[Hayek]

Let’s see what the outcome of the investigation is. But personally, I think this is much ado about nothing, and that the European Auto industry has a lot more to lose if a trade war between China and Europe regarding cars starts.

The fact is that EU auto makers woke up late to the opportunity posed by Electric Vehicles. They fell into the classic incumbent’s trap of trying to delay change - even though policies in their own home markets favoured this change.

China au contraire saw Electric Vehicles as an opportunity to leap frog the West and also to improve the noxious air quality in its cities - and through incentives (which are not different from what the EU does for renewable energy generation for example) grew EV demand. Plug in vehicles account for over 35% of China’s auto market with 25% being pure EVs. With sales of over 20 mm vehicles overall, this implies China produces over 5 mm EVs and 7 mm plug in vehicles. More importantly, EVs have had a 20%+ share of Chinese auto demand for 3-4 years now. Compare that with a 1 mm EVs sold in the USA, and perhaps 1.5 mm in the EU.

Net result, China has vastly superior scale economies in EV production - and that is before you consider the fact that for most electrical goods (think washing machines or air conditioners), China has been the preferred production location for years.

So NO - China is not dumping EVs, it is just the best place to produce them. Europe would be well served trying to make itself a more attractive place to produce EVs than in trying to stop an unstoppable wave.

[Jeroen]

Originally Posted by Hayek

So NO - China is not dumping EVs, it is just the best place to produce them. Europe would be well served trying to make itself a more attractive place to produce EVs than in trying to stop an unstoppable wave.

True, but we need to add a few things.
China has zero respect for IPS and has stolen from the west many technologies.
China is a dictatorial state where many people are oppressed if not prosecuted for all the wrong reasons.
China produces EV and a bunch of other stuff with total disregard to basic things such as health and safety, free employment and no concern for the environment.

I could go on for a bit longer. Yes, the western car manufacturer are run by fat lazy *******s who should be run out of town. But the west versus China is simply not an even and fair playing field.

I have said this before, I would not trust China any further than we can throwmthem and we need to do everything in our power to diminish our reliability on China. Not just in the automotive industry but every industry and other field we can think of.

The Russians are a real PITA, what with the war in Ukraine. Never the less, the long Germaanser is China I believe.

Jeroen

[digitalnirvana]

Originally Posted by nakul0888

Oh No! The People have more choices and can afford more cars now. What a tragedy!

Jokes aside, even if it is a case of Chinese Government splurging massive subsidies and perks to Chinese carmakers that is making their cars undercut their Euro counterparts in price, why is that a problem for anyone in Europe? Europe should welcome it. The Chinese people are literally throwing their hard earned money at the feet of Europeans to help them spend money. Win for Europe I would say. Yes European car sales and production would go down in the short term, but if Europe has an otherwise healthy economy unlike say Pakistan, where resources could be re allocated efficiently into different sectors, there would literally be no downside to Europe overall. Workers laid off can be employed again by capital freed up from exiting some of the car production. The only real losers here are the Chinese people getting taxed by their own misguided government so that some white guys in Europe can get a sweet discount on their car purchase.

Wowza I don't know where to start. Is this sarcasm or rage bait? Well done if yes.

It starts off with people's choice (ironic but let's keep that aside) and then moves on to free market capitalism, resource utilization, taxation and ends with a healthy bit of racism against the white guy. Throw in Pakistan for good measure. What a wild ride.

[SmartCat]

Originally Posted by Hayek

Let’s see what the outcome of the investigation is. But personally, I think this is much ado about nothing, and that the European Auto industry has a lot more to lose if a trade war between China and Europe regarding cars starts.

A few misconceptions:

1) Auto exports from EU to China is not as large as one imagines (just around €25 billion per year). Sure, EU car brands have a big marketshare in China, but cars sold there are mostly made in China. So Risk/Reward is favorable towards punitive action in order to protect their €400 to €500 billion revenue per year industry.

