China primed to reshape the US auto market
America to become more like China
The most important auto market in the world
For the first 6 months of this year, more cars were sold in China than in America, yet the potential of the Chinese market has barely been tapped. Thus, automakers are quickly pouring resources into China in a race that won’t just affect China, but almost certainly the entire world.
For instance, Ford has just opened a $300 million plant in China.
Likewise the biggest automaker in China, GM, has just opened the China Advanced Technical Center that will include “nine research labs and 62 test labs for work on new propulsion systems, petroleum alternatives, electrification systems and new engines and battery cells.
“Clearly the growth of China as the most important growth market in the world means that we’re going to be putting more of our resources in advanced technology and research here,” GM China President Kevin Wale said.
As a result new partnerships between Big 3 automakers and Chinese auto companies and suppliers are rapidly growing, decreasing the knowledge gap between the US auto industry and the Chinese auto industry. Consequently, while the US government and the likes of the UAW can exert pressure on companies like GM to keep certain types of manufacturing in the US, eventually GM’s partners will no longer need GM as much, and they’ll be very interested in also selling purely Chinese vehicles in America.
One way or another the competition in the auto industry is going to increase dramatically in the next few decades, and US automakers will have to be much smarter than they have been the last few decades. Certainly things look better since bankruptcy, but the real game hasn’t even begun.
Interesting points Tom, but very deep.
Anyway, I think there will always be loopholes in our tax structure. That’s why there are so many lawyers in America, including the President. As technologies, societies, etc. advance, new loopholes will emerge because everything changes.
Ultimately, we can never create a perfect world, and as those in the East might say, to imagine such a world is folly. The ying and yang of life is up and down, good and bad.
Still, that’s all just philosophical mumbo, jumbo.
GM will compete with BYD eventually, and BYD could have significant cost-advantages for some time. However, eventually if Americans can’t buy BYD products then Chinese workers will have to and that will mean higher wages for Chinese auto workers. Suddenly, the American worker might be competitive again.
Inevitably, it seems to me that if we focus on creating the most efficient products we can – financially, ecologically, etc. – we’ll reap the greatest rewards. Additionally, efficiency requires efficient workers and efficient workers requires proper incentives.
In terms of America, we need a ‘war effort’, or a ‘moon shot’. We need to believe in something bigger than ourselves that benefits more than just ourselves. We need a uniting vision, but we live in a world where division is the key to politics and economics via segmented marketing. Divide and control. That’s America today and for the last several decades.
Eventually, we’ll either rise together or descend further downward.
I guess I should be doing some research before posting this.
I keep hearing stories about the tax structure of our country. Stories of people and corporations that make billions and billion of dollars and move those dollars to offshore accounts to evade paying taxes. Mind you I have no idea if those stories are true or not, but if they are, shouldn’t we be doing something about that tax structure? Of course I fully understand the rich and famous are a very powerful lobby but when the money runs out will it really matter?
When everyone ends up working in some service industry job making $10-15.00/hr. will it really make any difference that the Volt cost $30,000 and the BYD cost $18,000?
Am I out of touch?