Michael, I worked in the VW Asia Pacific HQ in Hong Kong from 94-97 and at VW Group Singapore from 97-00. I remember having lunch with you on a few occasions and discussing this exact scenario. We all knew this was where we would end up. But no OE (or the executives that worked for them) wanted to be the one to halt forward progress. So here we are. Remember in 1994 when the Chinese hosted The Family Car competition? They hoovered up the strategy papers and prototypes and in the end nothing ever came of that event. For the OEs, anyway.
I’m delightfully retired and living in San Juan Capistrano. Watching this all unfold from a distance is fascinating. I enjoy your writing; thanks for your work!
I see the need for western countries to retain heavy industry and compete in the global auto markets, but these discussions are too often framed in terms of what happens to VW, GM, etc. and their employees. What about the rest of us? Americans would benefit A LOT from having access to Chinese EVs. Competition is good and prices of most American cars and trucks are way too high for most people. A middle ground is necessary that lets BYD and other Chinese car companies into the market in a guarded way. Quotas on imports, and having them do some manufacturing in the US and Canada. Force them into joint ventures like they did to western companies.
GM and Ford need to step it up and compete. Same goes for others like Rivian which is innovative but strikes me as very slow moving compared to the Chinese.
I remember sitting in the Chrysler Headquarters Tower in Auburn Hills, Michigan in about 2004 for an after-hours conversation. The team from China were in town and we discussed China's policy of JV formation and IP transfer. My question to them was, "what happens when they learn to do this themselves?" They responded that the company needed to be there for the growth and the profit potential. And that came to pass till Stellantis was one of the first to leave. But now, we know the full answer to my question.
I agree with you. I started in the industry in 1985 and was always shocked and perplexed by western company actions from the start. Maybe half of us thought it was simply nuts.
The Mexico example with SAIC and Chevrolet is particularly alarming becaus it reveals how Western automakers have become dependant on their Chinese partners for entire markets. Once you're exporting from joint ventures and splitting revenus 50/50, you've essentially handed over manufactring control. The fact that 78% of China's exports are still ICE vehicles shows this isn't just about EVs, it's about systemic overcapacity being weaponized for global market share.
This is the "work smarter" philosophy of the experts in the West. It's basically laziness. Doing little work and getting rewarded for. We are facing the reality of this nonsense.
Many thanks!! Global pharmaceutical OEMs have done the same with drug development, believe it or not. And the Navy is outsourcing ship construction to S. Korea.
The stat about 78% of China's exports being ICE vehicles is eye-opning. Everyone focuses on EVs but misses the bigger picture that China is winning across all segments. GM's Mexico situation is particularly concerning, where SAIC essentialy controls their market share. The brand erosion point is critical too, once consumers realize they're paying a premium for a badge on what's essentally a Chinese car, the whole value proposition collapses.
Really enjoy your take on the Chinese EV future; What do you anticipate is going to happen in Canada if the go forward with lowering tariffs against China EV's? Would a JV be a possibility? Do you eventually see China importing into the US?
It seems inevitable that the Chinese brands will find their way into the U.S. and Canada most likely via an investment in manufacturing and possibly a JV partner.
I've seen a lot of talk that Canada is about to make a deal that will let Chinese cars into the Canadian market in some fashion. Trump's actions and remarks toward Canada have not helped.
So much for the “we’ll be fine behind the tariff Maginot Line” idea. The wild card in all this will be governments- including the United States. Will the U.S., Germany, France, Japan, Italy, Korea decide that state ownership is warranted to prevent Chinese entities from taking over their national champions? Stellantis and Nissan could be early test cases - as you suggest.
What's the point of national champions when the supply chain is owned by the Chinese. China is the world largest net exporter of intermediate and capital goods. Basically no manufacturer can exist without China. No country can replace China's economy of scale. Due to politics all these national champions will just be assembling imported parts from China. We'll just be paying the extra cost of assembling the cars in country.
Michael, I worked in the VW Asia Pacific HQ in Hong Kong from 94-97 and at VW Group Singapore from 97-00. I remember having lunch with you on a few occasions and discussing this exact scenario. We all knew this was where we would end up. But no OE (or the executives that worked for them) wanted to be the one to halt forward progress. So here we are. Remember in 1994 when the Chinese hosted The Family Car competition? They hoovered up the strategy papers and prototypes and in the end nothing ever came of that event. For the OEs, anyway.
100%.
