Text | Lin groaned softly
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Sources: All of the information stated in this article is based on reliable sources, and is detailed at the end of the article
Preface
China's electric vehicles have entered overseas markets, which has impacted American electric vehicle companies, and the United States has hurriedly put forward opinions to Mexico to prevent Chinese cars from continuing to explore overseas markets.
What is the purpose of the United States in doing this, and what is Mexico's reaction?
Don't talk about martial arts
In 2023, BYD's global sales will reach 3 million, and its sales in foreign markets will reach nearly 2.5 million, which means that BYD already has a vast foreign market, rather than relying entirely on the motherland and people to survive.
However, Tesla's global sales during the same period were only nearly 2 million, and like Tesla, sales were not as good as BYD's Ford Motor in the United States.
The financial statements released by Ford in 2023 show that their electric vehicles are in a loss-making state, and they even discount $47,000 for every electric car sold.
Its rival, BYD, is not having a good time in the United States, especially after the United States raised tariffs on China.
The U.S. originally imposed tariffs on Chinese products at a rate of 2.5%, but in 2018, the U.S. was not convinced that Chinese manufacturing products were selling well in the U.S., so it imposed a tariff of 25% on top of 2.5%.
Since then, the United States has to charge a 27.5 percent tariff on imports from China, which appear to be paid by Chinese companies, but in fact American consumers are paying for them.
After paying the tariffs, Chinese companies have no choice but to raise the price of their goods in order to make a certain profit in the United States, otherwise it will be in vain to export goods to the United States.
In this case, the price of goods exported by China to the United States is more than 20% higher than the price of the same category of goods in the United States, which can theoretically make American goods more price-advantageous, but the automobile is an exception.
The cost of automobiles produced by the U.S. automobile manufacturing industry is 20% higher than that of cars produced by mainland car companies.
These two costs are comparable to the tariffs imposed by the United States on Chinese automakers, which means that the price of cars sold in the United States by Chinese tariff pressure is similar to that of cars produced in the United States.
Even Chinese cars are cheaper than American cars, especially electric cars, so outrageous that Americans spend the same amount of money and can only buy one engine from American car companies, while they can buy one car from Chinese car companies.
However, it is also an indisputable fact that there is a difference in the quality of Chinese-made cars and American cars, but Americans can buy a Chinese-made car for only one or two thousand dollars.
In the face of such an affordable price, the gap between the quality of Chinese and American cars is often ignored by American consumers, so that when Ford, which is rooted in the United States, is still losing money, BYD can earn more than $1,500 for every car sold.
The price of electric cars made by continental automakers was $11,400 before entering the United States, and the price did not exceed $15,000 after entering the United States, which is much cheaper than the $53,469 a US car.
There is also BYD's Atto 3 SUV, which sells for $43,000 in the European market, and the price is comparable to the European low-end models, but the quality can compete with the European mid-range models.
In addition to BYD, there are also domestic car companies such as SAIC and Chery, which have also noticed the European and American markets and are ready to show their strength here.
However, there are relatively few mainland car companies entering the U.S. market, because the tariffs here are relatively high, so BYD does not plan to enter the U.S. market this year, but plans to sell cars in Mexico.
Mainland car companies have no choice but to enter the European and North American markets in addition to the United States, such as Mexico, which has some ties with the United States.
In 2018, it signed an agreement with Canada and Mexico about how the three countries can make money together and not involve other countries.
The agreement includes some favorable provisions for Canada, Mexico and the United States, such as the fact that they do not have to pay customs duties to each other when they export goods to each other.
Since the signing of this agreement between the United States, Canada and Mexico, it has become much easier for Mexico to export cars to the United States and Canada.
Their domestic auto manufacturing industry, which accounts for more than 20 percent of the total value of manufacturing production, exports cars to the United States without tariffs means that their auto products are not sold.
Mexico's automotive industry also accounts for 3.8% of their GDP, which means that for every 100 pesos they earn, 3.8 pesos are contributed by the automotive industry.
The U.S. allows Mexican cars to enter the U.S., not just to help Mexico solve its car sales problems, but also to help itself.
Profit comes first
Because the U.S.-Canada-Mexico Trilateral Agreement stipulates that only 75% of a car comes from the U.S., Canada and Mexico to meet the tariff reduction threshold.
In this way, Mexico needs to buy raw materials to produce a car, and the first consideration is the United States and Canada, which bring export orders for automotive raw materials to these two countries.
In 2023, after visiting Mexico, American automaker Elon Musk decided to build a factory here, and also encouraged mainland auto companies to go to Mexico together, and BYD is one of them.
The more companies that set up factories in Mexico, the more investment Mexico can get and more jobs will be solved, which will benefit Mexico more than harm.
The Mexican government is well aware of this, so it provides cheap venues for mainland car companies, and also considerately reduces taxes, so that more mainland car companies can invest and build factories in Mexico.
