Has China won?
Discussion
Nearly 30 years ago the Chinese State determined that for secure economic growth China mustn't just remain the cheap tat factory of the world just responding to global demand for non essentials and living off a small cut but must own, design, manufacture and export its own higher value goods. Not just to create an economic base that was less dependent on Westerners borrowing from their future income to buy junk they really didn't need right now but because China's massively inverted population demographic guaranteed the demise of the cheap labour that was required to be the cheapest at making those low value non essential goods. Plus, India's perfect population pyramid meant they would eventually become the de facto global tat factory.
So the key high value global export they settled upon was the automobile. Not hugely complicated but complicated enough. Strong global demand and very easy to either steal any knowledge required but even easier to just wave a bit of free dosh in front of pretty much any Western engineer or company that was wanted.
To get ICE cars into the markets of the developed nations they held the general consensus that those consumers would require traditional branding stick to the front of their Chinese cars and so various Western brands were purchased for that purpose.
However the real play was EVs. By the time Western governments had stopped talking about getting EVs into the market place via legislation and taxation, China had already gone around the world in the 90s and Noughties and secured the rights to the bulk of the raw materials that would be required. If you want to manufacture your own high end goods then owning the flow of the essential, high value raw materials from which to make them is a rather obvious requirement. And while the West was giving all of that ownership up as it still worked through the end of colonialism (the mechanism by which the West owned and controlled raw materials) the Chinese were free to simply walk in and take over. Even America was stepping back after decades of fighting the Cold War.
So, China saw the manufacture of EVs as key to long term economic stability.
Meanwhile entities such as the EU have seemed to play endlessly into the hands of this intent while completely ignoring a lesson hard learnt twice in the 20th century which was that no entity in Europe or the whole of Europe combined can put produce one of the key global producers. But the West, in order to lock out Chinese vehicles which were cheaper to build than anything that could ever be built in Europe and could be built in endless numbers to dominate any chosen market, turned to a policy of enforcing more and more legislation upon consumers that was technology led.
This policy has backfired spectacularly as it played perfectly into the hands of technology giants opposed to the domestic automotive companies it was supposed to protect but who didn't realised they had no real technological ability.
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.
But that now looks to be backfiring as companies such as VW who need to sell at the bottom end of the market as well as the middle and top appear to be capitulating to inevitable Chinese manufacturing might.
They've recognised that their lobbying for technology was a disaster and had to buy a Chinese tech company just to try and stay in the game against the US and China.
They've woken up to the reality that having driven the legislation for EVs onto consumers in the devout and erroneous belief that they would be the dominant vendors and preside over far higher margins due to EVs being cheaper to build than ICE, they were barely ever in the race which was a US/China tech and manufacturing might event.
Chinese car factories, while many remain capable of churning out utter turds, these are mostly for their own domestic victims, are today capable of turning out quality that is on a par, maybe now superior in some cases to anything Europe can manufacture below quite a substantial price point. And not just through old Western brands but you can really see that China is on an absolute knife edge of having their own brands break into Western markets properly.
The capacity of China to build cars dwarfs what Europe can achieve. The quality when required is on par with European manufacturing at all but the highest price points. Western consumers are being squeezed financially which is precisely when overseas car brands that were seen as inferior get welcomed in and then become established. But most importantly, Tesla has made it abundantly clear to the planet that they can sell a Chinese car at a profit for less than a European car can be made for.
Now, after all that waffle, to the point: for Western brands to survive and be able to sell their cheaper cars which underpin their entire existence they will have no choice but to build them in China? 2023 will transpire to be the year not that China won but the year Europe realised for all its games, tricks and exploits, it was never in the game?
Are we going to see firms like VW capitulate and move the production of all its cheapest cars to China/Asia? Having had to go to China for technology there's no avoiding the truth that to build at Tesla costs must be done in China and that paying €bns to lobby to keep competition out by fair means and foul, mainly foul when you look at what they've done.
Has China won its 30 year program?
Does this matter to us? Surely 99% of cars today are no different from TVs or fridges and we shouldn't be forced to pay excessive amounts to only buy from particular firms? Does China winning mean we will stop bank rolling archaic 20th century businesses resorting to any means at our expense to sell over priced goods?
Especially in the U.K. where we have no domestic car industry at the lower end having already deindustrialised decades ago. We now import almost everything and what isn't imported is basically a subsidised assembly at taxpayer expense. Should we not open the U.K. market wide open, with no barriers to entry other than a pure free market, so that all the global manufacturers can slit each other's throats trying to get us to favour their goods?
Surely we've had enough of paying for protectionism that hasn't protected the U.K. for nearly two decades?
