Auto EV, does the EU need protectionist measures like the US to defend itself against Chinese brands?
The European Union may soon ban internal combustion engines but is doing nothing to protect industries from fierce Chinese competition. The American protectionist measures have instead accelerated the maxi investment of over 5 billion dollars on US soil put on the plate by the South Korean Hyundai …
In an increasingly globalized world with an EV automotive supply chain that, as we saw a few days ago, will touch every corner of the planet, imposing protectionist measures as Joe Biden has just done may seem anachronistic, but if the facts are proven, it cannot be say they don't work. When work resumed after the summer break, the US Congress in fact passed the Inflation Reduction Act , the substantial aid package in support of the American economy which contains, in the folds, a new regulation for the EV car incentives that do not it only limits who can receive US subsidies for producing electric vehicles but also dictates where companies can source battery materials, forcing foreign brands to invest billions to start a full-American supply chain. The law made about 70% of electric vehicles immediately ineligible for tax credits of up to $ 7,500 per vehicle.
THE FIRST EFFECTS OF THE REGULATION WANTED BY BIDEN: HYUNDAI MAXI INVESTMENT
Harshly criticized by the Americans' main trading partners, especially South Koreans and the EU, the law is starting to bear fruit. South Korea's Hyundai Motor Co said this month it will begin construction on a $ 5.5 billion battery and electric vehicle plant in the United States. An essential investment in order not to be excluded (at the moment it would be, together with the subsidiary Kia) from subsidies and therefore from the star and stripes EV car market.
Hyundai plans to begin commercial production in the first half of 2025 with an annual capacity of 300,000 units. The October 25 grand opening of the Hyundai Group's "metaplant" in Savannah, Georgia, is part of the "$ 10 billion commitment by 2025 to promote future mobility in the United States, including electric vehicle manufacturing," the company stated. Meanwhile, President Biden wrote a letter in his own hand to his South Korean counterpart Yoon Suk-yeol (who believes, and not wrongly, that the new US regulations damage his country's brands) expressing his willingness to continue talks with South Korea to review the regulatory framework according to the requests of Seoul, but there will be hardly any changes, especially if foreign companies have already begun to adapt.
WHAT OTHER ASIAN COLOSSUS DO
At the same time, the Japanese of Honda Motor are also moving, and with the South Koreans of LG Energy Solution Ltd they have declared that they will work side by side on a new lithium-ion battery plant for electric vehicles in the United States. Before building the plant, the two companies are expected to form a joint venture. Construction is scheduled to commence in early 2023 and mass production by the end of 2025. The investment for the Japanese-Korean joint venture will be $ 4.4 billion, a figure similar to that put on the plate. by Panasonic to build the plant that will make batteries for Tesla .
Honda and LG's goal is to open a gigafactory with an annual production capacity of around 40 GWh, with batteries supplied exclusively to Honda plants in North America to power Honda and Acura's EV models. The location of the plant has not yet been defined, but the Nikkei business newspaper reported that the two companies are evaluating Ohio, where Honda's main plant is located.
Earlier this year, Honda had set a goal of launching 30 electric vehicle models globally and producing around 2 million electric vehicles per year by 2030. The two companies said the combination of a strong local production of electric vehicles and timely supply of batteries will put them "in the best position to target the fast-growing North American electric vehicle market."
AND EUROPE STAYS TO WATCH?
In all this, the European automotive industry, forced by Brussels to run towards electric engines but without the protection of similar protectionist measures, risks falling prey to the Chinese. The latest alarm in this sense comes from the study by the climate group Transport & Environment, according to which Brussels must provide more regulatory incentives to car manufacturers to increase the production of fully electric vehicles (EV) because otherwise it risks not only losing momentum towards transport with low emissions but above all, at an industrial level, to lose market share in favor of Chinese rivals. "If the EU is unable to efficiently regulate its market – the report reads -, it risks losing its economic sovereignty in the automotive sector".
CHINA IS GETTING CLOSER
More and more brands coming from the Far East, such as BYD , NIO, Chery and Great Wall Motor, are planning to debut in the Old Continent in the coming months, thanks to the fact that China already has the undisputed leadership in terms of manufacturers. of batteries. The largest manufacturer in the world is in fact the Contemporary Amperex Technology Co. Limited (better known as CATL) which holds a market share of 34.8 percent. Until recently, in second place in the ranking there was, fixed, the South Korean LG Energy Solution, with a market share that was not even half that of CATL, to close with BYD. Until recently, in fact. In August, according to a report by SNE Research, a Seoul-based research firm, BYD performed a historic overtaking on the South Korean and now the first two steps of the podium are occupied by Chinese.
In the T&E report "From boom to brake: is the e-mobility transition stalling?", The group states that the growth in sales of electric vehicles has slowed, reaching only 11% of fully electric cars in the first half of 2022, against the 13% that it should have reached based on projections on past trends. According to T&E estimates, Chinese-made electric vehicles accounted for 5% of all-electric car sales in the EU in the first half of this year and could have a market share of 18% by 2025.
"The failure of EU carmakers to increase supply could lead foreign carmakers to offer affordable models and capture a large share of the mass market in Europe," the report reads. According to T&E, to further stimulate European production of electric vehicles, the EU should stick to the ban, oppose any exemption for synthetic fuels in cars, eliminate an emissions benchmarking system from 2025 and use EU funds. and national policies to accelerate the increase in electric vehicle production.
A similar alarm came a few weeks ago from London-based Jato Dynamics who brought out this warning in its report on electric mobility: "Without a convenient offer, private mobility will not be accessible to many consumers", a problem that, given the dependence from China as regards the essential rare earths in the development of batteries, is likely to be felt above all in Europe and the United States. As a logical consequence, "without a mass adoption" of electric, "the targets for reducing emissions will prove unattainable in the end".
In short, for the analysts of Jato Dynamics, who in this add to the chorus of controversy of many CEOs of the sector (starting with Stellantis, but of the same opinion many big Japanese companies ), "a significant part of the population is excluded from the transition towards electric mobility due to the problems linked to the economic accessibility of vehicles ”.
On all this, the West seems disadvantaged, while Beijing has moved with foresight in time: "Thanks to the strength of the internal market, technological progress and persistent government support, Chinese houses and startups are in a privileged position to accelerate their global expansion plans ", says the research company which, without too many words, highlights the risk that" China could acquire a crucial portion of the market that has so far been dominated by the most established traditional manufacturers in the sector " .
THE MINI ELECTRIC OF BMW MADE IN CHINA?
Then there is another aspect to consider: while the measures wanted by Biden force foreign brands to produce in the US, exactly the opposite has been happening in the EU for years. There are more and more brands from the Old Continent that produce abroad, especially in China, for well-known reasons of economic opportunity.
According to the Times , BMW is ready to move production of its electric Minis from the UK to China. BMW produces 40,000 electric Minis annually at the Cowley plant on the outskirts of Oxford and expects to finish production by the end of next year. The company denied the Times news about the transfer of production beyond European borders, but the alarm remains high. Also due to the absence of an industrial plan at Community level.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/auto-ev-lue-ha-bisogno-di-misure-protezionistiche-come-quelle-usa-per-difendersi-dai-marchi-cinesi/ on Mon, 17 Oct 2022 09:56:14 +0000.