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It's called dumping EVs with state subsidies to hollow out automobile industries in the west and Japan. No thanks.
by nextworddev 2y ago
It's called dumping EVs with state subsidies to hollow out automobile industries in the west and Japan. No thanks.
- presentation 2y agoOnly because the west and Japan are failing to subsidize their own industries. This is called competition. Yes please.
- FooBarWidget 2y agoBesides, reducing all of these achievements in EV technology to mere "subsidies" is being willfully blind. CEOs of incumbent car makers have been communicating for some time now how competitors such as BYD have a real technological edge thanks to research, innovation and having painstakingly built large, comprehensive and efficient supply chains. Subsidies are somewhat involved but not that much, especially considering that (1) subsidies are declining, (2) EU and US also subsidize. Have people ever looked at EV tax breaks in the Netherlands, or more in general tax breaks for any sort of R&D work (WBSO)? Nobody ever complained about that. Cars such as by BYD are already profitable even without subsidies. That's why subsidies are declining. One really has to ask oneself: if we subsidize incumbent automakers, are they really going to achieve the same level of competitiveness and innovation? Or will they just use it to launder more profits for shareholders? Be honest.
- tooltalk 2y agoIt's not just mere "subsidies," there is also blatant protectionism. CEOs of incumbents car makers have been warning against the Chinese gov't unsavory anti-market practices to protect their local battery companies and achieve market dominance past 10 years, such as: 1. Power Play: How China-Owned Volvo Avoids Beijing’s Battery Rules Car maker is allowed to use high-end foreign technology, while rivals are squeezed into buying local, Trefor Moss, May 17, 2018, the Wall Street Journal ... China requires auto makers to use batteries from one of its approved suppliers if they want to be cleared to mass-produce electric cars and plug-in hybrids and to qualify for subsidies. These suppliers are all Chinese, so such global leaders as South Korea’s LG Chem Ltd and Japan’s Panasonic Corp. are excluded. ... Foreign batteries aren’t officially banned in China, but auto executives say that since 2016 they have been warned by government officials that they must use Chinese batteries in their China-built cars, or face repercussions. That has forced them to spend millions of dollars to redesign cars to work with inferior Chinese batteries, they say. ... “We want to comply, and we have to comply,” said one executive with a foreign car maker. “There’s no other option.” 2. Why a Chinese Company Dominates Electric Car Batteries, Beijing gave CATL lavish subsidies, a captive market of buyers and soft regulatory treatment, helping it to control a crucial technology of the future. Keith Bradsher and Michael Forsythe, Dec. 22, 2021, The NYTimes 3. The Key to Electric Cars Is Batteries. One Chinese Firm Dominates the Industry. Beijing built the world’s largest EV market, then pressured foreign car makers to use its batteries, Trefor Moss, Nov. 3, 2019, WSJ ... China is by far the biggest EV market, and to boost its standing in the fast-growing industry, China began pressuring foreign auto makers to use locally-made batteries ... Auto makers weren’t pleased, but they fell in line. During a visit to CATL headquarters in 2017, three Daimler AG executives displayed their irritation shortly after the meeting started, recalled Jiang Lingfeng, then a CATL project manager who prepared a technical briefing for the visitors. One Daimler executive cut off his briefing, said Mr. Jiang. “We’re not interested,” the executive said, according to Mr. Jiang. “The only reason we’re here is that we have no choice, so let’s just talk about the price.” ... Still, auto makers bridled at CATL’s dominance, according to Mr. Tsao, the former supply-chain manager there. CATL’s batteries also cost 25% more than those of leading rivals because the company was still learning to mass-produce cost-effectively, he said. “The price is high, and the service is slow,” he said, summing up CATL’s proposition to auto maker clients. ... “What the government did was a good thing for China,” said Mr. Jiang, the former CATL project manager. “Without its restrictions, I don’t think CATL would ever have been successful.” Let's not forget that the EU also followed up with a WTO complaint against China for their NEV regulation that forced tech transfer (see WT/DS549) in 2018, and waited over 6 years to take a countervailing measure (2024/1866) against prohibited subsidies practices.