So the key high value global export they settled upon was the automobile. Not hugely complicated but complicated enough. Strong global demand and very easy to either steal any knowledge required but even easier to just wave a bit of free dosh in front of pretty much any Western engineer or company that was wanted.
To get ICE cars into the markets of the developed nations they held the general consensus that those consumers would require traditional branding stick to the front of their Chinese cars and so various Western brands were purchased for that purpose.
However the real play was EVs. By the time Western governments had stopped talking about getting EVs into the market place via legislation and taxation, China had already gone around the world in the 90s and Noughties and secured the rights to the bulk of the raw materials that would be required. If you want to manufacture your own high end goods then owning the flow of the essential, high value raw materials from which to make them is a rather obvious requirement. And while the West was giving all of that ownership up as it still worked through the end of colonialism (the mechanism by which the West owned and controlled raw materials) the Chinese were free to simply walk in and take over. Even America was stepping back after decades of fighting the Cold War.
So, China saw the manufacture of EVs as key to long term economic stability.
Meanwhile entities such as the EU have seemed to play endlessly into the hands of this intent while completely ignoring a lesson hard learnt twice in the 20th century which was that no entity in Europe or the whole of Europe combined can put produce one of the key global producers. But the West, in order to lock out Chinese vehicles which were cheaper to build than anything that could ever be built in Europe and could be built in endless numbers to dominate any chosen market, turned to a policy of enforcing more and more legislation upon consumers that was technology led.
This policy has backfired spectacularly as it played perfectly into the hands of technology giants opposed to the domestic automotive companies it was supposed to protect but who didn't realised they had no real technological ability.
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.
But that now looks to be backfiring as companies such as VW who need to sell at the bottom end of the market as well as the middle and top appear to be capitulating to inevitable Chinese manufacturing might.
They've recognised that their lobbying for technology was a disaster and had to buy a Chinese tech company just to try and stay in the game against the US and China.
They've woken up to the reality that having driven the legislation for EVs onto consumers in the devout and erroneous belief that they would be the dominant vendors and preside over far higher margins due to EVs being cheaper to build than ICE, they were barely ever in the race which was a US/China tech and manufacturing might event.
Chinese car factories, while many remain capable of churning out utter turds, these are mostly for their own domestic victims, are today capable of turning out quality that is on a par, maybe now superior in some cases to anything Europe can manufacture below quite a substantial price point. And not just through old Western brands but you can really see that China is on an absolute knife edge of having their own brands break into Western markets properly.
The capacity of China to build cars dwarfs what Europe can achieve. The quality when required is on par with European manufacturing at all but the highest price points. Western consumers are being squeezed financially which is precisely when overseas car brands that were seen as inferior get welcomed in and then become established. But most importantly, Tesla has made it abundantly clear to the planet that they can sell a Chinese car at a profit for less than a European car can be made for.
Now, after all that waffle, to the point: for Western brands to survive and be able to sell their cheaper cars which underpin their entire existence they will have no choice but to build them in China? 2023 will transpire to be the year not that China won but the year Europe realised for all its games, tricks and exploits, it was never in the game?
Are we going to see firms like VW capitulate and move the production of all its cheapest cars to China/Asia? Having had to go to China for technology there's no avoiding the truth that to build at Tesla costs must be done in China and that paying €bns to lobby to keep competition out by fair means and foul, mainly foul when you look at what they've done.
Has China won its 30 year program?
Does this matter to us? Surely 99% of cars today are no different from TVs or fridges and we shouldn't be forced to pay excessive amounts to only buy from particular firms? Does China winning mean we will stop bank rolling archaic 20th century businesses resorting to any means at our expense to sell over priced goods?
Especially in the U.K. where we have no domestic car industry at the lower end having already deindustrialised decades ago. We now import almost everything and what isn't imported is basically a subsidised assembly at taxpayer expense. Should we not open the U.K. market wide open, with no barriers to entry other than a pure free market, so that all the global manufacturers can slit each other's throats trying to get us to favour their goods?
Surely we've had enough of paying for protectionism that hasn't protected the U.K. for nearly two decades?
DonkeyApple said:
I suspect so and more importantly, the U.K. is one of the, if not the only other major economy that overtly will benefit as a major buyer of cars that doesn't have an economy where car manufacturing is an integral element.
Particularly when you combine that with our energy security potential through renewables. Just need to hurry up with the decoupling of electricity prices from gas.DonkeyApple said:
Nearly 30 years ago the Chinese State determined that for secure economic growth China mustn't just remain the cheap tat factory of the world just responding to global demand for non essentials and living off a small cut but must own, design, manufacture and export its own higher value goods. Not just to create an economic base that was less dependent on Westerners borrowing from their future income to buy junk they really didn't need right now but because China's massively inverted population demographic guaranteed the demise of the cheap labour that was required to be the cheapest at making those low value non essential goods. Plus, India's perfect population pyramid meant they would eventually become the de facto global tat factory.
