China!

Why weren't we talking about this 10 years ago?

There are more stories emerging about electric cars coming to Europe from China since the massive increase in taxes on Chinese made vehicles imposed by President Biden in the USA.

100% import tariff is a fairly major barrier and I’m sure it will help protect unionised labour in various big car plants around the USA, but it will also reduce competition, encourage complacency in design and technological development and just possibly enable the continuation of production of big, heavy, inefficient combustion vehicles which we all know are very popular in America.

Outside the USA we are seeing the first trickle, soon to be followed by a literal torrent of new Chinese electric vehicles arriving in Europe, (which includes the UK by the way) and they are already having a massive impact.

I drive an MG4, yes it’s an old British marque but the company was bought long ago by the Shanghai-based, state-owned carmaker SAIC Motor. The MG4 is made in China and has been a huge seller in the UK, the 2nd best selling EV after Tesla. I see them everywhere and after a year driving one, I will state right here it’s a very impressive machine for the price.

But that is just one Chinese electric car, there are dozens more makes and models appearing every month.

So one question you could ask is, why is this happening?

Why are these Chinese electric cars arriving and what is happening with our indigenous car makers? Why are they still, in 2024, mainly churning out diesel, petrol and ‘hybrid’ petrol cars. Yes, it’s sacrilegious but a petrol hybrid car won’t work without burning imported fuel and pumping out toxic gas.

Anyway, to understand how this is happening we need to go back a few years. Let’s pick a random date, December 1978, 46 years ago. This was when a man called Deng Xiaoping came to power in China. He set about reforming the economy and political structure of the communist state.

China had gone a bit Pete Tong towards the end of the Mao era, the cultural revolution, the little red book, lots of marching and shouting, I won’t go into detail but it was a bit bonkers and caused a huge amount of suffering and waste of talent.

Deng introduced elements of market capitalism to the Chinese economy, after years of total state control, individuals could set up companies and employ people, before Deng, everyone worked for the state.

This opened China up to foreign investment, which resulted in our wonderful and benign corporate bosses looking at their own workforces in the USA and Europe and said, “Screw them and their unions and endless demands, let’s move the factory to China where labour is incredibly cheap.”

And they did. Big time, and they were supported by our own governments, and not for entirely stupid reasons. For decades China had been a kind of pariah state, closed off to the rest of the world. Margaret Thatcher and Ronald Reagan were happy to embrace a more open China, this led to a long period of political stability and an enormous expansion of global trade.

And it did of course result in more and more of the products we all buy and rely on being made in China.

So let’s jump forward to 2013, the launch of the ‘Belt and Road policy by the Chinese government.

Sometimes referred to as the New Silk Road, the Chinese government built infrastructure and relationships around the world to facilitate the expansion of Chinese manufacturing companies.

This policy had enormous impact, particularly in Africa where they set up mining and manufacturing installations and securing vast quantities of raw materials in the process.

Jump again to 2015. This was when “Made in China 2025,” a state-led industrial policy seeking to make China dominant in global high-tech manufacturing was launched.

They had already secured access to materials for electronics and in particular batteries. I just want to remind ourselves that these minerals had been available to western industry for many decades, but we like burning oil and anyway we were busy blowing Iraq to.

Of course China burns oil and coal like it’s going out of style, but due to the dominating role of the state and zero political opposition they can also do long term planning. They have to import all the oil they burn, so they decided to use less by encouraging the hundreds of car and battery companies to start making ‘new energy vehicles.’

I saw some of the early Chinese models at the Geneva motor show in 2009, they were really not very impressive, but they hird a great many British, German, French and American automotive engineers, manufacturing engineers and car designers and after a few years their cars were as good as anything made in Europe or America.

A few more years later and it’s now hard not to say they are leagues ahead in terms of battery chemistry and the mind boggling scale of manufacturing facilities thus making their end product cheaper.

Of course their wages are cheaper, although not much, and who knows the realities of human rights abuses in various parts of China. But then again, people who live in fragile glass houses like we do should maybe be careful about the stones we chuck around.

Anyway, they are now manufacturing vast amounts of electric vehicles of all types, the focus is often on cars, but they are making trucks, busses (loads of them) vans and heavy equipment and are now miles ahead of any other country, including Norway, when it comes to charging infrastructure and ease of use.

And, surprise surprise, they are looking elsewhere to sell their products, and with the USA slamming the door we can expect to see a huge focus of Chinese car maker attention in Europe.

Is this a good thing?

I don’t know, I do know that it has had a noticeable impact on the management at all the European manufacturers, but Top executives at BMW and VW have very recently warned against imposing EU import duties on electric vehicles from Chinese automakers.

They claim it could upend the bloc's Green Deal plan and harm automakers that import cars made in China. The boss of Renault, Luca de Meo, said very recently in an open letter that the European automotive industry is facing an “onslaught” of electric vehicles from China.

This is a quite from his letter:

“In the global battle around electric vehicles, we can see three radically different strategies: China rules; the US stimulates; and Europe regulates. Chinese manufacturers are a generation ahead in terms of performance and costs of EVs (range, charging time, charging network, etc), as well as the software and speed of development of new models (between 1.5 and 2 years versus 3 to 5 years).”

That said, I think Renault are making the right moves, the soon to be released Renault 5, brilliant car. Small, electric and quite cool.

So what I want to happen is this. For the European, Japanese and American car makers to pull their finger out, stop faffing around with hybrids, they are yesterday’s news. Go full on electric, go smaller, lighters and cheaper. Use the vast experience they have to make really good cars, invest in solid, reliable and easy to use charging infrastructure. Yes, crazy idea, who would do that . . . . oh yes, Tesla, the company that is selling millions of electric cars every year.

Every European, Japanese and American company has dragged their feet (and sometimes lied and cheated) and lobbied against change for the last 15 years, and now the Chinese are literally eating their lunch, and their supper and will probably start on their breakfast soon.

I want European car makers to survive and thrive, I want them to innovate and create new models of ownership, allowing more people to use less cars in as frictionless and efficient way as possible.

And obviously I want all governments to resist the incredible pressure they are under from the fossil fuel industry, but that, I agree, is a very big ask.