So I guess the automakers didn't see the rise of China coming? If they did see this this coming, why were American automakers buying back stock instead of building capacity and cultivating talent?
One reason...None of the CEO's of the auto mfg's. went to China to see what was going on until Farley (Ford CEO) recently went there and saw for himself what's happening, claiming it an "existential" issue. It's hard to believe they could be so blithe in their relationships but...here we are. Read a few Farley interviews; it'll probably shock you. It shocked me, because now he sees what the situation is.
One of my educational experiences happened on a flight back from Wuhan, about 7-8 years ago. I'm sitting next to a Ford engineer who had been in China for about 15 years managing Ford's operations. He was circumspect for a few hours, but he liked to drink. As he got increasingly drunk, he started to unload....
"We gave them the company secrets! We took 20-30 years off their development cycle! I don't know what our guys up top are thinking!"....etc., etc., etc....
The guys running the gig in China knew what was happening. The CEO's apparently didn't.
(I live in Wuhan. Up until just a few years ago, there were all sorts of problems with Chinese cars that everyone, including most Chinese, knew. Now, Chinese cars are so much better than their competition within any particular price point, it's going to get ugly. Very ugly.)
So the top brass at the top 3 are sitting on one of the world's best intelligence networks (they make our tanks, right?) and they don't know what's going on in China...
Make an argument that shows they knew exactly what was going on. I'll wait.
Edit...Oh...wait, I'm sorry. I read your post again, and now I see your point. We need a sarcasm emoji. We had it all, and didn't read the reports. I'm not even in the business in any form, and I could see it coming ten years ago. It really is/was one of the dumbest of dumb blackout drunk misses.
So let's say I'm CEO. I don't know what China is doing. Do I want to waste any time finding out, or do I build up an industry that other countries can't beat?
America spends more money and time on sabotage than actually being a better country. It's kind of unreal. Makes me want to move.
That's an astute point. I don't get into it because it's so against the perceptions of most Americans, but it's true. One shining example...our "foreign policy" in Central and South America. For me, it took living in China to see it. America is not what most folks imagine it to be.
I read it. Yes, excellent overview. I don't fully agree with some of their conclusions, but they nailed the general outline. It's right in line with Susan Strange's Theory of Structural Power, which, since I became aware of it, has "explained" much of what we are currently seeing. Beijing Jeep also tells the story, albeit from a different direction, i.e., the bumbling stupidity of how our industries entered China, imagining they'd found the source of endless cheap labor, not understanding that Chinese are really good at this stuff and have been for approximately 1500 years.
I honestly never understood why is it so bad to continue with fossil fuel.. the whole supply chain already in place ..in order to have eletric cars other types of polution is created and everybody knows it.. In Brazil we dont know even how we will discard it after all .. Stop promoting this eletrical vehicle; perhapz hidrogen?? There are a lot of waste; cables and stuff just putting prices up
If western wants to change its energy matrix it will needs to find something we can afford and doesnt rely on them.. all about bad politicians and corrupt ones in Europe.. now pay the price
No doubt Scott. And on the top of that ; any business owner knows it has never been healthy to have one customer or one supplier; in this case China kkkkk crazy
Go back to the 1950s and you’ll understand why America’s Big Three have never been strategically pro-active. W. Edwards Deming, US statistician/engineer and later the father of the quality movement, heavily influenced Japan’s automotive industry. America wasn’t interested in Demings’ statistical approach to quality management theories. The rest is history. The US continues to manufacture for the most part lacklustre vehicles.
Thank you for useful information and emphasis. I think your references to remarks quoting Bessent and Leninism are not useful. Bessent may be considered one of the architects of the US’s suicidal economic policies.
and the US a ruthless abusers of its privilege as custodian of the world’s reserve currency. The chinese are probably just human. And there are a lot of them. Seems to me one needs to rely on attrition through their population growth prospects. But it’s long play
More like a dead on arrival play. The way China optimize, automate and look for practical application of AI in manufacturing, be sure that advanced manufacturing will need a lot less manpower than now in 10 years. Or just 5 or 3.
Post 2060 they will be significantly fewer people, sure, but also a lot richer in terms of GDP per person - and likely the more competitive in anything that isn’t so much on the lower rung that they will have outsourced it long ago.
When people talk about the Chinese population decline, they should remember how many poor, undereducated old people they have out in the provinces. That’s the demographic that will disappear. The proportion of well educated urbanites will expand enormously. Even if the country will be aging.