2) Slapping anti-dumping duties will not automatically start a trade war. what China will do is it will retaliate against either automobile imports or some other sector (since Chinese consumers want to own Porsches, 7 series and AMGs). Now only if EU fires a fresh import restriction in retaliation to this move, then it will proceed to a trade war. EU will not do that. Their sole focus is to protect the automobile industry that contributes significantly to both employment and GDP

[Hayek]

Originally Posted by Jeroen

True, but we need to add a few things.
China has zero respect for IPS and has stolen from the west many technologies.
China is a dictatorial state. I would not trust China any further than we can throw them

I agree fully with you. But EVs are simple products - and China has not had to steal to make them. The question is whether anti dumping duties are justified - and the answer to that is NO. Does it make sense to reduce trade with China - that is a political question which I will not address here.

Originally Posted by SmartCat

A few misconceptions:

1) Auto exports from EU to China is not as large as one imagines (just around €25 billion per year). Sure, EU car brands have a big marketshare in China, but cars sold there are mostly made in China.

Actually for the EU or the US, it is the brands that matter far more than where the products are made. The value added in vehicle assembly is large - but much smaller than that in vehicle design and branding. The fact is that VW, Mercedes and BMW would struggle (currently) without the Chinese market. They have more to lose from a trade war. And the destruction in value will happen irrespective of a trade war unless EU auto makers catch up on producing EVs at competitive prices. Which most likely will require competing in China and producing there for the globe.

[nakul0888]

Originally Posted by digitalnirvana

Wowza I don't know where to start. Is this sarcasm or rage bait? Well done if yes.

It starts off with people's choice (ironic but let's keep that aside) and then moves on to free market capitalism, resource utilization, taxation and ends with a healthy bit of racism against the white guy. Throw in Pakistan for good measure. What a wild ride.

Ok, I will say this using small and simple words just for you. It doesn't matter if Chinese government is subsidizing its manufacturers to make EV cars from China more affordable overseas. It is if anything a freebie to the consumers of the other country. Assuming that the other countries have a competent functioning societies and economies and are not basket cases like Pakistan (which I am using as my example of a basket case because of the simple objective fact that it is one- you can read about this in the news), even if there might be pain in the short term, no real long term damage will be done. The real damage is done is actually to the Chinese taxpayers and its economy. Shenanigans like these are the reason Chinese growth is faltering after 30 years of juggernaut growth.

And excuse me? Healthy bit of racism against whites? Why? because I said "some white guys in Europe". This is genuinely laugh out loud laughable. Next time I will be careful to use the dictionary definition of "Homo Sapiens of or relating to a group of people having European ancestry, classified according to physical traits (such as light skin pigmentation)". I don't want to give you have any more wild rides because of me.

[kiku007]

Originally Posted by aayusht

I am no economics expert, and my views are purely based on the limited understanding through browsing, but such predatory moves are not good for the economy.

I'm no expert either. I'll share something I read here. Here's the modus operandi of some of the global automakers,

• Roll into town, ask for government assistance to establish a manufacturing plant and promise thousands of jobs and vast tax revenues.
• But the subsidies never ended and the tax revenues never arrived. Every couple of years, they would ask for even more cash.

And it wasn't just Australia either. This was a global business model. It worked like a charm until the global financial crisis, as demand evaporated and governments embarked on austerity programs.

One of the enduring images of the GFC was the sight of executives from Detroit's three big car makers flying into Washington on private jets to demand bailouts from the Obama administration.

Originally Posted by aayusht

In any country, if an industry is facing on slaughter from external forces, there is a lot more indirect impacts as well. In this case, if the automobile sector in negatively impacted, there will be impact on auto ancillary, supply chain vendors, right down to the transport and F&B in the vicinity of the factories that cater to the day to day services to the labor force. Take the auto industry in Australia for example - today there aren't any auto companies manufacturing in Australia. Almost all the cars are imported from Thailand.

GM received A$2.17 billion from the Australian Government as subsidies in 12 years. Ford and Toyota got about half of that during the same period. That is not good use of tax payer money. Yes, the local auto industry died and its sad. However, in the long term the Australian tax payers and consumers didn't loose anything by stopping the subsidies and letting the local auto industry wind up. We get great cars from Thailand, Japan, China, Germany etc.

Regulation should protect the interest of the consumer and not the interest of the manufacturers.

This subsidy-for-jobs notion is a 20th century approach that benefits politicians and incompetent industries in the 21st century.