So the key high value global export they settled upon was the automobile. Not hugely complicated but complicated enough. Strong global demand and very easy to either steal any knowledge required but even easier to just wave a bit of free dosh in front of pretty much any Western engineer or company that was wanted.
To get ICE cars into the markets of the developed nations they held the general consensus that those consumers would require traditional branding stick to the front of their Chinese cars and so various Western brands were purchased for that purpose.
However the real play was EVs. By the time Western governments had stopped talking about getting EVs into the market place via legislation and taxation, China had already gone around the world in the 90s and Noughties and secured the rights to the bulk of the raw materials that would be required. If you want to manufacture your own high end goods then owning the flow of the essential, high value raw materials from which to make them is a rather obvious requirement. And while the West was giving all of that ownership up as it still worked through the end of colonialism (the mechanism by which the West owned and controlled raw materials) the Chinese were free to simply walk in and take over. Even America was stepping back after decades of fighting the Cold War.
So, China saw the manufacture of EVs as key to long term economic stability.
Meanwhile entities such as the EU have seemed to play endlessly into the hands of this intent while completely ignoring a lesson hard learnt twice in the 20th century which was that no entity in Europe or the whole of Europe combined can put produce one of the key global producers. But the West, in order to lock out Chinese vehicles which were cheaper to build than anything that could ever be built in Europe and could be built in endless numbers to dominate any chosen market, turned to a policy of enforcing more and more legislation upon consumers that was technology led.
This policy has backfired spectacularly as it played perfectly into the hands of technology giants opposed to the domestic automotive companies it was supposed to protect but who didn't realised they had no real technological ability.
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.
But that now looks to be backfiring as companies such as VW who need to sell at the bottom end of the market as well as the middle and top appear to be capitulating to inevitable Chinese manufacturing might.
They've recognised that their lobbying for technology was a disaster and had to buy a Chinese tech company just to try and stay in the game against the US and China.
They've woken up to the reality that having driven the legislation for EVs onto consumers in the devout and erroneous belief that they would be the dominant vendors and preside over far higher margins due to EVs being cheaper to build than ICE, they were barely ever in the race which was a US/China tech and manufacturing might event.
Chinese car factories, while many remain capable of churning out utter turds, these are mostly for their own domestic victims, are today capable of turning out quality that is on a par, maybe now superior in some cases to anything Europe can manufacture below quite a substantial price point. And not just through old Western brands but you can really see that China is on an absolute knife edge of having their own brands break into Western markets properly.
The capacity of China to build cars dwarfs what Europe can achieve. The quality when required is on par with European manufacturing at all but the highest price points. Western consumers are being squeezed financially which is precisely when overseas car brands that were seen as inferior get welcomed in and then become established. But most importantly, Tesla has made it abundantly clear to the planet that they can sell a Chinese car at a profit for less than a European car can be made for.
Now, after all that waffle, to the point: for Western brands to survive and be able to sell their cheaper cars which underpin their entire existence they will have no choice but to build them in China? 2023 will transpire to be the year not that China won but the year Europe realised for all its games, tricks and exploits, it was never in the game?
Are we going to see firms like VW capitulate and move the production of all its cheapest cars to China/Asia? Having had to go to China for technology there's no avoiding the truth that to build at Tesla costs must be done in China and that paying €bns to lobby to keep competition out by fair means and foul, mainly foul when you look at what they've done.
Has China won its 30 year program?
Does this matter to us? Surely 99% of cars today are no different from TVs or fridges and we shouldn't be forced to pay excessive amounts to only buy from particular firms? Does China winning mean we will stop bank rolling archaic 20th century businesses resorting to any means at our expense to sell over priced goods?
Especially in the U.K. where we have no domestic car industry at the lower end having already deindustrialised decades ago. We now import almost everything and what isn't imported is basically a subsidised assembly at taxpayer expense. Should we not open the U.K. market wide open, with no barriers to entry other than a pure free market, so that all the global manufacturers can slit each other's throats trying to get us to favour their goods?
Surely we've had enough of paying for protectionism that hasn't protected the U.K. for nearly two decades?
In terms of the “established” budget or standard western OEMs I would say yes. I would say that they have been caught napping on tech, design and overall proposition and find themselves in trouble for the next 5-10 years. I would also say Tesla has had a hand in the troubles for the likes of VW, Ford etc. I see this as less of an issue after this mid-transition phase.So the key high value global export they settled upon was the automobile. Not hugely complicated but complicated enough. Strong global demand and very easy to either steal any knowledge required but even easier to just wave a bit of free dosh in front of pretty much any Western engineer or company that was wanted.