- tooltalk 2y agoI think we should stop pretending that Chinese EV/battery companies can compete on their own without Papa Xi's big wallet or baton to keep out foreign competition.
- FooBarWidget 2y agoWhat does that even mean? Direct EV subsidies are already gone. In the first place, they were meant to start up an industry, not to be sustained forever. On a higher level, I find your thinking weird. Nobody ever said "let's not pretend $HIGH_SCHOOL_STUDENT can compete on its own without papa's wallet". Everybody thinks that it's natural to invest in a child's education until they can compete on their own in the world. College enrollment rates have only recently reached a high level.
- presentation 2y agoYou’re delusional, Chinese car factories are way more automated and advanced than our own, and they’re just seeing the benefits pay off. I think we should stop assuming that Asians can’t produce quality work.
- bdangubic 2y agoasians? - definitely make great stuff. chinese specifically? - they will have to prove that they can in fact make good quality products. I have bought hundreds of chinese products over the years and last thing I would subject myself to (and especially my wife and daughter) is chinese vehicle… they have a steep hill to climb to convince us that have bought many chinese-made goods that they can make good quality products
- tooltalk 2y agoAgain, no need to pretend that China's EV/battery domination comes from China's market competitiveness or technical advancement.
- petre 2y agoOh but they do, only they subsidize dirty diesels. https://www.transportenvironment.org/articles/subsidies-for-petrol-and-diesel-company-cars-cost-eu-taxpayers-eur42-billion-every-year https://www.transportenvironment.org/articles/subsidies-for-...
- tooltalk 2y agoironic comment, considering that the Chinese gov't fossile fuel subsidies's is by far the largest in the world -- or $270+B vs. $3B US (see the IMF's 2023 Fossile Fuel Subsidies Report). All that to support cheap energy and overcapacity.
- jychang 2y agohttps://insideevs.com/news/716063/china-ev-subsidies-byd-tesla-billions-study/ https://insideevs.com/news/716063/china-ev-subsidies-byd-tes... > China’s aid to domestic new energy vehicles amounted to roughly $5.6 billion until 2022 when the direct payments to manufacturers were phased out. $5.6 billion in subsidies over 10+ years. Ford has $29bil cash on hand Q3 2024. GM has $32bil cash on hand Q3 2024. Tesla has $33bil cash on hand Q3 2024. This is all public data (legally required for all publicly traded companies) anyone can check. American car companies don't need subsidies. They need to be less incompetent about spending their money, and whine less begging for USA government subsidies. If you believe the USA should send more money to their car companies, you're a sucker who fell for propaganda from car companies who are asking for handouts to increase their profit margin.
- FooBarWidget 2y agoWhy should the green energy transition be bottlenecked by entrenched incumbent players' profit margins? Are their profit margins more important than averting global climate disaster? We have a green technology undercapacity, not overcapacity.
- kayewiggin 2y agoWhy should Europe allowed China to attack and destroy its car industry, when China is also helping Russia destroy Europe militarily? Good thing Europe woke up earlier this year. impact of the EU’s tariffs on Chinese EV manufacturers. In November, Chinese automakers captured just 7.4% of Europe’s EV market, a noticeable drop from 8.2% in October and their lowest share since March [1]. As for US, the 100% tariff has safely protected America from Chinese EVs thus far. [1]https://www.autoblog.com/news/chinas-ev-invasion-hits-a-wall https://www.autoblog.com/news/chinas-ev-invasion-hits-a-wall
- FooBarWidget 2y ago> China is also helping Russia destroy Europe militarily This is a disingenuous framing based on the mere fact that China continues to do business with Russia. China also continues to do business with Europe and Ukraine, so one can just as easily argue that China is helping Europe destroy Russia. Have you seen the number of Chinese-made commercial-grade drones used by Ukraine? China is "destroying European carmakers" as much as your local supermarket A "destroying" supermarket B. It's called competition. As someone else said, Chinese subsidies have already declined, way way before the EU tarriffs went into effect, and the EU and US can also decide to subsidize their carmakers.
