Doxxing China's electric vehicles to go to sea is difficult: Greatly affected by the lobbying of Japanese companies, some Chinese car companies have called for no infighting
Ganzhou, Jiangxi: New energy vehicles are lined up and waiting to be sold to overseas markets. Source: Visual China.
Contributing Author|Luo Yuan
Edit | Wang Weikai
Produced by | Prism Tencent Xiaoman Studio
"It's the trend. When asked about the recent disadvantages of Chinese electric vehicles overseas, a head of the strategic research department of a Japanese automaker based in Europe told the author of "Prism".
Such an explanation is indisputable, there is obviously a human factor, but it tells you that the rules are like this.
Based on recent developments in the electric vehicle market, it seems possible to conclude that the global electrification process is being slowed down: Mercedes-Benz has abandoned its 2030 all-electric target, Ford has discontinued its star electric models, and the Indonesian government is moving to hybrid vehicles (HEVs), which Japanese cars specialize in.
However, some countries are still subsidizing electric vehicles, but the subsidy rules are more favorable to their own car companies.
On March 19, 2024, Japan's Ministry of Economy, Trade and Industry announced the 2024 EV subsidy, and the subsidy ceiling for the BYD Dolphin model will be reduced by about half compared to 2023, while Toyota's BZ4X model and Nissan's LEAF model remain unchanged.
At the end of 2023, the French government announced a list of subsidized models for electric vehicles, excluding Chinese cars, and also using a scoring method, and the result of scoring according to the rules is: Chinese cars do not meet the standards.
"The current cost performance, product strength and quality of China's electric vehicles are obvious to all, but unfortunately the global automobile market is not an Olympic competition field, but an ancient castle dominated by hidden forces. A senior executive of a Chinese car company in Southeast Asia described it to the author.
Recently, the author of "Prism" interviewed a number of practitioners in the automotive industry at home and abroad, using the European, Southeast Asian, and American markets as the entry point to try to decipher this "ancient castle dominated by hidden forces". According to the author's observations, there are three mysterious forces that govern the castle:
First, market forces, which are dominated by the existing global automotive industry leaders.
Second, at least the lobbying power of car companies, including Toyota, Renault, and BMW. The fundamental aim is to slow down the overall pace of development of electric vehicles and buy time for its own supply chain capacity building, or for the development of its alternative technology (hydrogen fuel cells).
Third, the power of social movements, such as the strike movement of the United Auto Workers.
A senior practitioner gave a suggestion that China's electric vehicles and related enterprises should first unite and gather strength, and secondly, they should focus on breaking through the single market, and come up with the determination to cultivate deeply, long-term investment and patient management.
(The recent disadvantages of China's electric vehicles overseas and the delay of the global electrification trend, the data comes from the Internet, the author makes a map)
"Akio Toyoda expressed the voice of European car companies"
"Toyota, BMW, and Renault are the ones who want to slow down the process of electrification, and the circle knows it, although they all say they support it. A French automotive analyst told the author.
In his view, in an old capitalist society like Europe, if it were not for the interest groups to lobby the government, a matter on which there was a broad consensus in society would not have suddenly and dramatically changed in the middle of the process.
The European Automobile Manufacturers Association (hereinafter referred to as ACEA) is the largest lobbying organization for the automotive industry in Europe, funded and led by 15 car companies such as BMW, Mercedes-Benz, Volkswagen, and Renault, and one of its major functions is to express opinions, lobby the government, and influence policies, and Toyota joined ACEA in 2008.
Renault and BMW, the most important allies of Japanese cars in Europe, have intricate cross-shareholding or business relationships between them.
(Equity and business alliances between Japanese automakers and European automakers, image courtesy of Japan Automobile Manufacturers Association)
From 2021 to 2022, the chairmanship of ACEA was held by Oliver Zipse, CEO of the BMW Group, and since 2023, by Luca de Meo, CEO of Renault. During their tenure, ACEC's lobbying tactics have been more inclined to slow down electrification and support hydrogen and internal combustion engines.
The Chairman of the ACEA is elected by the Board of Directors of the CEOs of the member OEMs and usually serves for two years.
In August 2022, Volvo Cars announced its withdrawal from ACEA, because Volvo Cars believes in pure electric vehicles and plans to transform into a company that sells 100% pure electric vehicles by 2030, and even transferred its fuel engine assets to Geely Automobile.
According to a report by Automotive News Europe on August 3, 2022, the CEO of Volvo Cars has said that the EU's goal is to ban the sale of gasoline vehicles by 2035, which is already later than its goal, but ACEA is still lobbying for further extensions.
