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By 2028 they probably won't be able to sell them in Mexico anyway thanks to competition from cheap EVs that the Japanese firms seem bizarrely averse to building

By 2028 they probably won't be able to sell them in Mexico anyway thanks to competition from cheap EVs that the Japanese firms seem bizarrely averse to building. Here's a headline for China last year: > Honda Slashes Gas Engine Production In China After Sales Collapse To Focus On EVs > Honda had a tough year in China, with sales dropping 30.9% to 852,269 units in 2024. This marks the first time in nine years that the Japanese brand has sold fewer than 1 million cars in the country

alephnerd 2y ago
> cheap EVs that the Japanese firms seem bizarrely adverse to building. Because all Japanese car manufacturers are waiting in Idemetsu Kosan to start solid state battery manufacturing by 2027-28, hence why Nissan, Toyota, and Honda all have rollout plans by 2028. Japanese companies prefer to buy from other Japanese companies, as the Japanese government's sovereign fund has voting positions in all these companies. > probably won't be able to sell them in Mexico anyway Most car sales in Mexico remain ICE/Gas driven - overwhelmingly Nissan and GM (Chevrolet) [0]. Not a single EV breaks into the top 50, and the only "Chinese" car that breaks into that list is the ICE MG 5. And if you've ever been to Mexico, you'll see how the Nissan Versa is basically the national car. Mexico is equally nationalistic about Oil, as Pemex is a national institution, and Mexico's oil soverign fund has constantly helped stabilize Mexico's economy [1]. > Here's a headline for China last year Mexico has halted incentives for Mexican automotive manufacturers since 2024 [2]. [0] - https://www.focus2move.com/mexico-best-selling-cars/ https://www.focus2move.com/mexico-best-selling-cars/ [1] - https://www.bloomberg.com/news/articles/2020-04-22/amlo-says-mexico-may-get-6-billion-from-oil-hedge-after-rout https://www.bloomberg.com/news/articles/2020-04-22/amlo-says... [2] - https://www.reuters.com/business/autos-transportation/mexico-facing-us-pressure-will-halt-incentives-chinese-ev-makers-2024-04-18/ https://www.reuters.com/business/autos-transportation/mexico...
- ericmay 2y ago
  > Japanese companies prefer to buy from other Japanese companies. > Mexico is equally nationalistic about Oil Kind of interesting given the broader context isn’t it? I think here in Ohio Honda and LG are working on a joint battery facility too.
  - alephnerd 2y ago
    Yep. You need both the carrot (Biden era IRA/Green New Deal policies) and the stick (Trump Tariffs) to force a reorienting. If these kinds of auto tariffs didn't occur, then there would have been greater parts co-mingling to maximize the benefit of the IRA tax credits - great for companies, but a slap in the face for IRA policies to bring domestic manufacturing back. That said, we need to level set and recognize that most manufacturing that hasn't yet returned (or isn't already in the process of returning) to the US will not return to the US. The tariffs are basically a de facto economic blockade against China and China-adjacent transshipment countries (Vietnam, Thailand), as China now has an overall tariff rate of 65% and Vietnam and Thailand are in the 45-50% range now, while other Asian economies like Japan, South Korea, Taiwan, and India remain at the 20-30% range, with significant exceptions to their top exports (Pharma, Semiconductors, Services of any kind, Auto Parts under an entirely separate tariff scheme) That's why, despite all this, most other countries (except China) have been fairly muted in their response to the tariffs, because even with tariffs they are now cost competitive to Chinese manufacturing.
- matthewdgreen 2y ago
  This sounds like a good explanation, but it's equally ridiculous. Why not just source batteries anywhere you have to, then start launching EV models just to get the production improvement curves started on the new tech? Japan cannot afford to begin this process in 2028. Honda is currently selling EVs made by GM, it's embarrassing.
  - alephnerd 2y ago
    > Why not just source batteries anywhere you have to, then start launching EV models just to get the production improvement curves started on the new tech Why give money to direct competitors like BYD or CATL? The whole reason Japan has been hesitant on traditional li-ion batteries has been because they do not own the IP, and do not want to become dependent on a competitor - Japan and China have been in a trade war since 2011-2012 when the naval showdown happened, and Japan and South Korea were in a trade war from 2019 to 2022. METI has spent tens of billions and decades working on and subsidizing research in domestic li-s battery tech, and Japanese companies have been waiting it out as a result. > Japan cannot afford to begin this process in 2028 They can. EV sales remain a minor fraction of the overwhelming majority of automotive sales globally. And because the entire supply chain and IP for li-s batteries is being built out in Japan and the US, it means that Japanese battery firms like Idemetsu Kosan and Japanese automotive firms are in a unique position to become the dominant supplier. Much of the capex for re-tooling for this already happened in the 2021-2023 period - Honda, Toyota, and Nissan's IRA benefits were directly tied to this expansion, and all these firms spent billions of their own capital expanding capacity on the assumption that they can begin production by 2028.
    - matthewdgreen 2y ago
      There’s a big difference between “becoming dependent on a competitor” and “using a competitor’s products for two to three years so you can shake the bugs out of your EV production process and get a product to market ASAP, then switch to domestic batteries that will soon be available.” This 2/3 year delay in the early part of the adoption curve matters a huge amount for the future of Japan’s EV business, particularly given that China is aggressively working to enter some important markets where Japanese companies have no competing EV product. Buying BYD batteries for two years matters only marginally to the long-term success of BYD.
- devilbunny 2y ago
  I'm not going to argue with your general point - the Nissan Versa is, indeed, the national car of Mexico - but EV's are showing up. Rode in a BYD EV Über in Mexico City a few months ago.
  - alephnerd 2y ago
    Yep! EVs have shown up but the network connectivity is weak outside of CDMX - and Mexico is massive (the size of the entire Eastern seaboard) and not that dense, so range anxiety once outside of CDMX will remain. VEMO is trying to change that [0], but they are concentrating moreso on CDMX at the expense of the rest of Mexico, and a lot of their strategy was based on catering to BYD, which is largely up in the air after the Biden admin pressured AMLO to remove incentives for Chinese automotive manufacturers in Mexico. My hunch is after a couple years, BYD will try to do what SAIC's MG Motors did in India and sell off the entire Mexican subsidiary to a local manufacturer, where MG Motors India is now majority owned and manufactured by JSW Group - a BJP aligned steel and energy conglomerate. I wouldn't be surprised if BYD does something similar now that Nissan is expanding their battery presence, GM+Honda use the same batteries from LG's factories in the US and Mexico, and Volkswagen AG already manufactures batteries in the US. BYD has tried expanding gigafactories for their EV batteries, but they've often faced export restrictions from the Chinese government in these attempts, so I'm not sure a CDK only model like the one they are using in MX today will be competitive for more than 2-3 years. [0] - https://vemovilidad.com/ https://vemovilidad.com/