To get ICE cars into the markets of the developed nations they held the general consensus that those consumers would require traditional branding stick to the front of their Chinese cars and so various Western brands were purchased for that purpose.
However the real play was EVs. By the time Western governments had stopped talking about getting EVs into the market place via legislation and taxation, China had already gone around the world in the 90s and Noughties and secured the rights to the bulk of the raw materials that would be required. If you want to manufacture your own high end goods then owning the flow of the essential, high value raw materials from which to make them is a rather obvious requirement. And while the West was giving all of that ownership up as it still worked through the end of colonialism (the mechanism by which the West owned and controlled raw materials) the Chinese were free to simply walk in and take over. Even America was stepping back after decades of fighting the Cold War.
So, China saw the manufacture of EVs as key to long term economic stability.
Meanwhile entities such as the EU have seemed to play endlessly into the hands of this intent while completely ignoring a lesson hard learnt twice in the 20th century which was that no entity in Europe or the whole of Europe combined can put produce one of the key global producers. But the West, in order to lock out Chinese vehicles which were cheaper to build than anything that could ever be built in Europe and could be built in endless numbers to dominate any chosen market, turned to a policy of enforcing more and more legislation upon consumers that was technology led.
This policy has backfired spectacularly as it played perfectly into the hands of technology giants opposed to the domestic automotive companies it was supposed to protect but who didn't realised they had no real technological ability.
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.
But that now looks to be backfiring as companies such as VW who need to sell at the bottom end of the market as well as the middle and top appear to be capitulating to inevitable Chinese manufacturing might.
They've recognised that their lobbying for technology was a disaster and had to buy a Chinese tech company just to try and stay in the game against the US and China.
They've woken up to the reality that having driven the legislation for EVs onto consumers in the devout and erroneous belief that they would be the dominant vendors and preside over far higher margins due to EVs being cheaper to build than ICE, they were barely ever in the race which was a US/China tech and manufacturing might event.
Chinese car factories, while many remain capable of churning out utter turds, these are mostly for their own domestic victims, are today capable of turning out quality that is on a par, maybe now superior in some cases to anything Europe can manufacture below quite a substantial price point. And not just through old Western brands but you can really see that China is on an absolute knife edge of having their own brands break into Western markets properly.
The capacity of China to build cars dwarfs what Europe can achieve. The quality when required is on par with European manufacturing at all but the highest price points. Western consumers are being squeezed financially which is precisely when overseas car brands that were seen as inferior get welcomed in and then become established. But most importantly, Tesla has made it abundantly clear to the planet that they can sell a Chinese car at a profit for less than a European car can be made for.
Now, after all that waffle, to the point: for Western brands to survive and be able to sell their cheaper cars which underpin their entire existence they will have no choice but to build them in China? 2023 will transpire to be the year not that China won but the year Europe realised for all its games, tricks and exploits, it was never in the game?
Are we going to see firms like VW capitulate and move the production of all its cheapest cars to China/Asia? Having had to go to China for technology there's no avoiding the truth that to build at Tesla costs must be done in China and that paying €bns to lobby to keep competition out by fair means and foul, mainly foul when you look at what they've done.
Has China won its 30 year program?
Does this matter to us? Surely 99% of cars today are no different from TVs or fridges and we shouldn't be forced to pay excessive amounts to only buy from particular firms? Does China winning mean we will stop bank rolling archaic 20th century businesses resorting to any means at our expense to sell over priced goods?
Especially in the U.K. where we have no domestic car industry at the lower end having already deindustrialised decades ago. We now import almost everything and what isn't imported is basically a subsidised assembly at taxpayer expense. Should we not open the U.K. market wide open, with no barriers to entry other than a pure free market, so that all the global manufacturers can slit each other's throats trying to get us to favour their goods?
Surely we've had enough of paying for protectionism that hasn't protected the U.K. for nearly two decades?
As you mentioned India, if a western car manufacturer needed to offshore production to somewhere cheap, with a large potentially well/adequately educated population, then why not consider India for your new venture? You avoid the downsides of producing in China and the potential is there for even lower wages/costs? Admittedly I am not aware of how interested India is in opening up to such opportunities, but it does seem that it could be the next China - and not just for cheap tat.
As for the UK, protectionism rarely works for long - at least in the ways intended... However, a country with little indigenous industry that doesn't 'make' anything dropping all barriers to entry sounds like a country that doesn't have long to live.