In 2023, the EU's fuel vehicles will be torn open. The Council of the European Union, the European Commission, and the European Parliament agreed in October 2022 to ban the sale of combustion engines by 2035, but in March 2023, the European Union approved a regulation that allows the continued sale of internal combustion engines using electronic fuels after 2035.
Volvo Cars has not adjusted its 2030 target at this time, and although ACEA lost Volvo Cars in 2022, it will welcome Nissan in 2024.
On August 31, 2023, ACEA published an article on its website titled "Can Europe Compete with the Chinese Dragon?", bluntly saying that the influx of Chinese cars could fundamentally change the face of European industry, posing risks to European manufacturing and employment.
In October 2023, the EU began a countervailing investigation into Chinese electric vehicles.
On December 14, 2023, ACEA cited a report from the Ecole Polytechnique on its website, saying that EU automakers were on the back burner due to the support of the Chinese and US governments for electric vehicles, and then on January 31, 2024, ACEA published an article on its website calling for more support from the government.
The attitude of European automakers towards electrification has also shifted from support to delay.
As early as July 2021, Mercedes-Benz announced that it plans to achieve 50% of electric vehicle sales by 2025 and achieve full electrification by 2030. Mercedes-Benz's chief financial officer also said in the previous earnings conference that Mercedes-Benz will reduce its investment in internal combustion engine and plug-in hybrid technology by 80% between 2019 and 2026.
As one of the world's top 10 car companies, Mercedes-Benz has sold more than 2 million vehicles, about three times that of Volvo, and Mercedes-Benz is also one of the most determined car companies to electrify, investing 60 billion euros in the transition to electrification by 2026.
However, at Mercedes-Benz's earnings conference in March 2024, the CEO of Mercedes-Benz changed his tune: he postponed the goal of 50% electrification in 2025 to 2030, and will continue to update the internal combustion engine model matrix.
"It cannot be said that European car companies are acting under the orders of the Japanese, but it is said that Akio Toyoda's point of view just speaks to the hearts of some European car companies, so they have adopted similar rhetoric. Said the above-mentioned French automotive industry analyst. Akio Toyoda was one of the first to publicly speak out against electric vehicles, repeatedly stressing that the shift to electric vehicles should not be 100% electric, and that the pace should be slower, and that hydrogen and hybrid energy should be developed at the same time.
However, European automakers are not monolithic in their attitudes towards electrification and China's new energy vehicles.
An interesting phenomenon is the transformation of the French automotive giant Stellantis Group, whose CEO said at the 2022 Paris Motor Show that the EU should increase tariffs on Chinese cars, but at the end of October 2023 announced that it would take a stake in Leapmotor and plan to organize local production of Leapmotor in Poland in 2024.
The driving force behind this comes from Japan
On March 25, 2024, Chinese car companies such as Xpeng and Zeekr made a high-profile appearance at the Bangkok International Auto Show and announced their entry into the Thai market. This has brought this proximity overseas market into the spotlight again.
The automotive market in Southeast Asia has similarities with the domestic market. On the one hand, it is the most important battlefield for China's electric vehicles to go overseas, although the market capacity is not as good as that of Europe, but the distance is close, the relationship is tight, and the largest number of Chinese electric vehicle brands are gathered; on the other hand, the local market was almost monopolized by Japanese cars, and the competition pattern is similar, and the resistance to Chinese electric vehicles is similar.
Relatively speaking, Thailand has the friendliest attitude towards Chinese electric vehicles, and the local government began to implement zero tariffs on Chinese electric vehicles imported from China in 2018. Today, Thailand has gathered the largest number of Chinese electric vehicle brands, including Great Wall, MG, BYD, Nezha, Changan Automobile, Aion, Xpeng, Zeekr, etc.
However, the situation of Chinese electric vehicles in Southeast Asia is not optimistic, and the local market is beginning to see subtle changes.
In Indonesia, for example, hybrid electric vehicles (HEVs), which Japanese automakers specialize in, have significantly surpassed BEVs in 2023. According to the Indonesian Legal Practice Review, the Indonesian government is currently adjusting its policy and plans to include HEV in the incentives.
(Comparison of HEV and BEV sales in Indonesia, unit: units Data from Indonesian Automobile Manufacturers Association, author's map)
The surprise of this turn of events is that the Indonesian government has previously opted for the all-electric route, discouraged HEVs, and even raised the consumption tax on HEVs in 2021.
According to the analysis of a number of senior practitioners, the driving force behind it comes from Japan, and the Indonesian Automobile Manufacturers Association is standing in the foreground.
