Currently, the competition between European, American, and Chinese car manufacturers is like a battle between two strongmen.
One swings a left hook but misses, quickly retracts the punch, and prepares to launch a right uppercut.
Reviewing a few significant events in 2024 that have impacted the new energy vehicle industry:
1. Several car companies, led by BYD, launched low-cost new energy vehicles priced under 80,000 yuan, attempting to capture the market.
2. Several European and American car companies announced adjustments to their new energy vehicle plans, and even Apple abandoned its car-making plan.
3. Chinese authorities criticized the three centrally-administered major car companies, pointing out their slow development in the new energy vehicle business.
In summary, foreign brands are retreating in the face of the technological and cost advantages of Chinese car companies, even abandoning the new energy vehicle market to focus on the traditional fuel vehicle market.
However, intelligent new energy vehicles represent the future of the industry. How could European, American, and Japanese car manufacturers easily give up on this field?
If they indeed abandoned it, wouldn’t a trillion-dollar automotive industry fall entirely into the hands of Chinese companies in ten years?
The only reasonable explanation is that European, American, and Japanese car companies, unable to compete with Chinese car companies in terms of technology and cost, might adopt different strategies to compete with Chinese car companies.
Currently, China's new energy vehicle industry faces three major risks:
1. The shareholding structure of some car companies has too much foreign investment, posing a risk of foreign control.
2. In recent years, some car companies have expanded massively with large debts, investing hundreds of billions and occupying thousands of acres. The price war at the beginning of the year showed that the current production capacity is severely overstocked.
3. During the transition from electrification to intelligence, the foundation is unstable. Except for Huawei, China heavily relies on American companies like Nvidia for high-end automotive chips, posing a risk of supply disruption.
European and American car companies have noticed these risks and plan to tackle China's new energy vehicle industry through means other than technology and cost.
Drawing from their experiences in targeting Japan’s semiconductor industry and China's Huawei phones, they might adopt the following measures:
1. Restricting the development space for Chinese new energy vehicle companies, confining them to the domestic market.**
1. Large foreign companies are generally a combination of capital and government.
Whether it’s the lobbying system in the United States or the Rhine capitalism system in Germany, capital uses various means to prompt the government to enact regulations beneficial to corporate development.
Currently, European and American car companies announcing the abandonment of new energy vehicle plans means they will temporarily halt lobbying their respective governments, thereby locking down the development space for new energy vehicles.
2. Not only will the development space be locked down, but European and American car companies might also use NGOs to stir public sentiment on issues like battery pollution, data privacy, and fire safety, creating obstacles for Chinese new energy vehicle companies and hindering their business expansion in those regions.
3. If the above measures fail to confine Chinese new energy vehicle companies domestically, Europe and America might directly impose anti-dumping and tariff barriers to ban Chinese cars from entering their markets.
2. If the above measures are successful, Chinese car companies’ vast production capacities cannot be released, leading to intense domestic competition.**
The U.S. successfully used industrial cycles and financial means to crush Japan’s semiconductor industry, and Europe and America are likely to replicate this strategy with China’s new energy vehicle industry.
Considering that domestic car companies blindly financed and borrowed for expansion, accumulating high leverage, some companies face high risks of breaking their funding chains and going bankrupt for restructuring.
In such cases, foreign capital might take advantage and acquire or control Chinese new energy vehicle companies.
This could lead to the hard-earned Chinese companies being controlled by foreign capital, losing dominance in the new energy vehicle industry, while European and American countries could easily reap the benefits of development.
3. Even if Chinese car companies overcome these challenges, Europe and America could strangle Chinese car companies through the supply chain.**
The lesson from Huawei being cut off from American chips is still fresh.
Before the cut-off, Huawei phones surpassed Samsung to become the world's second-largest mobile phone brand and were on the verge of surpassing Apple. But with the sanctions, everything came to naught.
If Chinese car companies break through market and financial barriers in Europe and America, these countries might cut off supplies of high-end chips needed for intelligent vehicles, hindering China’s transition to intelligent new energy vehicles.
Besides Huawei, domestic car companies have not made significant progress in chips and mostly rely on high-end chips from foreign companies like Nvidia.
Foreign capital might use supply chain disruptions to force car companies to sell control rights, similar to how the U.S. dealt with ZTE, directly demanding annual profits and appointing American executives to control the companies.
The speech by the chairman of Changan Automobile has already pointed out the risks that the domestic automotive industry might face, but it has been dismissed by some as coming from public intellectuals or comprador bourgeoisie, and rational discourse has been drowned out, which is truly regrettable.
The automotive industry is highly market-oriented. For the new energy industry to develop better, the advantages of private independent car companies must be leveraged.
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