Whether China has 'won' is an open question, but it is looking clear that the UK has 'lost'. We are a nation of telephone sanitisers, management consultants and marketing executives...
As for the UK, protectionism rarely works for long - at least in the ways intended... However, a country with little indigenous industry that doesn't 'make' anything dropping all barriers to entry sounds like a country that doesn't have long to live.
Whether China has 'won' is an open question, but it is looking clear that the UK has 'lost'. We are a nation of telephone sanitisers, management consultants and marketing executives...
Roguexcess said:
Great for China, they have lifted millions out of poverty and contirbuted significantly to global economic growth but let’s not forgot the issues such as IP theft, China's human rights practices, labor conditions, and environmental impact
Indeed but it's only via open trade and intelligent consumer pressure that a new industrial nation will evolve away from the same industrial practices we took over 200 years to feel obliged to change. I agree with a lot of what you say, fundamentally the Chinese have anticipated what the world needs (clean mobility) and planned to be in a position to provide it. However I think some parts are over-stated or 'citation needed'.
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.Citation needed on the auto industry lobbying for such causes.
The ICE ban is, was and will remain in 2035. The last thing the mainstream car industry wants now is moving the goalposts after all their investment. The car industry want legislation on the end goal (net zero) not on the means (BEVs vs H2 vs whatever) to keep the best option open.
I don't agree that the UK car industry is negligible or merely assembling products, JLR is a huge profitable luxury business, Nissan stamp the Qashqai out from sheet steel in Sunderland and are investing in battery making there, etc.
I also don't agree that Chinese companies are inherently better at software - I've seen plenty of complaints about the MG4 in this regard, equally many people regard BMW's iDrive as the gold standard in usable in-car UI.
Basically I think the legacy carmakers in US, Europe and Japan have been left behind on EV cost:range by Tesla, the Koreans and Chinese, that's what's driving the industry in the direction you describe. Much more than software or lobbying.
DonkeyApple said:
China had already gone around the world in the 90s and Noughties and secured the rights to the bulk of the raw materials that would be required. If you want to manufacture your own high end goods then owning the flow of the essential, high value raw materials from which to make them is a rather obvious requirement.
They're commodities. They come from China because they sell them cheapest; if and when that ceases to be the case, production will spin up elsewhere, and/or substitutes will be found. I don't see this as forming a major barrier to other countries' EV production.DonkeyApple said:
But the West, in order to lock out Chinese vehicles which were cheaper to build than anything that could ever be built in Europe and could be built in endless numbers to dominate any chosen market, turned to a policy of enforcing more and more legislation upon consumers that was technology led.
Ever-increasing automotive safety legislation has been a constant throughout our lifetimes, I don't think it needs a nefarious self-interested plan to explain it. And for the past couple of decades the leading edge hasn't been legislation but Euro NCAP, not universally popular with the industry https://www.autocar.co.uk/car-news/new-cars/renaul... . Legislation has tended to be significant only at the trailing edge, picking up niche cars like the A110 and GR86 which have evaded NCAP's beady eye through low volumes.DonkeyApple said:
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.
The ICE ban is, was and will remain in 2035. The last thing the mainstream car industry wants now is moving the goalposts after all their investment. The car industry want legislation on the end goal (net zero) not on the means (BEVs vs H2 vs whatever) to keep the best option open.
I don't agree that the UK car industry is negligible or merely assembling products, JLR is a huge profitable luxury business, Nissan stamp the Qashqai out from sheet steel in Sunderland and are investing in battery making there, etc.
I also don't agree that Chinese companies are inherently better at software - I've seen plenty of complaints about the MG4 in this regard, equally many people regard BMW's iDrive as the gold standard in usable in-car UI.
Basically I think the legacy carmakers in US, Europe and Japan have been left behind on EV cost:range by Tesla, the Koreans and Chinese, that's what's driving the industry in the direction you describe. Much more than software or lobbying.
plfrench said:
Particularly when you combine that with our energy security potential through renewables. Just need to hurry up with the decoupling of electricity prices from gas.
Very much so. The recent failed wind auctions were a very healthy sign that the government wasn't willing to throw excessive taxpayer money at corporates and the revised price that we will pay to underwrite the further expansion of renewables is arguably lower than if the govt had simply caved to the industry demands. Reaching the point where the cheapest electricity generated cannot legally be sold at the most expensively generated price is a crucial step change we need to arrive at as soon as possible.
We also do need to make a legal change on the retail side where a consumer buying electricity away from their domestic account is charged higher tax and higher pricing. That is a very regressive practice that as lower income households seek to transition to EVs will become a robust hinderance. It's a simple legal change to see vendors switched to acting as agent not principal and so rather than being a high cost vendor of electricity they simply become a broker charging a regulated fee while the actual act of purchase is treated the same as a consumer's domestic purchasing, ie 5% VAT not 20 and at the same rate as their home supply for that given time and amount.