The following article is a good one about the decline of the Australian automobile industry,

https://www.roadandtrack.com/car-cul...eptember-2020/

Originally Posted by SmartCat

Australia importing cars is fine because:

- Relatively small market size (60,000 units per month sales)
- Automotive industry was never a big employer
- Low unemployment rate
- Exports in $ value is > imports in $ value.

If you try to make everything in Australia, their currency will get stronger over time. This might negatively affect export sectors like agriculture/ poultry/ dairy/ fishing/ cattle farming etc - that actually employ significant number of people.

+1.

For Australia, it was the mining boom and the soaring Australian dollar that ultimately signed the car industry's death warrant.

Coming to the thread topic, both the EU and China protect their respective auto industries in their own way. Could be a case of the pot calling the kettle black. I'm interested to see how this unravels.

[SmartCat]

Originally Posted by kiku007

Regulation should protect the interest of the consumer and not the interest of the manufacturers.

Neither consumer nor manufacturer, but a country's interest will come first. And that comes from ensuring that unemployment remains low.

It is not Govt's responsibility to ensure that consumers have a wide variety of options to choose from. Govt's responsibility stops at ensuring that consumers have minimum 3 or 4 options to choose from. That is, there should not be a monopoly or duopoly.

This subsidy-for-jobs notion is a 20th century approach that benefits politicians and incompetent industries in the 21st century.

We cannot make a blanket statement like that. It is country specific and dependent on how many people are employed in each sector.

US govt gives subsidies/loans/insurance to agriculture sector. Why? Because it is a big employer and also for food security. Ditto with EU regarding automobiles - it contributes massively to GDP and employment. Similarly, Australia will take steps to protect their biggest employers, and ignore sectors that do not contribute much.

But in large population countries like China and India, it is Govt's responsibility to generate employment opportunites in all sorts of sectors. China has been doing this from the past 30 years. With PLI manufacturing schemes, India is following the footsteps of China.

[Jeroen]

Originally Posted by Hayek

I agree fully with you. But EVs are simple products - and China has not had to steal to make them..

BYD, among others has been known for copying technology from Mercedes and Tesla.

Jeroen

[avira_tk]

The EU should just let their industry die off, they're not walking the talk when it comes to carbon neutrality. Cheap EVs from China will allow the transition, while allowing for virtue signaling about air pollution. The Chinese are supplying a market demand created with legislation, the EU should just sit tight and let the market decide.

The Chinese guiding experience is the century of humiliation that Europeans brought on them. They don't have to bother with ROI, the state decides resource allocation. They won't be promoting consumer finance and speculation. The last big shot who tried to diversify into finance is now a teacher.

[SmartCat]

Originally Posted by Jeroen

BYD, among others has been known for copying technology from Mercedes and Tesla.

China's playbook:

- Force innovators like Tesla to setup assembly line in China
- Steal technology (industrial espionage) with the help of employees
- Give technology to BYD & others

Technology is stolen from US/European universities where R&D is done too:

Education or espionage? A Chinese student takes his homework home to China
https://www.nbcnews.com/news/china/e...-china-n893881

China’s Intellectual Property Theft and the US University System
https://medium.com/trends-thoughts/c...m-786bec3ed0ce

50 Chinese students leave UK in three years after spy chiefs’ warning
https://www.theguardian.com/uk-news/...chiefs-warning

However, the Chinese are good at building on existing stolen technology.


-----------------------------------------------------------------------------------------------------------------

Meanwhile, China accounts for 30% of all patents filed. But this article explains what it means:
https://www.cigionline.org/articles/...s-really-mean/

Instead of being innovation-driven, most of China’s patent applications are driven by other motives, such as seeking government subsidy or job promotion, reputation building for individuals or universities and institutions, or acquiring certification as national high-tech enterprises.

According to Bloomberg, 91 percent of design and 61 percent of utility model patents filed in China became invalid during 2013–2017 due to their holders’ failure to pay the annual fee. That explains why one Chinese patent expert stated rather bluntly that only 10 percent of China’s patents have market value and that probably 90 percent of them are “trash.”

