4 ms·

The best argument I liked so far to what's happening is that this flooding of Chinese EVs is due to the internal slowdown of EV sales. Essentially, China is pro

by csomar 3y ago

The best argument I liked so far to what's happening is that this flooding of Chinese EVs is due to the internal slowdown of EV sales. Essentially, China is producing roughly the same amount of EVs but as they can't sell them at the same pace locally, they are now pushing them to the outside world. There is no conspiracy here (in my opinion) or attempt to flood the global market; but rather a giant internal economy (that most people ignored because China is kinda enclosed in its own bubble) is now getting exposed and it's showing how far China has come. Another one is rails: China makes a lot of rails. A shit-ton but since these can't be sold to consumers, China created the "belt and road" thingy so that they can export their production. China has a lot of excess capacity. They can out build the West, the developing world and India. They were just busy building inside but now that they need new export markets and have mostly finished building inside, they are looking outward. The next few years will be interesting.

echelon 3y ago
> The best argument I liked so far to what's happening is that this flooding of Chinese EVs is due to the internal slowdown of EV sales. They're dumping on external markets. Tariffs will put a stop to this. We'll likely want tariffs if we want to give our domestic auto manufacturers time to adapt. And domestic automotive industry is important to maintaining a manufacturing base for defensive purposes during wartime. > They were just busy building inside but now that they need new export markets and have mostly finished building inside, they are looking outward. Their domestic market is saturated and experiencing economic headwinds. They're looking for external buyers because their internal economy has slowed. There wasn't enough real domestic consumption to prop it all up. > They can out build the West, the developing world and India. For a while. India, Mexico, Vietnam, et al. are ramping up.
- seanmcdirmid 3y ago
  Tariffs only apply to countries that make cars really, so don’t expect Australia to care much if BYD is selling below cost. America and China already have mutual tariffs in each others cars, China has those with most car producing countries (put in place originally and ironically to protect the Chinese car market)
  - echelon 3y ago
    > put in place originally and ironically to protect the Chinese car market Patrick Boyle has a fantastic essay on this: https://www.youtube.com/watch?v=rZgaj0jScOI https://www.youtube.com/watch?v=rZgaj0jScOI
    - seanmcdirmid 3y ago
      There is a 10% tariff in cars from China into the EU (I’m sure that’s reciprocal). > Europe levies a duty of 10% on cars imported from China. That compares with duty of 27.5% in the United States, and China's manufacturers have taken advantage to carve out a significant and rapidly growing foothold in the European https://www.cnn.com/2023/09/13/cars/europe-china-electric-car-subsidies/index.html#:~:text=Europe%20levies%20a%20duty%20of,foothold%20in%20the%20European%20market https://www.cnn.com/2023/09/13/cars/europe-china-electric-ca.... Of course, Europe is more than just the EU. And I don’t think the EU will shy away from protectionism, since China does the same. But in that case I’m sure BYD will just open up a factory in one of the cheaper EU countries (if they haven’t started that already).
      - Al-Khwarizmi 3y ago
        > Of course, Europe is more than just the EU. And I don’t think the EU will shy away from protectionism, since China does the same. But in that case I’m sure BYD will just open up a factory in one of the cheaper EU countries (if they haven’t started that already). Yes, already happening in Hungary. https://www.byd.com/eu/news-list/BYD_to_Build_A_New_Energy_Passenger_Vehicle_Factory_in_Hungary_for_Localised_Production_in_Europe.html https://www.byd.com/eu/news-list/BYD_to_Build_A_New_Energy_P...
- Dalewyn 3y ago
  >We'll likely want tariffs if we want to give our domestic auto manufacturers time to adapt. Also known as "<Country> First" policy, wasn't too long ago (and presumably still is) that such policies were/are heresy. Note, I agree with protecting domestic economies; I am all for America First, Japan First, UK First, France First, et al.. I'm just amused the same people who screamed "Orange Man Bad" turn on their heels to advocate the same policy just under different words.
  - thworp 3y ago