Roguexcess said:
Great for China, they have lifted millions out of poverty and contirbuted significantly to global economic growth but let’s not forgot the issues such as IP theft, China's human rights practices, labor conditions, and environmental impact
This is true, but it also has to be noted that every other major economy owes its current success to having done those same dubious things (with the possible exception of IP theft in some cases) in the past. Whether Chin has "won" is, I think, debatable. Their protectionist socioeconomic model was probably never really sustainable in the long term and it remains to be seen whether they can transition to a more open, international model without destroying what's made them so powerful. I think it's increasingly clear that the established global car makers are in serious trouble, but that doesn't necessarily mean that the car production industries of the countries they operate in are doomed.
Production costs in China are already rising to the point that many industries are starting to move their production elsewhere...
Edited by kambites on Monday 27th November 10:40
Om said:
As you mentioned India, if a western car manufacturer needed to offshore production to somewhere cheap, with a large potentially well/adequately educated population, then why not consider India for your new venture? You avoid the downsides of producing in China and the potential is there for even lower wages/costs? Admittedly I am not aware of how interested India is in opening up to such opportunities, but it does seem that it could be the next China - and not just for cheap tat.
As for the UK, protectionism rarely works for long - at least in the ways intended... However, a country with little indigenous industry that doesn't 'make' anything dropping all barriers to entry sounds like a country that doesn't have long to live.
Whether China has 'won' is an open question, but it is looking clear that the UK has 'lost'. We are a nation of telephone sanitisers, management consultants and marketing executives...
There is a transition of manufacturing to India currently underway but that is going to throw a greater spotlight on the absolutely shocking situation within India that is worse than China in several instances. Labour will and possibly already is cheaper, India has a booming youth worker demographic whereas China's is shrinking quicker than any Western economy's but there is no shortage or very hideous structural issues in India which will see the light of day more publicly as more people look. As for the UK, protectionism rarely works for long - at least in the ways intended... However, a country with little indigenous industry that doesn't 'make' anything dropping all barriers to entry sounds like a country that doesn't have long to live.
Whether China has 'won' is an open question, but it is looking clear that the UK has 'lost'. We are a nation of telephone sanitisers, management consultants and marketing executives...
I'm not sure the U.K. has lost though. Given 2035 and 2050 are both unavoidable and crippling costs for developed nations that still retain a large amount of 20th century industry it is looking quite clearly that the U.K. deindustrialising all that dirty industry and offshoring it in the 80s and 90s and dealing with the hideous economic regional fallout at a time when the global economy was booming endlessly and every corner of the world demanded our service industry and high end manufacturing, along with embracing the tech boom from the very beginning puts us, accidentally, at a monumental advantage to our economic peers who have all this to do going forward and in a period of lack of global growth.
Just look at the major EU economies who have retained very dirty cement, fertiliser and car industries etc and how they must now spend €bns that they don't have to get them to meet 2035-2050 legislation and the fact they aren't even competitive businesses today. The employment turmoil in Germany and France will be ghastly.
In addition, the U.K. accidentally finds itself as one of the few countries capable of easy and affordable renewable energy self reliance. Yet two of our closest peers, Germany and Japan are almost wholly dependent on imports and really have so little chance of self sufficiency under any current or near term tech that they are having to speculate in the most ludicrous of solutions such as attempting to import wind energy from the other side of the planet!!! Even France has a major structural issue that the bulk of its nuclear generation will have expired by and into 2050 and they have no viable program to replace it that can deliver on time. Meanwhile, we are an island off the West coast of the Asian landmass, to the East of one of the largest oceans, in the direct line of the prevailing SW winds and with a shallow seabed surrounding us. Another total accident that sees us with one of the easiest paths to renewables but also with an enormous natural gas reserve to serve as the transitional backbone while being one of the cleanest fossil fuels to centrally burn for electricity.
Thanks to Thatcher, plate techtonics, the Carboniferous era and global 2050 legislation we've really ended up as a lottery winner when we didn't even buy a ticket!
This isn't about saying the transition will be easy but about noting just how much easier it will be compared to our competitive peers, some of whom really are a bit screwed.
samoht said:
Citation needed on the auto industry lobbying for such causes.
The ICE ban is, was and will remain in 2035. The last thing the mainstream car industry wants now is moving the goalposts after all their investment. The car industry want legislation on the end goal (net zero) not on the means (BEVs vs H2 vs whatever) to keep the best option open.