- kayewiggin 2y ago> Have you seen the number of Chinese-made commercial-grade drones used by Ukraine? China Is Cutting Off Drone Supplies Critical to Ukraine War Effort [1]. China is reportedly making drones for Russia instead, according to multiple intelligence officials. [1] https://www.bloomberg.com/news/articles/2024-12-09/china-is-cutting-off-drone-supplies-critical-to-ukraine-war-effort https://www.bloomberg.com/news/articles/2024-12-09/china-is-...
- meyum33 2y agoIIRC Chinese EV manufacturers on average lose like 9k USD per car sold.
- Arnt 2y agoWhen is the number from? Is it one of the numbers where someone has divided the cost of building a new factory by the number of items produced in the first year and arrived at a huge loss per item produced?
- maxglute 2y agoPRC subsidy is like $2000 per car and decreasing, substantially lower than US domestic subsidies per vehicle. They're also selling for 2x PRC MSRP abroad, i.e. Euro EVs like 15000-20000 more expensive. Explicitly to avoid dumping and to make up thin margins in competitive domestic market. They don't need to dump to be competitive, reality is western automobile industries currently can't remotely compete, hence tariffs to buy time until they can, or forever because they simply can't.
- nextworddev 2y agosay your figure is correct. now also tally the subsidies on all of bill of materials as well as favorable loan terms.
- Arnt 2y agoI think you're saying that if Ford buys cheap and good batteries from CATL that's fair, but if BYD does that's a hidden subsidy. Right?
- nextworddev 2y agoYou are assuming that Ford and BYD pays same prices, but are you sure about that?
- Arnt 2y agoI consider it very likely. I shared office with an enterprise salesman for a year. We talked over lunch. Among the things he said: If you want to sell to someone in the long run, then be honest with them. Don't give their competitors better prices and lie about it. It's okay to tell someone that their competitors get better pricing because of volume or for other understandable reasons, but lying is not okay, because people will find out eventually and then your long-term relationship goes sour. CATL clearly wants to be a really big battery vendor and sell to lots of battery purchasers. I consider it very likely that they treat Ford well.
- jychang 2y agoEV companies haven't been directly subsidized in China since 2022. https://www.fastmarkets.com/insights/slowdown-in-china-ev-sales-expected/ https://www.fastmarkets.com/insights/slowdown-in-china-ev-sa... > As of January 1, 2023, OEMs in China are no longer offered financial subsidies for EV production https://insideevs.com/news/716063/china-ev-subsidies-byd-tesla-billions-study/ https://insideevs.com/news/716063/china-ev-subsidies-byd-tes... > China’s aid to domestic new energy vehicles amounted to roughly $5.6 billion until 2022 when the direct payments to manufacturers were phased out. China doesn't pay out any direct subsidies to their EV manufacturer. They only has a tax rebate for new EVs now- just like the USA $7500 tax rebate for EVs. And USA companies like Tesla can get that rebate in China as well, so the playing field in the Chinese market has been even since 2022. China has given a total of $5.6bil in subsidies over 13 years. Ford (by itself) has $36bil cash on hand in Q3 2024. Ford, by itself, can easily spend enough R&D money to match China. These are all numbers that anyone can read SEC filings to verify. Talking about "Chinese subsidies" is just pathetic whining and propaganda by western car companies, to cover up for their incompetent mismanagement when they can easily do it themselves. If you hear a car company whine about Chinese subsidies, that just means they want your tax dollars to pad their profits.
- maxglute 2y agoAll of the excuses - subsidy, dumping, weak domestic consumption -> export overcapacity (despite % of auto exports lower than JP/SKR). PRC is doing to EVs what Ford did to Model T (500USD when competition cost $2000). Anyone with a brainknows it's technically possible to make extremely cheap basic cars, but in most places with entrenched auto interests, not politically feasible.
