Good article. Paints a comprehensive and fact based picture of the auto industry’s shifting center of gravity to China in honest terms, which few in the West dare to publicly voice.
During the ICE age, the shift to Japanese and Korean auto manufacturers was tectonic but gradual over several decades. But the disruptive shift this time will be much much faster, due to the combination of Electric Mobility AND AI. Most ppl also don’t understand or believe AI will descend like a storm before it brings forth a rainbow of abundance - until it does.
We shouldnt get too excited about Chinese products. Recently a local metal processor thought they could save heaps by using chinese steel instead of the local Australian steel for their new factory. Turns out they couldnt. The stuff wouldnt weld. It cracked and broke. It was rubbish. They dumped it all in the ocean and started again with Australia steel. Cost them a bomb. Dont think chinese products are the answer. The danger is that if we let our own industries die we will be left with the rubbish products. And when that happens, thats a monopoly, they wont stay cheap. Rubbish products at a high price. Thats not a world we want.
If the company bought on price alone what did he expect. If they spec the product and paid accordingly, which would have still been Australian producers most likely, they would have got what they wanted. Western companies always think China cheap and seek bids for lowest price and then complain they got crappy products. You get what you pay for. Cars in China, full EV start around USD 5000 up to ＄200K+. At any price point, equivalent Japan or western car brand would be 50% to 300% more money. Chinese cars are NOT subsidized by Chinese government. They were helped in R&D financing during period from about 2018 to 2023 for batteries etc. Chinese cars are so much less expensive.because of intense internal competition. Something the west does not do anymore. Try to make a better mouse trap and sell it cheaper than your competitor.
Subsidies are part of the equation. Raw Steel for domestic use costs 1/2 of us steel. You can land finished Chinese steel goods in USA at a lower cost than raw steel in USA. It’s not as big a delta with EU but the EU cost for steel is still 50% higher than domestic Chinese prices.
That kind of delta percolates all over the supply chain as so much production has moved to china. USA prices reflect multiple middlemen, the china prices are factory-direct. The same crazy is all over critical metals supply chains, hence Chinese super cars getting exported to EU at 80k vs. buying a lucid sapphire @ 250k.
Key to restoring USA and EU competitiveness will be breaking up oligopolies and that is likely a mountain too steep to climb as the rents these enterprises collect are partially diverted into the political sphere.
Is there really not competition on quality? My anecdotal observation is that lots of China-made products I've bought have deteriorated (e.g. light-bulbs) too fast. So, I've flipped back to lots of domestic products that so far hold up better. Would that same dynamic not play out in China-made vehicles? Maybe it already is? Just curious if my observations match a broader reality.
How sustainable is the subsidy the chinese government provides? Their playbook is simple: get western companies to set up JV, license/steal IP, build highly subsidised product to drive western incumbents into stagnation or bankruptcy.
I'm more concern with the AI part of the race, since at one point the cars will be AIs on wheel that could be accessed remoty and hacked/disabled/used as weapons or coopted for decentralized computing projects (at night?)
Nah. No IP court on earth has found China guilty of stealing significant IP, ever.
In fact, hardly any IP cases have been filed against China. Of the world's Top 20 scientists whose papers have been withdrawn for dishonesty, only one is Chinese, from Taiwan.
In real life, China leads the world in all fields of scientific research, in the top 1% of STEM papers, in patents, and in technology implementation (Tibet has much better 5G coverage than California), and owns 65% of the IP on 21st century technologies.
When I lived in the former Soviet block we used to have a nice propaganda machine churning similar facts. We also had parts of the capital that were to "showcase" our great progress.
I even met an older American from Texas who wanted to invest in our fledging biotech industry based on a day trip he took around our "factories"...
When the tide recedes we'll see who was swimming naked... My bet is it will be a Chinese grad student with parents that robbed billions so they can buy his way into a prestigious US university and get themselves a Singapore citizenship as well.
China 2025 is not the USSR 1985. If you can't get dumb ass to China to see for yourself then do some more research from actual Chinese citizens or people who have been to China recently. You would then have more wisdom in your next bet.
Please consider products made in India. It is building up a strong portfolio in EV cars market. Besides home grown brands like Tata and Mahindra, you have the international brands like Hyundai, Kia, Suzuki. In small ways, all the European brands have also set up shop here - Mercedes, BMW, Audi, VW, Škoda, Renault, Citroen, not to speak of the Tata owned JLR. Australia and South Africa are already good markets for Tata and Mahindra SUVs. Yes, key EV components are still Chinese imported, but otherwise it is all Indian, including design. Canadian auto businesses should consider tie ups with Tata and Mahindra , assembling to start with and moving to total manufacturing in Canada.
If you are an industrialised country you must have industry. If you only have finance, you are just an intermediary company. Finance doesn't mean anything if it's not backed by industry. And military power eventually also wanes if it's not backed by industry.