alephnerd 2y ago

> cheap EVs that the Japanese firms seem bizarrely adverse to building. Because all Japanese car manufacturers are waiting in Idemetsu Kosan to start solid state battery manufacturing by 2027-28, hence why Nissan, Toyota, and Honda all have rollout plans by 2028. Japanese companies prefer to buy from other Japanese companies, as the Japanese government's sovereign fund has voting positions in all these companies. > probably won't be able to sell them in Mexico anyway Most car sales in Mexico remain ICE/Gas driven - overwhelmingly Nissan and GM (Chevrolet) [0]. Not a single EV breaks into the top 50, and the only "Chinese" car that breaks into that list is the ICE MG 5. And if you've ever been to Mexico, you'll see how the Nissan Versa is basically the national car. Mexico is equally nationalistic about Oil, as Pemex is a national institution, and Mexico's oil soverign fund has constantly helped stabilize Mexico's economy [1]. > Here's a headline for China last year Mexico has halted incentives for Mexican automotive manufacturers since 2024 [2]. [0] - https://www.focus2move.com/mexico-best-selling-cars/ https://www.focus2move.com/mexico-best-selling-cars/ [1] - https://www.bloomberg.com/news/articles/2020-04-22/amlo-says-mexico-may-get-6-billion-from-oil-hedge-after-rout https://www.bloomberg.com/news/articles/2020-04-22/amlo-says... [2] - https://www.reuters.com/business/autos-transportation/mexico-facing-us-pressure-will-halt-incentives-chinese-ev-makers-2024-04-18/ https://www.reuters.com/business/autos-transportation/mexico...

