Produced by丨Tiger Sniff Automobile Group
Author丨Li Mingyang
Header image source丨Visual China
The internationalization of Chinese automobiles is about to reach the 2.0 era.
On May 14, local time, the Biden administration of the United States announced that it would impose tariffs on Chinese electric vehicles and other products. Among them, the tariffs on electric vehicles in China will be increased from the current 25% to 100%.
In September last year, European Commission President Ursula von der Leyen announced that it would launch a countervailing investigation into Chinese electric vehicles to determine whether to impose punitive tariffs on them.
Image source: Visual China
After more than ten years of ultra-rapid development, just as Chinese car companies want to start the road to overseas and let the global market know about China's electric vehicles, they have encountered unprecedented tariff pressure, and this pressure happens to come from Europe and the United States, the two most mature auto markets in the world.
What are the countermeasures for China's electric vehicles to go overseas with tariffs on the United States and the European Union?
The impact of the U.S. market is limited, and Europe may accelerate the construction of factories/joint ventures
When talking about the U.S. market, Lao Zhou (general manager of a self-owned brand stationed in Mexico) said to Tiger Sniff Auto:
1. At present, China's automobiles are dominated by oil vehicles, and the share of electric cars is not so large.
2. At this stage, the export of finished vehicles is still dominated by the markets of Russia, South America, the Middle East and Southeast Asia. With the exception of Polestar, not many Chinese-made passenger cars are exported to the US.
Looking at the global new energy vehicle market, China itself occupies more than half of the share, Europe has 30 percent, and North America has a total of more than 10 percent, so the impact is limited.
When talking about the impact on the European market, Lao Li (general manager of a self-owned brand stationed in Europe) told the author: The international companies of many car companies are more like trading companies at this stage. This underlying logic determines that companies generally do not take the initiative to invest in heavy assets, but focus on exports.
The EU may follow the tariffs like the US, but it shouldn't pull them that high. If the CKD (Completely Knock Down) approach does not work, this incident may indirectly speed up the construction of a local factory.
Image source: Zerorun
But he also believes that the joint venture between Leap and Stellantis may be a way to solve the problem. While Chinese automakers like Leapmotor can leverage their advantages in E&E technology, Stellantis can use its manufacturing base and sales outlets in Europe to bring Chinese electric vehicles into the European market and reduce resistance.
Toyota also experienced trade frictions back then
In fact, the trade friction faced by China's electric vehicles was experienced by our East Asian neighbor Toyota several decades ago.
Under the pressure of tariffs, they did not fall down, but became the world's largest automobile group by sales, expanding their business to more than 100 countries.
Toyota's overseas growth path may not be 100% applicable to the current Chinese auto brands, but it must have reference value. They have gone through the 1.0 export stage; 2.0 Joint Venture Stage; 3.0 The whole system goes to sea stage.
After World War II, Toyota gradually exported economy cars to the international market, mainly the U.S. market, through exports from its own sales outlets and export from trading partners. This is the 1.0 version of Toyota's overseas business: export trade-led strategy.
The price of local labor in Japan is low, and people can endure hardship, and with the help of the progress of the production system, the competitiveness of products has been greatly improved. In the face of such a God-given opportunity as the oil crisis, Japanese cars have opened the door to the international market with the advantage of small displacement and more fuel economy.
Image source: Visual China
But similar to the tariff pressures facing China's electric vehicles today, in the 80s, the Reagan administration announced that it would impose export restrictions on Toyota. In order to solve the impact of international trade frictions and break through the quota limit, Toyota has adjusted its overseas business to version 2.0: trying to build a joint venture with local brands.
After 1985, Toyota began to invest directly in the construction of a joint venture with General Motors in the United States. It not only produces cars in the United States, but also creates jobs and contributes tax revenue to the United States, and also integrates Toyota's lean production.
The transfer of mature technology, the use of local resources, so that the speed of overseas business development, from green cars to high-speed rail.
After that, for specific markets, Toyota began to set up local R&D institutions to open up the entire business chain of business strategy, technology research and development, product planning, manufacturing, marketing, channel management, and after-sales maintenance. Version 3.0 of the international business strategy has established Toyota's position among the global automotive giants.
Of course, the story between China and the United States today is very different from the story of the United States and Japan back then, but the story of Toyota's more and more frustration may also inspire many Chinese car companies.
International car companies have to go through a complete economic cycle
The author once worked in a leading new car brand for a year and a half in the European market. We know how difficult it is for Chinese car companies to enter a mature overseas market.
Technology and products are only the first step in the long march, the study of local laws and regulations, the understanding of user habits, how to solve the certification, warehousing, logistics, after-sales accessories and charging services, and how to create a talent organization that not only adapts to the local culture, but also can be in line with Chinese enterprises.
Without the support of these systematic capabilities, Chinese car companies want to convey brand power and product power to the outside world in unfamiliar overseas markets at the same time, just like the NBA rookie wall, it is a high probability event to hit the wall.
Image source: The author took a photo at the ZEEKR Amsterdam store
The above is just the level of surgery. At the level of the road, if an automobile company wants to truly embark on the international track, there are more dimensions that need to be improved.
Li Bin once said in an interview on the topic of going to sea: never have the mentality of a conqueror. We are proud, but we don't have the concept of "I'm better than you".
I know this well in my dealings with overseas partners. Wolf nature, involution, and zero-sum games seem to be commonplace for us, and even the remarks of missing the birth of a child overtime and still fighting on the post for four consecutive times can appear at the press conference of a brand.
But this kind of realistic narrative, if placed in overseas markets, will only attract strong resistance to a large extent. Why does the topic of ESG (Evaluating the Sustainability of Business Operations and the Impact on Social Values from the Three Dimensions of Environmental, Social and Corporate Governance) exist? That's the point.
Looking back at the history of the development of the global automobile industry, truly international car companies must have experienced a complete economic cycle. During the Spring Festival this year, the author took my family to Stuttgart to visit the Mercedes-Benz Museum, which has a wall that records the growth history of the inventor of the automobile.
Image source: The author took a photo at the Mercedes-Benz Museum in Stuttgart, documenting the globalization of Mercedes-Benz
World War I, World War II, trade wars, the Cold War, economic crises, oil crises, the collapse of the Soviet Union, the division and merger of East and West Germany. Mercedes-Benz faced several crises, but in the end it survived.
In the era of the rapid development of China's car companies, it is not only a time of peace, but also a rare economic upward cycle in the context of reform and opening up and accession to the WTO. Although China's electric vehicles have made great progress, they are still too young and have experienced too few twists and turns compared to century-old brands.
Looking back on this tariff incident many years later, it is just a footnote to the internationalization of Chinese car companies.
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