You want Nash Equilibrium, not macho standup displays. Google it. China is our equal, ahead in many areas behind in many others. Their middle class is as big as our entire country. Think about rebuilt Germany. It is a proud, advanced country, but it must coexist with America. The ratio of China to the U.S. is similar. Think about the strategy Germany, Japan, etc. use to compete globally with the much larger and richer U. S. This will give you a clue as to how the U.S. strategy will need to evolve. Too bad the current regime is doing the opposite. So we are like a runner who has fallen, early in the race. There will be a big change when China gets its own EUV exposure tool to work. Google that too.
There is something even deeper down. I commute between Princeton University and New York City. The NJ Transit trains look like they came out of an Industrial Revolution museum, and Manhattan’s subway is no better, stinky, gloomy, grinding through garbage and rats. All this stands in sharp contrast to China and other countries, where public transportation is modern, clean, and designed to look good and be comfortable.
I came to this country 25 years ago. I love this country. But my observation is, somewhere along the way, Americans’ minds and souls have been occupied by something unknown. In China, people work “996” driven by the desire to make more money, live a better life and, to win. Americans seem to have lost drive, even for money.
It’s time to wake up; otherwise China will beat us not only in auto industry, but AI, energy, Quantum Compute and more.
I wish I could find the article arguing that the Chinese in real terms face less economic burden from the government in terms of taxation, regulations, etc. despite being nominally communist.
The scale and velocity is stunning. I think there is limited action available in Europe and in the US. But tariffs must be part of it, even though I generally despise them. However, in the 1980s Ronald Reagan put massive tariffs on Japanese motorcycle companies to help give Harley a chance at survival. They helped. But western manufacturers will also have to devise their own ways out of this mess, starting with customer-friendly models, eschewing ICE investment and consolidating ruthlessly.
So … is the purpose of the automobile industry to provide the best possible value to consumers? Or to be a giant “sheltered workshop” employment program, subsidized by trade barriers and concessions to unions that result in high prices for consumers?
As an automobile owner who is not an employee or shareholder of N.American automobile industry, I know which choice serves my personal interests. I want the best possible car at the lowest possible cost.
The level of short-sightedness in this comment is alarming. To discount the importance of industrial capacity / capabilities to save a few thousand on an "appliance" misses the point entirely. Not to mention the "price / savings" is not real. It is created artificially (at the expense of share holder value, workers' wages, environmental impact...) to capture markets.
My intuition is that the answer is no. I think that in the new "China shock" the western companies that will thrive will be those that will manage to integrate within the Chinese industrial chains.
Not enough credit is given to unhinged Donny and his tariffs for the starve out phase. Decades of Yellow Peril couldn't produce risk management and mitigation efforts from the West either. Hopefully this will pump more money into basic research and talent in the West for alternative tech. But that's not going to happen either.
"This extreme overcapacity has ignited brutal price wars at home, causing profits to vanish. This is forcing Chinese automakers to face an ultimatum: export or die"??
This is just repeating Fox News memes. It's not analysis and it's not true. It's just lazy.
A real analyst, Glenn Luk, has done the hard work and concluded that the top manufacturers are solidly profitable and their main focus is domestic.
I appreciate your comment but the conclusion is not accurate. BYD, for example, achieved all of its growth in 2025 through exports. Domestic sales are flat YOY. Check it.
China is just doing what we did a few decades back... Taking the opportunity that WE WESTERNS created for them.
We're actively destroying our economies and industry (Ukrainistan CIRCUS is just the latest sign of the degeneration of the West) with CO2 unicorns and other moronic ideas/policies.
And they are doing it in the WESTERN CAPITALIST style... That's very likely the main reason we're so mad at them!
So I guess the automakers didn't see the rise of China coming? If they did see this this coming, why were American automakers buying back stock instead of building capacity and cultivating talent?
One reason...None of the CEO's of the auto mfg's. went to China to see what was going on until Farley (Ford CEO) recently went there and saw for himself what's happening, claiming it an "existential" issue. It's hard to believe they could be so blithe in their relationships but...here we are. Read a few Farley interviews; it'll probably shock you. It shocked me, because now he sees what the situation is.
One of my educational experiences happened on a flight back from Wuhan, about 7-8 years ago. I'm sitting next to a Ford engineer who had been in China for about 15 years managing Ford's operations. He was circumspect for a few hours, but he liked to drink. As he got increasingly drunk, he started to unload....
