With demand unleashed amid Beijing’s policy blessings to rev up the green transition over the past several years, the EV and other green industries saw a steady build-up of capacity – widely viewed as the tip of China’s hi-tech-manufacturing iceberg.
Back in 2009, China began pushing its carmakers to develop cutting-edge EV technology, with an eye on leapfrogging the global makers of petrol-powered vehicles.
But the blowback from abroad has ramped up relatively recently, as the fruits of China’s exhaustive EV undertakings truly began to be realised. Having long led the global pack in automobile and hi-tech manufacturing, the United States and European Union now find themselves scrambling to erect roadblocks to safeguard those sectors at risk of being upended by Chinese exports.
“The intention to hype up China’s overcapacity is to contain China’s industries that have an edge,” said an opinion piece in People’s Daily, adding that China was being made a “scapegoat” for the decline of various American sectors.
A bit of truth in the above paragraph as the big 3 automakers & Toyota have been laggards in EV development.
The shake out is coming though.
the almighty market will eventually weed out uncompetitive players or excess capacity.
“The key is keeping politics out of this market mechanism.”
Christopher Tang, a University of California Los Angeles professor specialising in global supply-chain management, said the US’ relative shortfall in competitiveness could end up hitting its drivers in their wallets.
“Washington fails to acknowledge that China has developed efficient supply-chain solutions – from raw materials to end products – to mass produce at low prices,” he said. “Raising barriers will rob Americans of their access to good, cheap products.
“US manufacturing has never been competitive. Washington blamed Japan first, and now China.”
Chinese EV makers showing off their newest models at Auto China, which kicks off in Beijing on Thursday
But all of the country’s more than 200 EV manufacturers are now grappling with huge oversupply, and experts predict many smaller companies will not survive the fiercely-competitive environment.
More than a dozen passenger carmakers disappeared from the market last year, according to statistics from the China Passenger Car Association.
Some global automakers have also had to restructure their businesses or shut down operations. In October, Mitsubishi Motors announced it would end production of its cars at its joint venture in China. Honda (HMC), Hyundai and Ford (F) have also taken steps, including layoffs and factory sales, to cut costs, according to stock exchange filings and state media reports.
Successful low cost producing China EV exporters will benefit from jacking up pricing in foreign markets to pad bottom line.
Take the BYD Atto 3, a compact electric crossover. In China, the midrange version sells for $19,283. In Germany, the little SUV is priced at $42,789 — a price that’s still competitive with comparable electric vehicles in that market.
Across those markets, the starting price for the BYD Atto 3 ranged from 81 percent to 174 percent higher than in China. Dolphin prices ranged from 39 percent to 178 percent higher, and Seal prices from 30 percent to 136 percent higher.
Profit margins likely surpassing Tesla’s golden era before 2023.