The Indonesian Association of Automobile Manufacturers, similar to ACEA, is also a lobbying organization. The difference is that its control is concentrated in the hands of Japanese companies, the current chairman is from the Japanese car company Isuzu, the chairman and several vice chairmen are all from Japanese companies such as Honda and Toyota, and only the financial director is from BMW.
In fact, Japanese car companies have always had an important presence in Indonesia. In the first half of 2023, Indonesia's automotive industry received a total of 700 million US dollars in foreign investment, of which 600 million US dollars came from Japan, and more than 40% of the approximately 1 million new cars sold in Indonesia each year are Japanese cars.
The Indonesian government previously proposed to raise its vehicle emission standards from Euro 4 to Euro 5, and the Indonesian Automobile Industry Association posted an article on its website, quoting the heads of Japanese car companies such as Toyota and Honda: The fuel used in the upgrade is more expensive, and the local fuel in Indonesia is not up to standard.
After Indonesia was upgraded to Euro 4 in 2017, it has not been able to continue to upgrade to Euro 5, while neighboring India, Vietnam, and Singapore have all been upgraded.
(Jongkie Sugiarto, First Chairman of the Indonesian Association of Automobile Manufacturers, photo courtesy of the Indonesian Association of Automobile Manufacturers)
In 2019, Indonesia issued Presidential Decree No. 55 to provide incentives for the import of electric vehicles. The Indonesian Automobile Manufacturers Association issued a document in early 2024 pointing out that this policy has caused Indonesia's foreign trade to fall into passivity, and the trade surplus in 2023 will be reduced by half due to large imports. In 2023, the Indonesian government issued Presidential Decree No. 79, which updated Order No. 55.
The new policy requires electric vehicle companies selling in Indonesia to build factories in Indonesia within a specified time, meet a localization rate of 40%, and if they want to receive subsidies, they must pay the equivalent amount of collateral at the bank.
This is actually more beneficial for Japanese companies, which already have relatively complete supply chains in Indonesia. However, due to the lack of local power battery supply, it is difficult for Chinese automakers to meet the requirements of localization rate even if they invest in the construction of OEMs.
The Southeast Asian market is becoming a bridgehead for China's new energy vehicles to go overseas, and many car companies are worried that this transformation in Indonesia may spread to other neighboring countries.
Electrification in the U.S. is slowing down
When talking about the topic of Chinese car companies going overseas, the US market cannot avoid it, although Chinese car companies have been there early, but they have been struggling.
BYD built a factory in Lancaster in 2013 to produce electric buses with a localization rate of 70%, but in 2020, the U.S. Congress passed the National Defense Authorization Act, which prohibits the government from spending money on trains, subways and buses made by Chinese companies.
In fact, as early as the Trump era, the United States imposed a high tariff of 25% on Chinese car imports, and it continues to this day.
The Biden administration's Inflation Reduction Act, introduced in 2022, also stipulates that in order for electric vehicles to receive subsidies, they must be assembled in North America and cannot use Chinese batteries, that is, they cannot be produced in China, and the partners cannot be companies linked to the Chinese government.
Unlike Chinese automakers, Japanese automakers have had a much smoother ride, and the U.S. is the source of more than 50% of Honda's revenue.
In 2008, Toyota encountered a crisis in the United States, and U.S. lawmakers harshly criticized Toyota, but within a few months, the criticism of Toyota in the American media disappeared, and U.S. lawmakers who harshly criticized Toyota changed their tunes and called Toyota a trustworthy company.
Since Honda established its first Japanese car plant in the U.S. in 1983, Japanese automakers have invested more than $60 billion in the U.S., and currently employs more than 100,000 people directly, with a total of more than 2 million people employed through dealers and parts suppliers.
The United States does not need to encircle China's electric vehicles, and its electrification process has begun to slow down.
The most emblematic and dramatic is the electrification of Ford's F150 model. As the best-selling model in the United States, Ford began production of the electric version of the F150 lighnting in April 2022, and the CEO of Ford proposed in May 2023 to invest $50 billion in the development of electric vehicles and batteries between 2022 and 2026, and held a public online meeting with Musk on Twitter that month to discuss the promotion of electrification in the United States.
However, in August 2023, Ford's electric vehicle plant, which had taken six weeks to upgrade, had just reopened, and in January 2024, Ford abruptly announced that it would stop production of the F150 lighnting and divert 1,400 employees from the electric vehicle program, half of whom were transferred to produce the gasoline-powered Ford Remar and Ranger models.
GM originally planned to open a second EV plant in Michigan, but announced in mid-October 2023 that it would be postponed until the end of 2025.
Unlike other regions, the lobbying activities of Japanese automakers have not been visible during the delay in electrification in the United States, with the United Auto Workers (UAW) and U.S. politicians in the foreground.