ericmay 2y ago
> Japanese companies prefer to buy from other Japanese companies. > Mexico is equally nationalistic about Oil Kind of interesting given the broader context isn’t it? I think here in Ohio Honda and LG are working on a joint battery facility too.
- alephnerd 2y ago
  Yep. You need both the carrot (Biden era IRA/Green New Deal policies) and the stick (Trump Tariffs) to force a reorienting. If these kinds of auto tariffs didn't occur, then there would have been greater parts co-mingling to maximize the benefit of the IRA tax credits - great for companies, but a slap in the face for IRA policies to bring domestic manufacturing back. That said, we need to level set and recognize that most manufacturing that hasn't yet returned (or isn't already in the process of returning) to the US will not return to the US. The tariffs are basically a de facto economic blockade against China and China-adjacent transshipment countries (Vietnam, Thailand), as China now has an overall tariff rate of 65% and Vietnam and Thailand are in the 45-50% range now, while other Asian economies like Japan, South Korea, Taiwan, and India remain at the 20-30% range, with significant exceptions to their top exports (Pharma, Semiconductors, Services of any kind, Auto Parts under an entirely separate tariff scheme) That's why, despite all this, most other countries (except China) have been fairly muted in their response to the tariffs, because even with tariffs they are now cost competitive to Chinese manufacturing.
matthewdgreen 2y ago
This sounds like a good explanation, but it's equally ridiculous. Why not just source batteries anywhere you have to, then start launching EV models just to get the production improvement curves started on the new tech? Japan cannot afford to begin this process in 2028. Honda is currently selling EVs made by GM, it's embarrassing.
- alephnerd 2y ago
  > Why not just source batteries anywhere you have to, then start launching EV models just to get the production improvement curves started on the new tech Why give money to direct competitors like BYD or CATL? The whole reason Japan has been hesitant on traditional li-ion batteries has been because they do not own the IP, and do not want to become dependent on a competitor - Japan and China have been in a trade war since 2011-2012 when the naval showdown happened, and Japan and South Korea were in a trade war from 2019 to 2022. METI has spent tens of billions and decades working on and subsidizing research in domestic li-s battery tech, and Japanese companies have been waiting it out as a result. > Japan cannot afford to begin this process in 2028 They can. EV sales remain a minor fraction of the overwhelming majority of automotive sales globally. And because the entire supply chain and IP for li-s batteries is being built out in Japan and the US, it means that Japanese battery firms like Idemetsu Kosan and Japanese automotive firms are in a unique position to become the dominant supplier. Much of the capex for re-tooling for this already happened in the 2021-2023 period - Honda, Toyota, and Nissan's IRA benefits were directly tied to this expansion, and all these firms spent billions of their own capital expanding capacity on the assumption that they can begin production by 2028.
  - matthewdgreen 2y ago
    There’s a big difference between “becoming dependent on a competitor” and “using a competitor’s products for two to three years so you can shake the bugs out of your EV production process and get a product to market ASAP, then switch to domestic batteries that will soon be available.” This 2/3 year delay in the early part of the adoption curve matters a huge amount for the future of Japan’s EV business, particularly given that China is aggressively working to enter some important markets where Japanese companies have no competing EV product. Buying BYD batteries for two years matters only marginally to the long-term success of BYD.
devilbunny 2y ago
I'm not going to argue with your general point - the Nissan Versa is, indeed, the national car of Mexico - but EV's are showing up. Rode in a BYD EV Über in Mexico City a few months ago.
- alephnerd 2y ago
  Yep! EVs have shown up but the network connectivity is weak outside of CDMX - and Mexico is massive (the size of the entire Eastern seaboard) and not that dense, so range anxiety once outside of CDMX will remain. VEMO is trying to change that [0], but they are concentrating moreso on CDMX at the expense of the rest of Mexico, and a lot of their strategy was based on catering to BYD, which is largely up in the air after the Biden admin pressured AMLO to remove incentives for Chinese automotive manufacturers in Mexico. My hunch is after a couple years, BYD will try to do what SAIC's MG Motors did in India and sell off the entire Mexican subsidiary to a local manufacturer, where MG Motors India is now majority owned and manufactured by JSW Group - a BJP aligned steel and energy conglomerate. I wouldn't be surprised if BYD does something similar now that Nissan is expanding their battery presence, GM+Honda use the same batteries from LG's factories in the US and Mexico, and Volkswagen AG already manufactures batteries in the US. BYD has tried expanding gigafactories for their EV batteries, but they've often faced export restrictions from the Chinese government in these attempts, so I'm not sure a CDK only model like the one they are using in MX today will be competitive for more than 2-3 years. [0] - https://vemovilidad.com/ https://vemovilidad.com/