    The reason the world largely went away from high tariffs are many. In the first place they're redistribution scheme from consumers to industries that have the political influence to lobby for tariffs. Secondly they make the domestic industry lazy and increasingly noncompetitive (not just in pricing, also in R&D and market fit). After some years of this, the foreign competition will be so far ahead that they're able to out-compete the domestic industry while producing in-country (see Japanese/German car makers in the US). Regarding cars specifically, which group do you think is bigger: car buyers that would get a $20,000 gift from the Chinese taxpayer (and likely spend those savings in the domestic economy) or people employed in car manufacturing?
seanmcdirmid 3y ago
I think their strategy was always to dominate EV exports, it’s just that until now their supply was mostly eaten up by internal demand. They do need to pay attention to their margins though, if they aren’t high enough this won’t be sustainable (and ya, tariffs). China is hitting that demographic cliff much quickly than Japan did, so I wonder what that will mean in a decade or two. Maybe they will turn more attention to robots next.
- wenyuanyu 3y ago
  I disagree with the notion that Chinese EV makers, including BYD, have always aimed to dominate EV exports. Their focus has primarily been on satisfying domestic demand rather than targeting overseas markets like Tesla or VW. Given that they've only 1 year something ago emerged from COVID-related restrictions, a shift to an export-focused strategy would require substantial time and effort in research, planning, and marketing to become competitive internationally. While BYD, as one of the earliest players in the EV market and with existing facilities in Mexico and the U.S., may be a step ahead, I believe they're just at the initial stages of exploring overseas opportunities. The EV market competition is likely to intensify in the coming years, but it's still early days for Chinese EV makers in the global arena.
  - maxglute 3y ago
    Excess capacity argument is more and more dog whistle for PRC exports that eats away at historically western/incumbant market share. It's just exports. Right now PRC exports ~15% of domestic production. Germany, Japan, South Korea exports >50%, I think US ~20% due to RoW not caring much for SUVs. But light vehicles like Tesla has >50% of Tesla export markets. PRC has a lot of absolute excess capacity, but not really relative to total production vs other exporters. The aggregate export of non PRC players is probably equivalent to another 15-20% of PRC production, a big chunk of which is the PRC market itself. It's still early days, no reason PRC not to aim for 50% exports (15m cars), and if there's tariffs in west, ban domestic western cars and chip away at RoW share. EV also ties into energy charging/infra exports, indigenous semi, RoRo ships etc. There's a lot of strategic synergies.
NicoJuicy 3y ago
One road one belt was a political decision to have more influence. In terms of what rails transport can process versus container ships, it's barely useful. They downsized one road one belt loans to a minimum last years. Most likely because countries can't afford those predatory % ( the details are also not open). The years that China had "interesting" growth are over. Perhaps EV's, who knows.
- seanmcdirmid 3y ago
  There is an article in China daily somewhere a decade back discussing the niche between container ships and air freight. It seemed to be stretching at the time, I think the rail connection to Europe was more about face than practical use, but a lot of points in between in Central Asia aren’t served well by sea.
  - NicoJuicy 3y ago
    Yeah. The main differences are: Plane: very small load, fast ( 1 day) Train : small load, slow ( 2 weeks), obstructing regular traffic for long trains Containers: huge load, slow ( 1 month)
    - seanmcdirmid 3y ago
      It might make sense for some food goods that would spoil on a ship and aren’t high enough margin for a plane trip. But that isn’t really much.
aurareturn 3y ago
Chinese companies always want to export. Same as American companies, if they could. The world is a bigger market. They now have a competitive advantage in EVs. Of course they want to export.
throwaway4good 3y ago
BYD is a commercial company with US financing. They are leading in vertical integration and battery tech which allows them to sell at these price points. They are expanding in export markets because they think they can make money not because of "overcapacity".
deepfriedchokes 3y ago
They’re doing to EVs what they did to PVs.