.
There is of course a very significant proportion of the motoring world where no 2035 ICE ban exists today.The ICE ban is, was and will remain in 2035. The last thing the mainstream car industry wants now is moving the goalposts after all their investment. The car industry want legislation on the end goal (net zero) not on the means (BEVs vs H2 vs whatever) to keep the best option open.
.
samoht said:
I agree with a lot of what you say, fundamentally the Chinese have anticipated what the world needs (clean mobility) and planned to be in a position to provide it. However I think some parts are over-stated or 'citation needed'.
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.Citation needed on the auto industry lobbying for such causes.
The ICE ban is, was and will remain in 2035. The last thing the mainstream car industry wants now is moving the goalposts after all their investment. The car industry want legislation on the end goal (net zero) not on the means (BEVs vs H2 vs whatever) to keep the best option open.
I don't agree that the UK car industry is negligible or merely assembling products, JLR is a huge profitable luxury business, Nissan stamp the Qashqai out from sheet steel in Sunderland and are investing in battery making there, etc.
I also don't agree that Chinese companies are inherently better at software - I've seen plenty of complaints about the MG4 in this regard, equally many people regard BMW's iDrive as the gold standard in usable in-car UI.
Basically I think the legacy carmakers in US, Europe and Japan have been left behind on EV cost:range by Tesla, the Koreans and Chinese, that's what's driving the industry in the direction you describe. Much more than software or lobbying.
1). The raw materials are located in key geographies such as Africa and South America. Since the 90s the Chinese have been taking controlling stakes in the corporates that hold the mining rights along with building out African infrastructure in exchange for mining rights directly. As Stellantis discovered last year, it's quite difficult to forward purchase Lithium without sucking Chinese balls. And even the Australian economy is now dependent on raw material exports to China. DonkeyApple said:
China had already gone around the world in the 90s and Noughties and secured the rights to the bulk of the raw materials that would be required. If you want to manufacture your own high end goods then owning the flow of the essential, high value raw materials from which to make them is a rather obvious requirement.
They're commodities. They come from China because they sell them cheapest; if and when that ceases to be the case, production will spin up elsewhere, and/or substitutes will be found. I don't see this as forming a major barrier to other countries' EV production.DonkeyApple said:
But the West, in order to lock out Chinese vehicles which were cheaper to build than anything that could ever be built in Europe and could be built in endless numbers to dominate any chosen market, turned to a policy of enforcing more and more legislation upon consumers that was technology led.
Ever-increasing automotive safety legislation has been a constant throughout our lifetimes, I don't think it needs a nefarious self-interested plan to explain it. And for the past couple of decades the leading edge hasn't been legislation but Euro NCAP, not universally popular with the industry https://www.autocar.co.uk/car-news/new-cars/renaul... . Legislation has tended to be significant only at the trailing edge, picking up niche cars like the A110 and GR86 which have evaded NCAP's beady eye through low volumes.DonkeyApple said:
On the back of this the automotive lobbying switched to funnelling more money into right wing political groups and looking to buy protectionism via tariffs, rolling back ICE bans, trying to delude the voting public with the hydrogen delusion and the fomenting of anti China rhetoric among domestic populations.
The ICE ban is, was and will remain in 2035. The last thing the mainstream car industry wants now is moving the goalposts after all their investment. The car industry want legislation on the end goal (net zero) not on the means (BEVs vs H2 vs whatever) to keep the best option open.
I don't agree that the UK car industry is negligible or merely assembling products, JLR is a huge profitable luxury business, Nissan stamp the Qashqai out from sheet steel in Sunderland and are investing in battery making there, etc.
I also don't agree that Chinese companies are inherently better at software - I've seen plenty of complaints about the MG4 in this regard, equally many people regard BMW's iDrive as the gold standard in usable in-car UI.
Basically I think the legacy carmakers in US, Europe and Japan have been left behind on EV cost:range by Tesla, the Koreans and Chinese, that's what's driving the industry in the direction you describe. Much more than software or lobbying.
2) Automotive legislation is a key practice for seeking to lock out competition. It is not just about safety.
3) No citation needed, we've all just witnessed the lobbying backed by VW to try and extend 2035 via eFuels etc. Plus, the large hydrogen lobby funded by the fossil fuel industry and automotive. And there was last years lawsuit over lobbying disclosures that was brought against VW and still trying to get into German courts.
kambites said:
This is true, but it also has to be noted that every other major economy owes its current success to having done those same dubious things (with the possible exception of IP theft in some cases) in the past.