"We gave them the company secrets! We took 20-30 years off their development cycle! I don't know what our guys up top are thinking!"....etc., etc., etc....
The guys running the gig in China knew what was happening. The CEO's apparently didn't.
(I live in Wuhan. Up until just a few years ago, there were all sorts of problems with Chinese cars that everyone, including most Chinese, knew. Now, Chinese cars are so much better than their competition within any particular price point, it's going to get ugly. Very ugly.)
So the top brass at the top 3 are sitting on one of the world's best intelligence networks (they make our tanks, right?) and they don't know what's going on in China...
Make an argument that shows they knew exactly what was going on. I'll wait.
Edit...Oh...wait, I'm sorry. I read your post again, and now I see your point. We need a sarcasm emoji. We had it all, and didn't read the reports. I'm not even in the business in any form, and I could see it coming ten years ago. It really is/was one of the dumbest of dumb blackout drunk misses.
So let's say I'm CEO. I don't know what China is doing. Do I want to waste any time finding out, or do I build up an industry that other countries can't beat?
America spends more money and time on sabotage than actually being a better country. It's kind of unreal. Makes me want to move.
That's an astute point. I don't get into it because it's so against the perceptions of most Americans, but it's true. One shining example...our "foreign policy" in Central and South America. For me, it took living in China to see it. America is not what most folks imagine it to be.
I got a taste of one of your articles. I'll be back for more. Keep writing. :)
I highly recommend reading Apple In China - it will explain much of where this came from
I read it. Yes, excellent overview. I don't fully agree with some of their conclusions, but they nailed the general outline. It's right in line with Susan Strange's Theory of Structural Power, which, since I became aware of it, has "explained" much of what we are currently seeing. Beijing Jeep also tells the story, albeit from a different direction, i.e., the bumbling stupidity of how our industries entered China, imagining they'd found the source of endless cheap labor, not understanding that Chinese are really good at this stuff and have been for approximately 1500 years.
Ignorance and arrogance. I saw it in 2010.
I honestly never understood why is it so bad to continue with fossil fuel.. the whole supply chain already in place ..in order to have eletric cars other types of polution is created and everybody knows it.. In Brazil we dont know even how we will discard it after all .. Stop promoting this eletrical vehicle; perhapz hidrogen?? There are a lot of waste; cables and stuff just putting prices up
If western wants to change its energy matrix it will needs to find something we can afford and doesnt rely on them.. all about bad politicians and corrupt ones in Europe.. now pay the price
We could have spent the last 30 years working on efficiency. We didn't want to do that, either. Some people are beginning to wake up.
https://rmi.org/our-work/
No doubt Scott. And on the top of that ; any business owner knows it has never been healthy to have one customer or one supplier; in this case China kkkkk crazy
Beats opium. Ooh wait, we’re still getting that too.
Go back to the 1950s and you’ll understand why America’s Big Three have never been strategically pro-active. W. Edwards Deming, US statistician/engineer and later the father of the quality movement, heavily influenced Japan’s automotive industry. America wasn’t interested in Demings’ statistical approach to quality management theories. The rest is history. The US continues to manufacture for the most part lacklustre vehicles.
Thank you for useful information and emphasis. I think your references to remarks quoting Bessent and Leninism are not useful. Bessent may be considered one of the architects of the US’s suicidal economic policies.
The Leninist aspect is entirely accurate, though.
and the US a ruthless abusers of its privilege as custodian of the world’s reserve currency. The chinese are probably just human. And there are a lot of them. Seems to me one needs to rely on attrition through their population growth prospects. But it’s long play
More like a dead on arrival play. The way China optimize, automate and look for practical application of AI in manufacturing, be sure that advanced manufacturing will need a lot less manpower than now in 10 years. Or just 5 or 3.
Post 2060 they will be significantly fewer people, sure, but also a lot richer in terms of GDP per person - and likely the more competitive in anything that isn’t so much on the lower rung that they will have outsourced it long ago.
When people talk about the Chinese population decline, they should remember how many poor, undereducated old people they have out in the provinces. That’s the demographic that will disappear. The proportion of well educated urbanites will expand enormously. Even if the country will be aging.
If you stand up to your abuser and your abuser kills you that’s not suicide.