Is human existence car dependent? Are personal use vehicles necessary in cities? If a citizen’s life revolves around the car, I question why we are here and the priorities of “civilization “.
Brian: So long as black and mentally ill crime in our urban areas goes unchecked no one is willing to abandon cars to use mass transit and certainly not want the female members of their families to use it. It’s, of course, anathema to mention this reality in polite society but most white people live by it.
Europe has different problems, but public transportation systems are not one of them. You are linking terrible traffic jams and density to mental health, and that is a good point. It’s a bit unsettling though. The money spent on cars might better be used to nurture children, teach them properly, make sure they are well fed and give them opportunities to grow. Rural areas need vehicles far more than city dwellers. Delivery vehicles are necessary in cities but if everyone needs personal vehicles, there is a problem. Every citizen cannot have one. It’s impossible.
Time to rethink transport completely. The motor vehicle is an abomination. The winner will be the country that reinvents automotive or semi-automotive transportation
To quote the piece “Tens of thousands of jobs would disappear. Tax revenues would dive. We would forget how to make thing, even the most basic things. The West would be extremely vulnerable. “ Not so. People will only buy Chinese made vehicles if they judge them to be good value. Let’s take the buyer who buys on price alone. If he saves $5,000 by buying a Chinese car, that gives him $5,000 to spend on something else, likely produced locally, such as yoga classes, restaurant meals, sport tickets etc. So he gets all those extra things and the government gets the tax revenue from the businesses providing those services and more people are employed teaching yoga and as chefs - a win win win. Remember there are millions more people consuming cars than there are making them, so the benefits are multiplied millions of times. Chinese workers are growing more expensive. So many industries are leaving China for places like India, Vietnam and Bangladesh. The same thing will happen with car manufacture.
Just as an example in Germany the red tape was massive against Tesla when trying to build a plant. When local leftist protesters cut the power supply to the plant the government did basically nothing. Maybe we deserve to suffer again? Maybe every generation has to learn the hard way. When a 17 year old feels she has the right to rule the world from her beliefs. Hard working adults need to step up, not treat her like a Messia..
Putting Greed and Money before national pride obliterates the meaning of nation.
And there it is. The “why” is observable and the outcome inevitable.
“We are making record margins on those Chevy exports to Mexico,” one GM executive told me.”
Like the executive who stated, Trump might not be good for the country but he is good for CBS.
When all the jobs have gone elsewhere, they won’t be able to import cars because no one has a job to pay for them.
Good article. Paints a comprehensive and fact based picture of the auto industry’s shifting center of gravity to China in honest terms, which few in the West dare to publicly voice.
During the ICE age, the shift to Japanese and Korean auto manufacturers was tectonic but gradual over several decades. But the disruptive shift this time will be much much faster, due to the combination of Electric Mobility AND AI. Most ppl also don’t understand or believe AI will descend like a storm before it brings forth a rainbow of abundance - until it does.
We shouldnt get too excited about Chinese products. Recently a local metal processor thought they could save heaps by using chinese steel instead of the local Australian steel for their new factory. Turns out they couldnt. The stuff wouldnt weld. It cracked and broke. It was rubbish. They dumped it all in the ocean and started again with Australia steel. Cost them a bomb. Dont think chinese products are the answer. The danger is that if we let our own industries die we will be left with the rubbish products. And when that happens, thats a monopoly, they wont stay cheap. Rubbish products at a high price. Thats not a world we want.
If the company bought on price alone what did he expect. If they spec the product and paid accordingly, which would have still been Australian producers most likely, they would have got what they wanted. Western companies always think China cheap and seek bids for lowest price and then complain they got crappy products. You get what you pay for. Cars in China, full EV start around USD 5000 up to ＄200K+. At any price point, equivalent Japan or western car brand would be 50% to 300% more money. Chinese cars are NOT subsidized by Chinese government. They were helped in R&D financing during period from about 2018 to 2023 for batteries etc. Chinese cars are so much less expensive.because of intense internal competition. Something the west does not do anymore. Try to make a better mouse trap and sell it cheaper than your competitor.
Subsidies are part of the equation. Raw Steel for domestic use costs 1/2 of us steel. You can land finished Chinese steel goods in USA at a lower cost than raw steel in USA. It’s not as big a delta with EU but the EU cost for steel is still 50% higher than domestic Chinese prices.
That kind of delta percolates all over the supply chain as so much production has moved to china. USA prices reflect multiple middlemen, the china prices are factory-direct. The same crazy is all over critical metals supply chains, hence Chinese super cars getting exported to EU at 80k vs. buying a lucid sapphire @ 250k.
Key to restoring USA and EU competitiveness will be breaking up oligopolies and that is likely a mountain too steep to climb as the rents these enterprises collect are partially diverted into the political sphere.