Whether Chin has "won" is, I think, debatable. Their protectionist socioeconomic model was probably never really sustainable in the long term and it remains to be seen whether they can transition to a more open, international model without destroying what's made them so powerful. I think it's increasingly clear that the established global car makers are in serious trouble, but that doesn't necessarily mean that the car production industries of the countries they operate in are doomed.
Production costs in China are already rising to the point that many industries are starting to move their production elsewhere...
My suspicion is that as the US on shores more manufacturing and as India takes more low hanging fruit, one of the only paths open to China may be to play the ethical cars and tighten up practices to align more closely with Western expectations. It's mainly up to the West whether it wishes to pay more for less slavery and industrial and labour exploitation?Whether Chin has "won" is, I think, debatable. Their protectionist socioeconomic model was probably never really sustainable in the long term and it remains to be seen whether they can transition to a more open, international model without destroying what's made them so powerful. I think it's increasingly clear that the established global car makers are in serious trouble, but that doesn't necessarily mean that the car production industries of the countries they operate in are doomed.
Production costs in China are already rising to the point that many industries are starting to move their production elsewhere...
Edited by kambites on Monday 27th November 10:40
DonkeyApple said:
1). The raw materials are located in key geographies such as Africa and South America. Since the 90s the Chinese have been taking controlling stakes in the corporates that hold the mining rights along with building out African infrastructure in exchange for mining rights directly. As Stellantis discovered last year, it's quite difficult to forward purchase Lithium without sucking Chinese balls. And even the Australian economy is now dependent on raw material exports to China.
Oz has been hocking itself to the chinese for 30+ years. Lithium is being 'found' in a lot of places, as minerals go it's recently exploited and quite widely distributed, no Saudi Arabias exist to corner the market. There's also the chance a new battery chemistry will emerge and the lithium boom will subside, if not burst.hidetheelephants said:
Oz has been hocking itself to the chinese for 30+ years. Lithium is being 'found' in a lot of places, as minerals go it's recently exploited and quite widely distributed, no Saudi Arabias exist to corner the market. There's also the chance a new battery chemistry will emerge and the lithium boom will subside, if not burst.
At a price. Lithium is globally abundant but the bulk of the known, cheapest sources are locked in to China. So even if a non Chinese manufacturer sources Lithium from one of the alternate suppliers they do so at a cost disadvantage. You have a similar issue with graphite and cobalt among other rare Earth metals. Russia is also a key rights holder. It is part of the reason why so much money is being invested in establishing a battery chemistry that is not reliant on these resources, as you say. But Western manufacturers who wish to produce price competitive vehicles at the volume end of the market have to survive until such chemistry breakthroughs while also hoping it's not made by one of the dominant Chinese battery companies. Not a great was to bet the farm, hence why some appear to be set to follow the Tesla path of lower resistance and just move manufacturing to China. Pretty sure VW will end up moving far more production to China than they're currently letting on. They do seem to be building greater capacity than would potentially be required for just servicing the domestic Chinese market.
I think it's still too soon to tell.
The Chinese products have come a long way but I think they have a long way to go as well in some respects.
The quality of assembly is one of the much improved areas, but what is still relatively untested is the longer term durability of their vehicles including components that normally have to be replaced less frequently (but replaced nonetheless) like suspension components.
With so many Chinese brands trying to sell into the UK, only some are likely to survive long enough to have set up a good distribution and aftersales support network.
I think the Chinese cars are strong in respect of powertrain (efficiency, recharging speed) but still lag behind when it comes some important design elements.
The forthcoming models from MG will be interesting, as with the pace of development at the moment, they may have already addressed some of the shortcomings of their existing range, and they also have a dealer network so have first mover advantage in respect of the Chinese brands.
The point about protectionism is interesting. The UK is still in the top 10 manufacturing nations and Nissan has just announced the next generations of Juke and Qashqai will be assembled here. There is still something to protect, as things stand.
The Chinese products have come a long way but I think they have a long way to go as well in some respects.
The quality of assembly is one of the much improved areas, but what is still relatively untested is the longer term durability of their vehicles including components that normally have to be replaced less frequently (but replaced nonetheless) like suspension components.
With so many Chinese brands trying to sell into the UK, only some are likely to survive long enough to have set up a good distribution and aftersales support network.
I think the Chinese cars are strong in respect of powertrain (efficiency, recharging speed) but still lag behind when it comes some important design elements.
The forthcoming models from MG will be interesting, as with the pace of development at the moment, they may have already addressed some of the shortcomings of their existing range, and they also have a dealer network so have first mover advantage in respect of the Chinese brands.
The point about protectionism is interesting. The UK is still in the top 10 manufacturing nations and Nissan has just announced the next generations of Juke and Qashqai will be assembled here. There is still something to protect, as things stand.
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