I’m delightfully retired and living in San Juan Capistrano. Watching this all unfold from a distance is fascinating. I enjoy your writing; thanks for your work!
I see the need for western countries to retain heavy industry and compete in the global auto markets, but these discussions are too often framed in terms of what happens to VW, GM, etc. and their employees. What about the rest of us? Americans would benefit A LOT from having access to Chinese EVs. Competition is good and prices of most American cars and trucks are way too high for most people. A middle ground is necessary that lets BYD and other Chinese car companies into the market in a guarded way. Quotas on imports, and having them do some manufacturing in the US and Canada. Force them into joint ventures like they did to western companies.
GM and Ford need to step it up and compete. Same goes for others like Rivian which is innovative but strikes me as very slow moving compared to the Chinese.
I remember sitting in the Chrysler Headquarters Tower in Auburn Hills, Michigan in about 2004 for an after-hours conversation. The team from China were in town and we discussed China's policy of JV formation and IP transfer. My question to them was, "what happens when they learn to do this themselves?" They responded that the company needed to be there for the growth and the profit potential. And that came to pass till Stellantis was one of the first to leave. But now, we know the full answer to my question.
I agree with you. I started in the industry in 1985 and was always shocked and perplexed by western company actions from the start. Maybe half of us thought it was simply nuts.
You are, give or take 5%, 150% correct!
In the ballpark
These days, with launch angles and ball speed being the only things sports writers care about, your thinking should be “outta da ball park!” Lol
Is Tesla as bad off as the others?
Tesla in much much better position because it owns 100% of its China operations. Not a JV.
The Mexico example with SAIC and Chevrolet is particularly alarming becaus it reveals how Western automakers have become dependant on their Chinese partners for entire markets. Once you're exporting from joint ventures and splitting revenus 50/50, you've essentially handed over manufactring control. The fact that 78% of China's exports are still ICE vehicles shows this isn't just about EVs, it's about systemic overcapacity being weaponized for global market share.
Exactly. Right on Americas doorstep.
This is the "work smarter" philosophy of the experts in the West. It's basically laziness. Doing little work and getting rewarded for. We are facing the reality of this nonsense.
Many thanks!! Global pharmaceutical OEMs have done the same with drug development, believe it or not. And the Navy is outsourcing ship construction to S. Korea.
Capitalists selling rope, I guess.
Wow. So clear.
Michael, great analysis! Wish you could share this at our annual event in Bangkok, our 31st!
That would be lovely - what are the dates? And congratulations on 31!
March 26 and 27, 2026 at The St. Regis Bangkok.
The stat about 78% of China's exports being ICE vehicles is eye-opning. Everyone focuses on EVs but misses the bigger picture that China is winning across all segments. GM's Mexico situation is particularly concerning, where SAIC essentialy controls their market share. The brand erosion point is critical too, once consumers realize they're paying a premium for a badge on what's essentally a Chinese car, the whole value proposition collapses.
You’ve got it exactly right. The Chinese are winning across all powertrains m.
How many of these joint venture agreements have expiration dates? And, of course, what are they?
Very good question. GM is set to expire in 2027. Will it be extended? Likely but perhaps with a different structure.
Really enjoy your take on the Chinese EV future; What do you anticipate is going to happen in Canada if the go forward with lowering tariffs against China EV's? Would a JV be a possibility? Do you eventually see China importing into the US?
It seems inevitable that the Chinese brands will find their way into the U.S. and Canada most likely via an investment in manufacturing and possibly a JV partner.
I've seen a lot of talk that Canada is about to make a deal that will let Chinese cars into the Canadian market in some fashion. Trump's actions and remarks toward Canada have not helped.
Anything is possible but I expect Canada to wait for some breakthrough in America.
So much for the “we’ll be fine behind the tariff Maginot Line” idea. The wild card in all this will be governments- including the United States. Will the U.S., Germany, France, Japan, Italy, Korea decide that state ownership is warranted to prevent Chinese entities from taking over their national champions? Stellantis and Nissan could be early test cases - as you suggest.
Very good comments. It would be hard to see America let Jeep go. Buick on the other hand…
What's the point of national champions when the supply chain is owned by the Chinese. China is the world largest net exporter of intermediate and capital goods. Basically no manufacturer can exist without China. No country can replace China's economy of scale. Due to politics all these national champions will just be assembling imported parts from China. We'll just be paying the extra cost of assembling the cars in country.
Great stuff Michael!
SGM commenced exports prior to COVID
SGMW