Is there really not competition on quality? My anecdotal observation is that lots of China-made products I've bought have deteriorated (e.g. light-bulbs) too fast. So, I've flipped back to lots of domestic products that so far hold up better. Would that same dynamic not play out in China-made vehicles? Maybe it already is? Just curious if my observations match a broader reality.
If you think about it he have a point cause most people I see now drive more China and Japanese cars now.
How sustainable is the subsidy the chinese government provides? Their playbook is simple: get western companies to set up JV, license/steal IP, build highly subsidised product to drive western incumbents into stagnation or bankruptcy.
I'm more concern with the AI part of the race, since at one point the cars will be AIs on wheel that could be accessed remoty and hacked/disabled/used as weapons or coopted for decentralized computing projects (at night?)
Nah. No IP court on earth has found China guilty of stealing significant IP, ever.
In fact, hardly any IP cases have been filed against China. Of the world's Top 20 scientists whose papers have been withdrawn for dishonesty, only one is Chinese, from Taiwan.
In real life, China leads the world in all fields of scientific research, in the top 1% of STEM papers, in patents, and in technology implementation (Tibet has much better 5G coverage than California), and owns 65% of the IP on 21st century technologies.
When I lived in the former Soviet block we used to have a nice propaganda machine churning similar facts. We also had parts of the capital that were to "showcase" our great progress.
I even met an older American from Texas who wanted to invest in our fledging biotech industry based on a day trip he took around our "factories"...
When the tide recedes we'll see who was swimming naked... My bet is it will be a Chinese grad student with parents that robbed billions so they can buy his way into a prestigious US university and get themselves a Singapore citizenship as well.
China 2025 is not the USSR 1985. If you can't get dumb ass to China to see for yourself then do some more research from actual Chinese citizens or people who have been to China recently. You would then have more wisdom in your next bet.
Please consider products made in India. It is building up a strong portfolio in EV cars market. Besides home grown brands like Tata and Mahindra, you have the international brands like Hyundai, Kia, Suzuki. In small ways, all the European brands have also set up shop here - Mercedes, BMW, Audi, VW, Škoda, Renault, Citroen, not to speak of the Tata owned JLR. Australia and South Africa are already good markets for Tata and Mahindra SUVs. Yes, key EV components are still Chinese imported, but otherwise it is all Indian, including design. Canadian auto businesses should consider tie ups with Tata and Mahindra , assembling to start with and moving to total manufacturing in Canada.
If you are an industrialised country you must have industry. If you only have finance, you are just an intermediary company. Finance doesn't mean anything if it's not backed by industry. And military power eventually also wanes if it's not backed by industry.
Is human existence car dependent? Are personal use vehicles necessary in cities? If a citizen’s life revolves around the car, I question why we are here and the priorities of “civilization “.
Brian: So long as black and mentally ill crime in our urban areas goes unchecked no one is willing to abandon cars to use mass transit and certainly not want the female members of their families to use it. It’s, of course, anathema to mention this reality in polite society but most white people live by it.
Europe has different problems, but public transportation systems are not one of them. You are linking terrible traffic jams and density to mental health, and that is a good point. It’s a bit unsettling though. The money spent on cars might better be used to nurture children, teach them properly, make sure they are well fed and give them opportunities to grow. Rural areas need vehicles far more than city dwellers. Delivery vehicles are necessary in cities but if everyone needs personal vehicles, there is a problem. Every citizen cannot have one. It’s impossible.
Seems to echo what happened with cell phone technology. (APPLE IN China a very good read for this.)
Time to rethink transport completely. The motor vehicle is an abomination. The winner will be the country that reinvents automotive or semi-automotive transportation
To quote the piece “Tens of thousands of jobs would disappear. Tax revenues would dive. We would forget how to make thing, even the most basic things. The West would be extremely vulnerable. “ Not so. People will only buy Chinese made vehicles if they judge them to be good value. Let’s take the buyer who buys on price alone. If he saves $5,000 by buying a Chinese car, that gives him $5,000 to spend on something else, likely produced locally, such as yoga classes, restaurant meals, sport tickets etc. So he gets all those extra things and the government gets the tax revenue from the businesses providing those services and more people are employed teaching yoga and as chefs - a win win win. Remember there are millions more people consuming cars than there are making them, so the benefits are multiplied millions of times. Chinese workers are growing more expensive. So many industries are leaving China for places like India, Vietnam and Bangladesh. The same thing will happen with car manufacture.
Just as an example in Germany the red tape was massive against Tesla when trying to build a plant. When local leftist protesters cut the power supply to the plant the government did basically nothing. Maybe we deserve to suffer again? Maybe every generation has to learn the hard way. When a 17 year old feels she has the right to rule the world from her beliefs. Hard working adults need to step up, not treat her like a Messia..