How China Put The Big 3 And The U.S. Behind The 8 Ball With EVs
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If you look at the Bolt EUV, you might just think it’s a modified Bolt EV. To some extent this is true, but that’s nowhere near the whole story. The original Bolt EV came from GM’s Korea division, which in turn grew out of Daewoo, a Korean company GM purchased years earlier.
But, after the success of the Bolt EV, the platform was further developed in China to satisfy the appetite for EVs there. An improved design that found success there (the Chevrolet Menlo) became the Bolt EUV and is now sold in the United States. The EUV’s platform is going to be the basis of the next affordable Bolt, which is increasingly becoming vital to GM’s future.
Some readers who didn’t know that the Bolt EUV and its vital future descendants has Korean and Chinese roots are probably wondering why American automotive companies have gotten to this point. The sad fact is that the Chinese EV market managed to gain a years-long head start, and the design work ends up following the money, and it’s going to take years for American-designed platforms to become dominant again (assuming they ever do).
A recent video I came across on YouTube shows us not only how this happened, but why. People working in and out of the industry need to understand what happened, because if we don’t, the whole industry will be under Chinese control and influence for decades to come (article continues after video).
The story starts with the Changan Eado, an electric car that looks like a failure on the surface. Hundreds of them are sitting abandoned now. But, the effort lead to not only the growth of the Chinese automotive industry, but becoming a leader in EVs globally. Not only are ideas like the Bolt EUV’s platform dominating, but made in China vehicles are also increasingly dominating the field (especially outside of the United States). Even Tesla has become a Chinese exporter.
It goes further back to China’s oil problem. Even as late as 2000, micromobility (whether pedal-powered or powered by small gasoline engines) dominated. But, in just a few years, car ownership exploded. Eventually, the ruling party decided they didn’t want the country to look poor with all the bikes and motorcycles, so the leadership pushed even more people into cars (a move that they’re now trying to reverse).
Unlike the United States, China doesn’t produce much oil or have much in the way of oil reserves to tap. So, when the United States used 20% of the world’s oil and China used 13% of it, the Chinese situation was a lot more precarious. Being heavily dependent on oil imports leaves a lot of political power outside of the country, and could even leave China vulnerable to blockades in the event of a major war.
The other problem was pollution. We’ve seen images over the years of nasty air quality in the country. The ruling party doesn’t take orders from its people the way that western governments do, but if things get too bad for too long, even the more centralized authoritarian power arrangement could become imperiled. Plus, the wealthy elites live in these megacities and have to breathe the same air. Add to that the optics problem, and China was losing a lot of face on the world stage.
For all of these reasons, something had to be done, and China’s political leadership (like them or not) had the will do do it without the limitations of a more free market. The relative simplicity of EVs was also a lot more compatible with the existing Chinese economy’s strengths. By adding on lots and lots of subsidies, letting people buy EVs outside of the license plate lottery system, and having government entities themselves buy lots of EVs, EVs really took off.
This wasn’t without challenges, though. Regional rivalries, market saturation, and highly competitive pricing has made it challenging for companies to succeed. So, the party had to deregulate the market and cut back on subsidies to let the best companies succeed. The government also lit a fire under Chinese automakers’ butts by letting Tesla enter the market without a JV partner. This has helped the industry become a lot more healthy (after a pain period).
Now, around 40% of Chinese auto sales are electric, and like the U.S. auto market, one company broadly dominates: BYD. This then led to Chinese cars becoming export items, which in turn leaves the rest of the world dependent on China for battery minerals.
Now, U.S. domestic automakers and those in allied countries are in the hot seat. Policies that only allow subsidies for electric vehicles with supply chains extending into friendly countries are there to protect the Big 3 and even German and Japanese automakers from the onslaught of cheaper Chinese cars. More importantly, the goal is now to keep US transportation and energy from being too dependent on Chinese minerals.
In other words, the problem China had with oil is now faced by the United States and allies in different ways.
Another factor outside of public policy supporting EVs is that Chinese buyers are a lot less picky about range. United States buyers often want 500 miles of range (even if it’s an excuse), while Chinese buyers don’t feel the need for even half that. Why? Because in a country with abundant public transportation options, the need for road tripping seems a lot lower. The number of EV buyers buying their first car ever also keeps expectations for range low, because they never lived in ICE land and don’t make such comparisons.
Another issue is that the United States didn’t have much of a battery industry to begin with. The vast consumer electronics industry was there and party officials only had to subsidize them to get them to grow faster. It didn’t take that long for EV battery packs to be more widely available. United States battery companies just weren’t there to begin with, and we’re having to start them from scratch.
On the other hand, I can’t agree with the negative end of the video. The Biden Administration may be trying to have it both ways (more EVs, less China), but at the same time, the strategic situation leaves the administration with little choice but to slow EVs down a bit to keep them from becoming a Chinese beachhead. With the serious possibility of warfare in the future, a president cannot favor environmentalism at the cost of enabling global authoritarianism.
Featured image by GM China.
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