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.
... 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.”
I don't know any specifics of Ford and CATL, but it was always the Chinese gov't driving their growth either by protectionism or undercutting foreign competitors with subsidies which is why Chinese EVs are being pushed back by the trade regulators in EU/US/Turkiye/France/etc..
I have no reason to believe that it was motivated China's altruism to pass the best price to their American customers.
China's cost competitiveness comes from China's protectionism and subsidies past decade. The EU Commission has already conducted an antisubsidy investigation against Chinese EV imports and imposed countervailing measures earlier this year (see EU's Implementation of Regulation 2024/1866) based on prohibited export subsidies given to Chinese EV makers (or MIC EVs).
The outcome of that investigation was predetermined.
The French government began pushing for tariffs. The Germans opposed the idea, but France turned out to have more political support on this issue. The EU needs a technical justification for tariffs, so the Commission launched an investigation. That investigation came to the conclusion it needed to in order to justify the policy that had already been decided on at the political level.
The conclusions of the report are petty ridiculous. China has a much more competitive EV market than the EU does, and Chinese manufacturers are much lower cost as a consequence. When Chinese companies export EVs to Europe, they sell them at a very substantial markup, which is the exact opposite of dumping.
The types of subsidies the EU is complaining about are the exact same types of subsidies that EU countries themselves (and US states) give. They're things like government funding for charging infrastructure and sales-tax exemptions.
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).
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?
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
The car industry that closed factories all over Europe and sold expensive cars made in poor countries?
"Too big to fail" is not a product statement.
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.
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-...
What damaged the EU cae makers was that they had a very good market in China, and Chinese EV makers could step up and make cars that were more desirable/affordable for their domestic market. The loss of profits in China is what hurt everyone, because that country alone is a very large market.
Guess who's whining? China filed a WTO complaint (WT/DS623) against the US IRA earlier this year, accusing the US of violating what China has violated past 10 years.
The EU is also working on theirs, called CRMA approved earlier this year, but nothing that would match Papa Xi's blatant protectionism; or China's annual $270B fossile fuel subsidies to support cheap energy or overcapacity; or China's insatiable appetite for coals and carbon emission.
Sounds like you're proving my point: they care more about protectionism than about averting global climate disaster.
Yep, exactly. It's not "sounds like" -- China's protectionist, mercantilist trades practices have no place in this side of the water. The world is really not too interested in China's weaponization of clean energy or resources.
You're not making sense.
No need to pretend Papa Xi's mercantilism is all about original innovation, working 996, or Qian Xuesen's vision.
> 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.
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.
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.”
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.”
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.
https://www.transportenvironment.org/articles/subsidies-for-...
All that to support cheap energy and overcapacity.
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-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.
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.
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.
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.
I feel that the same way about EVs, or EV batteries in particular.
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.
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.