The United States' calculation of attacking Chinese cars may fail, and domestic car companies are not domestic mobile phones

Text/Wang Xinxi

A few days ago, U.S. President Joe Biden declared that Chinese cars could flood the U.S. market, "posing a risk to national security" and said that he would "take unprecedented action" to deal with it.

During the period, Raimondo claimed that Chinese-made smart cars could "collect data from millions of Americans every minute" and that "if there are 3 million Chinese cars on the road in the United States, Beijing can turn them off at the same time". The remarks sparked controversy.

We will find that what is supposed to come will eventually come.

"It's a routine, we always blame others for what we do. Some American netizens said so.

"I'm curious, what kind of cars are flooding the United States in China?", some netizens pointed out sharply. Because of the existence of trade barriers in the United States, the export market of domestic cars is mainly in the Middle East, Russia, Asia, Europe and other markets, and Chinese cars cannot enter the American market at all, the largest foreign brand in the American market is Toyota, and the biggest competitor is Toyota. From a competitive point of view, the United States wants to restrict Toyota, not China's smart cars.

Chinese cars can't enter the U.S. market, so why should Biden attack the Chinese market on "national security" grounds?

Behind this, the direct reason is the election campaign, which wants to win the votes of domestic auto workers. As early as October last year, Trump had emphasized that he would support fuel vehicles, rather than supporting electric vehicles like Biden, because if he supported electric vehicles, it would make a large number of fuel car company workers in the United States lose their jobs.

Therefore, Biden's high-profile announcement that he will take action against Chinese cars is essentially a clear banner to compete for the basic market that originally belonged to Trump.

Second, the manufacturing industry is returning to the United States to compete for the electric vehicle industry chain.

The U.S. investigation is not limited to electric vehicles of "Chinese brands" or "Chinese companies", but electric vehicles made in China, so the United States is targeting the Chinese industrial chain of electric vehicles, and the "American" Tesla models produced in Shanghai are also in scope.

Later, with the growth of Apple, the core suppliers of Apple's industrial chain Foxconn and TSMC were driven to build factories in the United States on the grounds that the manufacturing industry returned to the United States.

Now the United States may want to play this trick again, and when your industrial chain matures, I will let the industrial chain companies that are attached to the major automobile manufacturers return to the United States. Let the OEMs and supply chains that are dependent on the electric vehicle industry chain produced in China have no orders, forcing these companies to build factories in the United States and promoting the development and employment of the American manufacturing industry.

Therefore, the United States is actually eyeing the fat of the new energy industry chain, and it hopes that the United States will also have it, and it is best to bring China's mature supply chain manufacturers to the United States.

The third purpose, of course, is also to suppress the global development of China's electric vehicles, Reuters report pointed out that China will become the world's largest auto exporter in 2023, with 4.91 million vehicle exports, a year-on-year increase of 57.9%. NEV exports totaled 1.203 million units, reflecting a 77.6% y/y increase. According to a report released by the US market consulting firm Rhodium Group, China's OFDI in the EV value chain could hit a new record in 2023.

At present, the penetration rate of new energy vehicles in the United States and Europe is accelerating, and the penetration rate of new energy in European countries such as Germany, France and the United Kingdom is about 30%, and the acceptance of new energy vehicles is very high. Although the U.S. market has not been knocked open because of trade barriers, the U.S. is really worried. In the United States, passenger car sales in 2023 will be 15 million units, and the new energy penetration rate will be 11%. China's passenger car sales in 2023 will be 30 million units, and the penetration rate of new energy will be 35%. The U.S. market is inferior to China in terms of market size and the development of new energy vehicles.

The U.S. is more worried that Chinese automakers will use Mexico as a springboard to set up related companies in Mexico to export cars and related parts from Mexico to the United States.

After all, the automobile industry in the Western world camp led by the United States is a pillar industry for the United States, Germany, Japan, South Korea and other countries, which is related to the contribution of a country's employment population and GDP output value.

The United States wants to attack Chinese automobiles on the grounds of "national security", which also conforms to the wishes of old European car companies.

A while ago, the Germans destroyed 22 Volkswagen ID6 imported from China, and the entire cost of destruction was borne by the import dealers, which essentially shows that these old automobile countries need the protection of trade barriers, otherwise the pillar industries are worried, and they actually have common interests.

Abacus or failure, domestic new energy vehicle companies are not domestic mobile phones

To sum up, we still have to be wary of the possibility that the United States may engage in chip blockade in the new energy vehicle industry.

But the other party's calculation is likely to fail, because domestic car companies are not domestic mobile phones.

From the perspective of the domestic new energy vehicle industry, unlike smart phones, the core technology and important components of the three electric vehicles have basically been localized. AI computing power chips, on-board computing power, in fact, there are solutions in China.

At present, it is not difficult for Texas Instruments and other chips to complete domestic substitution, because the requirements for space and power consumption of automobiles are actually much lower than those of mobile phones. Other related RF, Ethernet switching chips, MCUs, etc., in fact, localized substitution is also possible.

The key is that China controls key mineral resources and technologies such as batteries, lithium, graphite, and nickel in the electric vehicle industry chain.

In general, the core components of new energy vehicles, the United States can restrict China's part is very small. On the contrary, if the United States wants to develop electric vehicles, it must rely on China's industrial chain resources and technology.

In the past era of fuel vehicles, when the West was in an absolutely dominant position, it played the banner of "open trade", but now when it is in a disadvantageous position in the wave of smart electric vehicles, it has begun to turn to trade protection.

The U.S. calls and restrictions may lead other European countries to introduce restrictive policies. Since the largest export markets for Chinese cars are Russia, Southeast Asia and other markets, there is an impact, but not much. However, Chinese manufacturers still need to be prepared earlier.

Notably, the Biden administration is planning to sign an executive order restricting the import of Chinese smart cars and related parts into the U.S., as well as expanding the scope to electric vehicles and parts in all third-party countries.

For some car companies, it is now necessary to open sales channels in markets where the United States has a weak influence, such as third world countries and Southeast Asian markets, but if the United States expands the scope of parts and automobiles to electric vehicles and parts in third-party countries, then this may also affect the layout and sales in other countries. Therefore, we cannot take Biden's words lightly.

Therefore, based on this direction, the most important thing is that the dominance of the underlying technology of new energy vehicles cannot be lost, especially in chips and operating systems. In the fields of automotive operating systems, intelligent control systems, and artificial intelligence models, domestic car companies should further deepen their efforts and not lose their dominance.

If you want to wear the crown, you must bear its weight, and the wood show will be destroyed by the forest wind, and the worries and encirclement of foreign countries do not just show that China's new energy vehicle companies are taking the right road? But from the current point of view, the overseas market is also the most difficult road.

From the basic bottom layer to the product layer to achieve higher standards, from product quality to the supply chain, the basic bottom layer has no shortcomings in all aspects, the impact of dimensionality reduction product power on consumers is very direct, which is undoubtedly the direction of evolution of domestic cars.

Judging from the current development of domestic new energy, domestic car companies are rising in all directions, and they are no longer in the state of domestic mobile phones that are subject to people everywhere, and the strategy of "high wall encirclement" may eventually be difficult to stop the development of China's new energy vehicles in overseas markets, and we maintain our expectations.

Author: Wang Xinxi, Senior Reviewer of TMT This article is not reproduced without permission