by csomar 3y ago

echelon 3y ago

> The best argument I liked so far to what's happening is that this flooding of Chinese EVs is due to the internal slowdown of EV sales. They're dumping on external markets. Tariffs will put a stop to this. We'll likely want tariffs if we want to give our domestic auto manufacturers time to adapt. And domestic automotive industry is important to maintaining a manufacturing base for defensive purposes during wartime. > They were just busy building inside but now that they need new export markets and have mostly finished building inside, they are looking outward. Their domestic market is saturated and experiencing economic headwinds. They're looking for external buyers because their internal economy has slowed. There wasn't enough real domestic consumption to prop it all up. > They can out build the West, the developing world and India. For a while. India, Mexico, Vietnam, et al. are ramping up.

seanmcdirmid 3y ago
Tariffs only apply to countries that make cars really, so don’t expect Australia to care much if BYD is selling below cost. America and China already have mutual tariffs in each others cars, China has those with most car producing countries (put in place originally and ironically to protect the Chinese car market)
- echelon 3y ago
  > put in place originally and ironically to protect the Chinese car market Patrick Boyle has a fantastic essay on this: https://www.youtube.com/watch?v=rZgaj0jScOI https://www.youtube.com/watch?v=rZgaj0jScOI
  - seanmcdirmid 3y ago
    There is a 10% tariff in cars from China into the EU (I’m sure that’s reciprocal). > Europe levies a duty of 10% on cars imported from China. That compares with duty of 27.5% in the United States, and China's manufacturers have taken advantage to carve out a significant and rapidly growing foothold in the European https://www.cnn.com/2023/09/13/cars/europe-china-electric-car-subsidies/index.html#:~:text=Europe%20levies%20a%20duty%20of,foothold%20in%20the%20European%20market https://www.cnn.com/2023/09/13/cars/europe-china-electric-ca.... Of course, Europe is more than just the EU. And I don’t think the EU will shy away from protectionism, since China does the same. But in that case I’m sure BYD will just open up a factory in one of the cheaper EU countries (if they haven’t started that already).
    - Al-Khwarizmi 3y ago
      > Of course, Europe is more than just the EU. And I don’t think the EU will shy away from protectionism, since China does the same. But in that case I’m sure BYD will just open up a factory in one of the cheaper EU countries (if they haven’t started that already). Yes, already happening in Hungary. https://www.byd.com/eu/news-list/BYD_to_Build_A_New_Energy_Passenger_Vehicle_Factory_in_Hungary_for_Localised_Production_in_Europe.html https://www.byd.com/eu/news-list/BYD_to_Build_A_New_Energy_P...
Dalewyn 3y ago
>We'll likely want tariffs if we want to give our domestic auto manufacturers time to adapt. Also known as "<Country> First" policy, wasn't too long ago (and presumably still is) that such policies were/are heresy. Note, I agree with protecting domestic economies; I am all for America First, Japan First, UK First, France First, et al.. I'm just amused the same people who screamed "Orange Man Bad" turn on their heels to advocate the same policy just under different words.
- thworp 3y ago
  The reason the world largely went away from high tariffs are many. In the first place they're redistribution scheme from consumers to industries that have the political influence to lobby for tariffs. Secondly they make the domestic industry lazy and increasingly noncompetitive (not just in pricing, also in R&D and market fit). After some years of this, the foreign competition will be so far ahead that they're able to out-compete the domestic industry while producing in-country (see Japanese/German car makers in the US). Regarding cars specifically, which group do you think is bigger: car buyers that would get a $20,000 gift from the Chinese taxpayer (and likely spend those savings in the domestic economy) or people employed in car manufacturing?

seanmcdirmid 3y ago

I think their strategy was always to dominate EV exports, it’s just that until now their supply was mostly eaten up by internal demand. They do need to pay attention to their margins though, if they aren’t high enough this won’t be sustainable (and ya, tariffs). China is hitting that demographic cliff much quickly than Japan did, so I wonder what that will mean in a decade or two. Maybe they will turn more attention to robots next.

wenyuanyu 3y ago
I disagree with the notion that Chinese EV makers, including BYD, have always aimed to dominate EV exports. Their focus has primarily been on satisfying domestic demand rather than targeting overseas markets like Tesla or VW. Given that they've only 1 year something ago emerged from COVID-related restrictions, a shift to an export-focused strategy would require substantial time and effort in research, planning, and marketing to become competitive internationally. While BYD, as one of the earliest players in the EV market and with existing facilities in Mexico and the U.S., may be a step ahead, I believe they're just at the initial stages of exploring overseas opportunities. The EV market competition is likely to intensify in the coming years, but it's still early days for Chinese EV makers in the global arena.
- maxglute 3y ago
  Excess capacity argument is more and more dog whistle for PRC exports that eats away at historically western/incumbant market share. It's just exports. Right now PRC exports ~15% of domestic production. Germany, Japan, South Korea exports >50%, I think US ~20% due to RoW not caring much for SUVs. But light vehicles like Tesla has >50% of Tesla export markets. PRC has a lot of absolute excess capacity, but not really relative to total production vs other exporters. The aggregate export of non PRC players is probably equivalent to another 15-20% of PRC production, a big chunk of which is the PRC market itself. It's still early days, no reason PRC not to aim for 50% exports (15m cars), and if there's tariffs in west, ban domestic western cars and chip away at RoW share. EV also ties into energy charging/infra exports, indigenous semi, RoRo ships etc. There's a lot of strategic synergies.

NicoJuicy 3y ago

One road one belt was a political decision to have more influence. In terms of what rails transport can process versus container ships, it's barely useful. They downsized one road one belt loans to a minimum last years. Most likely because countries can't afford those predatory % ( the details are also not open). The years that China had "interesting" growth are over. Perhaps EV's, who knows.

seanmcdirmid 3y ago
There is an article in China daily somewhere a decade back discussing the niche between container ships and air freight. It seemed to be stretching at the time, I think the rail connection to Europe was more about face than practical use, but a lot of points in between in Central Asia aren’t served well by sea.
- NicoJuicy 3y ago
  Yeah. The main differences are: Plane: very small load, fast ( 1 day) Train : small load, slow ( 2 weeks), obstructing regular traffic for long trains Containers: huge load, slow ( 1 month)
  - seanmcdirmid 3y ago
    It might make sense for some food goods that would spoil on a ship and aren’t high enough margin for a plane trip. But that isn’t really much.

aurareturn 3y ago

Chinese companies always want to export. Same as American companies, if they could. The world is a bigger market. They now have a competitive advantage in EVs. Of course they want to export.

throwaway4good 3y ago

BYD is a commercial company with US financing. They are leading in vertical integration and battery tech which allows them to sell at these price points. They are expanding in export markets because they think they can make money not because of "overcapacity".

deepfriedchokes 3y ago

They’re doing to EVs what they did to PVs.