However, on April 18, foreign media Reuters released an "exclusive news" saying that Mexico or under pressure from the United States, it cannot continue to support mainland car companies to build factories and production in Mexico, nor can it provide preferential policies to mainland car companies.
After Mexican officials revealed the news, the Mexican presidential office and the Ministry of Economy did not respond, they were not far from offending the United States, and they were unwilling to let go and let Chinese car companies leave, and they could not give a clear answer to Chinese car companies for the time being.
Mainland car companies invest in Mexico, and Mexico can also reap the benefits, which is a matter between the two countries, but because of the will of the United States, especially the American executives.
Retreat
The United States believes that mainland auto companies went to Mexico to sell the cars they had produced to the country north of Mexico, that is, the United States.
In their view, mainland car companies are still going around and around trying to circumvent the 27.5% tariff, sell cars to the United States at a cheaper price, and compete more fiercely with their car companies.
Tesla CEO Elon Musk once expressed his views on mainland electric vehicles, and he felt that if the United States had not imposed tariffs on mainland electric vehicles, mainland electric vehicles would have defeated American car companies and swept their markets.
This is because car companies in Europe and the United States produce most of the cars in mid-to-high-end models, and these cars involve industry-leading technology, which is not available in cars in other countries.
European and American car companies rely on their advanced technology and good quality to raise the price of automobiles according to their own ideas, and as for how much to raise the price, it is all negotiated by the automobile giants.
The consensus among these car companies is to raise the price of the same type of car to the same height, everyone has money to make together, and it is European and American consumers who pay for their ambitions.
However, after Chinese automobiles entered the European and American markets, things changed, and Chinese automobiles led by BYD focused on the low-end markets in Europe and the United States, launching high-quality and beautiful car types, breaking the balance of the European and American markets in one fell swoop.
The U.S. auto manufacturing industry is affected by their steel companies, the price of buying steel is high, the production costs they have to pay are also very high, plus they have to engage in research and development, there is no way to compress the price of automobiles too low all at once.
When their auto manufacturing industry competes with China's auto manufacturing industry, there is an advantage in quality, but not much, they do not have an advantage in price, and they do not have the ability to grab customers from Chinese car companies.
Expect one’s son to be talented
In 2023, when Chinese car companies are killing all sides in overseas markets, the United States will personally subsidize car companies by $2 billion, so that domestic car companies can come to their senses and continue to compete with Chinese car companies.
The U.S. has also eliminated subsidies for battery components in order to restrict industries related to Chinese automakers, and since then, the U.S. auto industry has never received U.S. subsidies for importing electric vehicle batteries from China.
They did this because they wanted to make the local manufacturing industry angry and quickly research their own battery products, but they ignored the fact that many minerals needed by batteries were not self-sufficient.
Considering their car import and export problems, the United States also sent the International Trade Administration to investigate and see which other country is impacting the American auto market besides China.
After their investigation, they soon found that Mexico is a country where Mexico exports 20% of its auto parts to the United States, which is still very different from finished automobiles, so it can be said that it does not pose much of a threat to the United States.
But the United States knows Mexico's manufacturing level very well, and they feel that there is another superior behind Mexico, and they quickly found China along the way.
When the U.S. found that Mexico continued to export auto parts to the U.S., Chinese investment in Mexico increased by as much as 126 percent, which means that the U.S. parts produced in Mexico are related to China.
Biden felt that this was very unsafe, and he also proposed that China's electric vehicles should collect user information and threaten the national security of the United States, and Trump, who had similar thoughts with Biden, and promised that he would never condone such things to continue to happen.
There is a big difference between electric vehicles and oil vehicles, oil vehicles contain ninety percent of hardware, while electric vehicles only have three or four percent of hardware, and the rest are software and systems, which are more high-tech than oil vehicles.
The scientific and technological content of electric vehicles, involving intangible intellectual property rights, low cost and high return, simply put, selling electric vehicles is more profitable than selling oil cars, when the United States realized this problem, it vigorously supported its own car companies to carve up the electric vehicle market, but failed to achieve this goal.
No matter what the market, it should be open and fair competition, so that different enterprises can communicate with each other, constantly improve their own problems, and gain the recognition of consumers with their ability.
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Resources
The original article was published in Phoenix.com Finance 2024-04-18 on "Foreign Media: Under US Pressure, Mexico Will Stop Incentives for Chinese Electric Vehicle Manufacturers".
The original article was published in The Paper 2023-03-02 on "The World's Fifth! Musk Officially Announces Tesla's Gigafactory Settled in Mexico to Make the Next Generation of Vehicles".
The original article was published on IT House2024-04-09 on "News that BYD and other Chinese car companies are considering abandoning the US market and turning to the Latin American market".
The original article was published on the 2024-02-24 report on "Urgent? Foreign media: The American Manufacturing Alliance urges the Biden administration to block the import of Chinese-made automobiles and parts from Mexico".
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