[kiku007]

Originally Posted by SmartCat

Neither consumer nor manufacturer, but a country's interest will come first. And that comes from ensuring that unemployment remains low.

It is not Govt's responsibility to ensure that consumers have a wide variety of options to choose from. Govt's responsibility stops at ensuring that consumers have minimum 3 or 4 options to choose from. That is, there should not be a monopoly or duopoly.

I beg to differ. The term, "country's interest" is misused and I'll say even weaponized in some cases to push the agenda of the government. One day it could be providing employment and another day it could be national security. So I have trouble trusting the noble intentions of the governments.

Originally Posted by SmartCat

We cannot make a blanket statement like that. It is country specific and dependent on how many people are employed in each sector.

US govt gives subsidies/loans/insurance to agriculture sector. Why? Because it is a big employer and also for food security. Ditto with EU regarding automobiles - it contributes massively to GDP and employment. Similarly, Australia will take steps to protect their biggest employers, and ignore sectors that do not contribute much.

I could also say it is because they form a big part of their vote bank. I'm questioning the need for continuing old practices and this definitely includes the sops for corn sugar in the USA and fossil fuels in Australia. Find better ways.

I'm sorry for going off-topic but IMHO both the industry and the government want this sort of regulation and gatekeeping to continue for their respective interests (lobbying, political funding, tax breaks, import tariffs, votes etc.).

If the removal of subsidies or excessive tariffs makes the local industry uncompetitive then, I think we are delaying the inevitable.

[StarrySky]

Originally Posted by SmartCat

China's playbook:

- Force innovators like Tesla to setup assembly line in China
- Steal technology (industrial espionage) with the help of employees
- Give technology to BYD & others

I once worked on a project supplying SW components to a large non-Chinese MNC. The MNC had competing products in the market with similar SW components supplied from other companies as well. We were all implementing those components according to the industry standard specifications, but each had different optimizations etc.

Now the MNC wanted a specific function in our component to provide the same experience to the end-user as another company's component. After a few re-writes of the code, they were still not fully satisfied with our solution. They then suggested that we can be given access to the other company's source code, so that we can implement it exactly like them!! We said no.

We were a miniscule company compared to the MNC, and they had already forced us to provide our entire source code to them in order to work with them (other suppliers did not provide their entire source code). The MNC itself was working on implementing these components in-house. So who knows where our code ended up?

[volkman10]

Chinese manufacturers create waves in the European market.

Euro NCAP releases the results for three Chinese electric family cars: the BYD SEAL, XPENG P7 and the BYD DOLPHIN. These cars have made their first splash in Europe’s market with the glamorous BYD SEAL targeting TESLA’s core buyers, the sleek XPENG P7 showcasing its long-distance range capability, and the BYD DOLPHIN underlining its value for money as an electric vehicle. Euro NCAP today reveals that these cars have all achieved five-star ratings in the programme’s most stringent testing yet. European manufacturers remain switched on, with the Mercedes E-Class and the Mercedes EQE SUV both achieving a ‘very good’ grading for their Highway Assist systems.

In today’s super-competitive European car market, Chinese manufacturers are keen to demonstrate that their cars are a match for better-established brands. And the cars released today show that safety is one of the areas where they compete, to the benefit of car-buyers. All three have achieved Euro NCAP’s highest star rating, with little to choose between them, particularly in the areas of adult and child crash protection. And all three are well-equipped with an impressive range of safety technologies, including lane and speed assistance.

Link

[volkman10]

Chinese EV excel in EuroNCAP tests:


Nine Chinese electric cars receive 5-star safety rating at EuroNCAP 2023.

In 2023, EuroNCAP has put a total of 17 cars to the crash test, including nine electric cars coming from China: Xpeng G9, Xpeng P7, BYD Tang, BYD Seal-U, BYD Seal, BYD Dolphin, Nio EL7, Nio ET5/ET5 Touring, Smart #3. But they were successful and satisfied with the assessment that all cars were rated 5 stars.

The Smart #3 was developed and manufactured by Geely, but was designed by Mercedes-Benz for EuroNCAP crash tests. In Adult Occupant, Child Occupant got 86%, Vulnerable Road Users got 84%, and Safety Assist got 85%.


Link: