese use the same 1954 technology, because China doesn’t innovate, they copy. I think of China as a massive beehive; very productive, but the bees haven’t changed their manufacturing system in 10mil years.

The more sinister aspect to “cheap” production is slave labor. China’s solar manufacturing production has accelerated the global deployment of renewable energy. The miracle production can be found in Xinjiang Uyghur Autonomous Region where Uyghur (ethnic minority viewed as subhuman in China) are put to work at the barrel of a gun.
I believe that President Biden has vetoed legislation passed by the U.S. Congress that would repeal exemptions on American tariffs on imported solar panels, basically these panels made in Xinjiang and finished up in Vietnam to make it look legitimate (nothing political here, just pointing out the facts as I understand them). In the end it comes down to a moral dichotomy. It works!

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This.

My company is reacting to a similar action that found subsidy levels across the globe between 15 to 40% for various products in this category.

China is listed in this impact. They are at the pointy end with a subsidy of more than 338%

This is not the only category this type of subsidy occurs, obviously.

Short term there are benefits all around for consumers and the larger network.

Long term, this has the effect of hollowing out entire sectors of manufacturing, production, capability and capacity.

At even longer time frames, R&D falters since there are fewer and fewer engines of growth along the production curve except at the very pointy (bleeding edge) end of the innovation in technology.

This is why you see niche producers flourishing in the US today. Not only because they are great innovations, but because they are effectively racing ahead of the copy cat subsidizers.

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I tried to make that clear…
Uyghur Forced Labor Prevention Act (UFLPA) is specific to the forced production of solar panels. I used the example of solar panels because it may be the most egregious use forced labor and subsidized production.
China has since moved the unfinished product to Indonesia and Vietnam to hide slavery. All they really do is package the final product for delivery.
Perhaps you know of other specific manufactured products that carry the onus of slave labor.

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