From September to the end of October 2023, UAW will strike on the three major U.S. car companies, General Motors, Ford, and Stellantis.
UAW also announced in February 2024 that it plans to invest $40 million by 2026 to organize workers at power battery manufacturers, and proposed plans to further unite workers in Mexico.
This will inevitably hinder the development of batteries in the United States, and objectively restrict the development of electric vehicles. In addition, the U.S. will be hindered in its access to low-cost EV parts from Mexico.
In the short term, the biggest beneficiary of the delay in electrification in the United States is still Japanese automakers. The delay in the production and sales of electric vehicles has provided space and time for the promotion of gasoline and HEV models in Japan, and the UAW strike has led to the production reduction of the three major car companies, which has increased the price of American cars and made Japanese cars sell better.
In 2023, Toyota's revenue in the U.S. will increase significantly.
However, the strike struggle of the UAW is also a double-edged sword. Currently, the UAW is expanding its fight to other car companies in the United States, including Toyota, Honda, Mazda, Nissan, as well as BMW, Mercedes-Benz, Volkswagen, and Tesla. Workers' representatives have been vocal on the UAW website, accusing Japanese automakers of persecuting their employees.
However, the UAW said in a statement on its website on March 20, 2024, that attributing the delay to the electrification to the labor movement is a ploy by the billionaire class to shirk their responsibilities and that the demands of workers do not conflict with the electrification process.
"The most important thing for Chinese automakers is unity"
In order to block China's electric vehicles, the global auto market is in a state of deformity under policy restrictions.
The electrification process in overseas markets lags behind the Chinese mainland market. The Chinese mainland market has achieved low electricity specific oil, less than 80,000 yuan of BYD Qin series models, the interior and intelligent level is higher than the same level of joint venture brand fuel vehicles.
However, in the U.S., the gasoline version of the F150 model costs about $36,000, while the electric version of the F150 lightning starts at $50,000, and the Chevrolet blazer model, which is equivalent to about 180,000 compact SUVs in China, costs about $35,000 in the U.S. for the gasoline version and $49,000 for the electric version.
Even in Thailand, BYD's ATTO 3 (Yuan PLUS) model is priced at about 200,000 yuan, which is twice the price in Chinese mainland and much more expensive than the local fuel model of the same level.
On the other hand, HEV models of Japanese automobiles have achieved the same price as the same fuel vehicles overseas due to the complete supply chain and scale advantages. For example, the U.S. market is about $26,000 for the gasoline version of the Toyota Camry and $29,000 for the HEV version.
"The reason for this is the scale effect and trade barriers. A senior executive of China's new car-making car company told the author. Due to the scale effect, coupled with local production, it can be sold cheaply, which can further promote demand and scale, forming a virtuous circle, whether it is electric vehicles in Chinese mainland or Japanese HEV models around the world.
However, overseas, affected by trade and policy barriers, China's overseas production capacity of electric vehicles and batteries has not yet landed, and it is difficult to quickly form a scale effect and the price is high. Overseas car companies, due to their vigilance against Chinese cars and batteries, cannot quickly rely on China's supply chain to reduce the cost of electric vehicles, and they are also caught in a cycle of low scale and high prices.
Toyota's battery plant in the U.S. is scheduled to start production in 2025, and most of the battery production capacity of most European and American automakers will not be put into production until around 2025. In many places overseas, the current charging piles are not sufficient, and it takes time to build.
In addition, it will take several years for Japanese automakers to invest heavily in hydrogen vehicles and solid-state batteries to develop to a stage where they can quickly become popular at low cost.
"In such a situation, half-time and delaying the opponent's attack is the best option. The above-mentioned senior management of China's new car-making forces told the author of "Prism". He believes that under the current situation, the most important thing for Chinese car companies is unity.
Although Chinese electric vehicles have suffered from policy thresholds, trade barriers, and various exclusions overseas, they have not found that foreign car companies have directly attacked Chinese car companies and models. In fact, the most direct and ruthless attack on China's electric vehicles does not seem to come from foreign countries. Mutual harm among Chinese EV peers has been controversial.
In the future, China's electric vehicles may be facing an allied European or Japanese rival. Honda has formed an alliance with Nissan, and there are also voices in Europe calling for an alliance between Volkswagen, Stellantis, and Renault.
For Chinese automakers, it is possible to refer to the development of Japanese automakers overseas, and Japanese automakers are conducting activities in the U.S. as a whole, forming industry alliances, and announcing the amount of investment in the U.S., the number of employees, and donations made by Japanese automakers as a whole.