Is China the future or the end of the US auto industry?
First high speed trains, now electrification
Technology transfers plus supply chains advantage Chinese auto industry
When it comes to the future of the auto industry, it’s all about Asia and no country looms larger than China. Yet, is China’s growing auto market really just fool’s gold?
For instance, soon new Chinese rules could force foreign automakers to give major ownership rights of any Chinese venture to Chinese partners, enabling full technology transfers to these Chinese companies. But that’s only one half of this scary story.
According to the AP story China’s electric car tactics rattle automakers, automakers aren’t just worried that China will use these technology transfers to support its own auto industry for domestic needs, reducing the need for foreign automakers, but also for exports. Not long ago, for example, China required similar technology transfers from European and Japanese companies developing high speed trains in China. Today, those Chinese companies are now offering that technology throughout the world.
Couple that latest and greatest electrification know-how with China’s well established lithium-ion industry and their rare earth resources and a recent World Bank/PRTM study suggests that a “significant shift in the overall value chain in the automotive industry” favoring the Chinese auto industry could be inevitable.
Ironically, despite this writing on the walls, many US automakers can’t get into the Chinese auto market fast enough. The sale’s opportunities are just too sweet to pass up. However, the more dependent automakers become on those sales, the less negotiating power they will have to secure their R&D secrets.
It has been said that the planning of US auto makers is too often driven by quarterly financial statements. Thus, profits are often maximized today, even at the expense of future profits. This kind of boardroom-based corporate thinking could play into China’s hands perfectly and turn those short term profits into long term fool’s gold.
With Buick leading the way.
It’ll be interesting to see how China reconciles this conundrum.
Still, the far majority of Chinese can’t afford a gas guzzler. so alternatives will ultimately be required I think. that’s why I find Better Place’s Chinese moves extremely interesting – that’s probably going to be my next post.
The biggest problem with EVs is owning the battery. The Better Place battery swap model could be the perfect way to offset this problem. Sure, in the US that probably won’t work outside of college campuses. However, in China, with the majority being so new to autos, the plausibility seems very real.
Better Place just might make the world a better place yet.
The US has been importing cars to China for years.
Ironically, the most successful GM cars in China have been gas guzzlers…..
And you probably won’t for at least 5 to 10 years, but considering that cars are becoming more like computers and computers are almost exclusively mass manufactured in China, I wouldn’t bet against them.
I think the U.S will be able to import cars to China for sale, however I don’t foresee Chinese cars being a hit in America. I can’t think of any Chinese brands now that are being sold in the U.S.
I seriously doubt it…..
China is basically the same place that Japan was in the 1960′s.
In the 1960′s and 1970′s, Japan began importing cheaper vehicles to the US. Many thought THAT would be the end of the US auto industry. While it did introduce competition into the market, it was not the end of the US auto industry.
The same will be true for China.
New competition? Yes.
End of the US auto industry? No.