- codedokode 2y agoSome Western countries also offer subsidies or other benefits for buyers of solar panels or electric cars.
- tooltalk 2y agoUsually no problem with subsidies as long as it is local (eg, GM bailout). China's gov't subsidies to promote export in markets abroad or undercut foreign competitors are generally prohibited.(see Article 3 Prohitibion of the WTO's Subsidies and Countervailing Measures Agreement).
- awongh 2y agoThis is also seems to be the main factor in the exponential adoption of solar panels/energy. Yes, it's a trade war with geopolitical implications. But not sure that it outweighs exponential adoption of solar energy. The same might be true here.
- ZeroGravitas 2y agoThere's actually been a lot of research into this for PV that probably applies to EVs too. After initial government support from western nations mostly it's been economies of scale and innovation that have dropped the price of PV. Prices that have been called dumping (i.e. sold cheaper than they sell in the home market, which harms the foreign manufacturers in an unfair way) have repeatedly been further beaten by the next generation of panel. I expect to see similar with batteries, the main component by cost of EVs.
- CalRobert 2y agoTo be fair this is nothing new, look at the Chicken Tax for instance
- tooltalk 2y agoThe Chicken Tax was initially a response to Europe's protectionist measure against American poultry imports. I see how it eventually turned into a protectionist racket, but most never seem to look at the source of the problem. I feel that the same way about EVs, or EV batteries in particular.
- dalyons 2y agoYour opinion. To me it seems like actual innovation, and delivery on the cost promise of EVs (vastly simpler internals, so they should cost less) The west is going to screw around with tarrifs which will delay the inevitable for a few years, at massive cost to their consumers, while the rest of the world jumps ahead to cheap green cars.
- dalyons 2y agoThey have better technology. Better batteries, innovative drive trains, cheaper chassis, better product market fit. This is supposed to be a pro technology forum.
- bravo33 2y agothat is the problem they cannot deal with the truth if the car is better you have to recognize that regardless of where it is made. The Chinese absolutely dominate on batteries they also have unique IP on different types of batteries, they are cheaper, better charging cycles, the best energy density at scale. They are also competing in the luxury watches category which I am have a keen interest in I have a few collection that I have acquired apart from the ones I got from my fathers estate, the quality and cut of the sapphire they use on the watches, the jewels they use is getting better, the hairspring, the gear each category is getting better. I am telling you that the Chinese watch industry can now produce a better quality watch than the rolex detona including a better movement they only thing that people can argue against now is that they can't write the word "ROLEX" on it and that they don't have "Heritage" ( which they don't because they cannot go back in time, but I'll tell you want they can do they can go forward which is better), every measurable quality like finishing and polish everything better in every way physically other things like marketing and thing that exist in the customers mind they can't control.
- tooltalk 2y agoThat's not exactly how it happened. Sony of Japan was the first to successfully commercialize lithium ion batteries, most commonly used in EVs, in the early 1990's; quickly followed by South Korea -- most or 3/4 of all active lithium ion battery patents come from either Japan or South Korea. China was very late to the EV battery game and LFP was more or less their only choice, which was deemed inferior for EVs due to its low energy density, but whose core patents were all about to expire -- ie, great for exports. They are effectively patent-free now. In short, the Chinese gov't essentially forced all key EV battery industry leaders to waive their IPR to access China's local market; then effectively banned them and forced their customers, EV OEMs, to switch to local Chinese battery suppliers, who were still learning to make batteries under MIIT's Regulation on Power Standard since 2015/2016 (announced/enforced). That's essentially how China came to corner the battery supply-chain and scale up/commoditize their production at the expensive of everyone else past 10 years.
- Yeul 2y agoYou know it's okay to admit that China is better at something... This blind patriotism doesn't help in staying competitive.
- tooltalk 2y agoWe also know that most Chinese battery companies would have been crushed by foreign competitors from Japan and South Korea, had the Chinese gov't effectively not banned them and forced their customers to switch to local Chinese battery makers since 2015.