You want Nash Equilibrium, not macho standup displays. Google it. China is our equal, ahead in many areas behind in many others. Their middle class is as big as our entire country. Think about rebuilt Germany. It is a proud, advanced country, but it must coexist with America. The ratio of China to the U.S. is similar. Think about the strategy Germany, Japan, etc. use to compete globally with the much larger and richer U. S. This will give you a clue as to how the U.S. strategy will need to evolve. Too bad the current regime is doing the opposite. So we are like a runner who has fallen, early in the race. There will be a big change when China gets its own EUV exposure tool to work. Google that too.
Germany and Japan go to great lengths to protect their domestic manufacturing and be net exporters, literally what the current admin is trying to do.
Germany used to, now it behaves like a mouse with toxoplasmosis
Germany and Japan go to great lengths to protect their domestic manufacturing and be net exporters, literally what the current admin is trying to do.
There is something even deeper down. I commute between Princeton University and New York City. The NJ Transit trains look like they came out of an Industrial Revolution museum, and Manhattan’s subway is no better, stinky, gloomy, grinding through garbage and rats. All this stands in sharp contrast to China and other countries, where public transportation is modern, clean, and designed to look good and be comfortable.
I came to this country 25 years ago. I love this country. But my observation is, somewhere along the way, Americans’ minds and souls have been occupied by something unknown. In China, people work “996” driven by the desire to make more money, live a better life and, to win. Americans seem to have lost drive, even for money.
It’s time to wake up; otherwise China will beat us not only in auto industry, but AI, energy, Quantum Compute and more.
Agree. We are in the slow lane.
I wish I could find the article arguing that the Chinese in real terms face less economic burden from the government in terms of taxation, regulations, etc. despite being nominally communist.
The scale and velocity is stunning. I think there is limited action available in Europe and in the US. But tariffs must be part of it, even though I generally despise them. However, in the 1980s Ronald Reagan put massive tariffs on Japanese motorcycle companies to help give Harley a chance at survival. They helped. But western manufacturers will also have to devise their own ways out of this mess, starting with customer-friendly models, eschewing ICE investment and consolidating ruthlessly.
To the point, thanks
informative article. Please keep writing and spread the knowledge! Thank you.
So … is the purpose of the automobile industry to provide the best possible value to consumers? Or to be a giant “sheltered workshop” employment program, subsidized by trade barriers and concessions to unions that result in high prices for consumers?
As an automobile owner who is not an employee or shareholder of N.American automobile industry, I know which choice serves my personal interests. I want the best possible car at the lowest possible cost.
The level of short-sightedness in this comment is alarming. To discount the importance of industrial capacity / capabilities to save a few thousand on an "appliance" misses the point entirely. Not to mention the "price / savings" is not real. It is created artificially (at the expense of share holder value, workers' wages, environmental impact...) to capture markets.
My intuition is that the answer is no. I think that in the new "China shock" the western companies that will thrive will be those that will manage to integrate within the Chinese industrial chains.
A fresh example of European Dead Brains proliferation...
https://www.eugyppius.com/p/climate-lunatics-in-hamburg-pass
Don't blame China!
Not enough credit is given to unhinged Donny and his tariffs for the starve out phase. Decades of Yellow Peril couldn't produce risk management and mitigation efforts from the West either. Hopefully this will pump more money into basic research and talent in the West for alternative tech. But that's not going to happen either.
"This extreme overcapacity has ignited brutal price wars at home, causing profits to vanish. This is forcing Chinese automakers to face an ultimatum: export or die"??
This is just repeating Fox News memes. It's not analysis and it's not true. It's just lazy.
A real analyst, Glenn Luk, has done the hard work and concluded that the top manufacturers are solidly profitable and their main focus is domestic.
I appreciate your comment but the conclusion is not accurate. BYD, for example, achieved all of its growth in 2025 through exports. Domestic sales are flat YOY. Check it.
China is just doing what we did a few decades back... Taking the opportunity that WE WESTERNS created for them.
We're actively destroying our economies and industry (Ukrainistan CIRCUS is just the latest sign of the degeneration of the West) with CO2 unicorns and other moronic ideas/policies.
And they are doing it in the WESTERN CAPITALIST style... That's very likely the main reason we're so mad at them!
The crazy thing is in the midst of this, luxury cars in the US are all over $100k
Heavy industry in western Europe is basically doomed. No amount of innovation can make up from deep disadvantages in materials and labor inputs.
USA focused on a manufactured war on terror (i.e Muslims ) & the Chinese built sustainable & integrated capacity in nearly all industrial sectors.
Cry babies
It’s too wide to close. And between government mandates and Chinese manufacturing/engineering skills it’s not even close.