Mom… they’re Chinese! Turks fear Beijing’s electric cars
The electric car doesn't stop running, with the risk of fully hitting its Western rivals. While the EU investigates the subsidies and the US shields itself from the IRA, Turkey decides to close its borders in the American wake
It is certainly no longer a mystery to anyone that the ecological transition is giving a boost to Chinese competition . Immediately outside our borders there are countless Asian brands, still little-known in Europe, ready to establish themselves with cars at highly competitive prices. Immediately outside our borders, however, other states are gearing up to limit the damage from the impact of these aggressive and aggressive new houses. The best-known case is the IRA ( Inflation Reduction Act ), the 369 billion dollar maxi plan wanted by Joe Biden to boost American industry. But Turkey is also now arming itself.
TURKISH MOVES TO DEFLATE THE TIRES OF CHINESE EV CARS
China is the largest producer of these vehicles, with a share of 54 percent of the global total, and Chinese companies have long benefited from generous state subsidies. A situation that is creating real 'unfair competition' on a global level. Hence the Turkish decision to try to stem the arrival of Chinese electric cars through a decree from the Ankara Ministry of Commerce.
REQUIREMENTS FOR ENTERING TURKEY
The new rule, from which all products coming from the European Union or from countries that have free trade agreements with Ankara are explicitly exempt, calls for increasing import controls by providing tighter meshes in the requirements that companies in the world of cars will have to present to sell their electric cars in Turkey.
Starting from customer care through a user call center up to the management of at least 140 charging stations uniformly distributed across the entire national territory. In short, anyone who wants to sell in Turkey will have to contribute to the creation of a service infrastructure for electric cars.
All this by the end of the month. A goal impossible to reach for the majority of foreign companies targeted by the Turkish legislator. At the beginning of 2023, Turkey had also decided to impose an additional 40% tariff on battery-powered vehicles imported from China.
And the EU?
The European Commission woke up late on this point , launching an anti-subsidy investigation into electric cars from China and sold at low cost only in September.
“Global markets are flooded with affordable electric cars right now. And their price is kept artificially low by huge state subsidies,” said the President of the European Commission, Ursula von der Leyen, in her State of the Union speech to Parliament.
USA ACCELERATION
Joe Biden has characterized his stay in the White House with works aimed at encouraging his own industry by banning, starting from 2024, electric cars equipped with Chinese batteries. An unofficial but "de facto" ban, since the American administration's intention is to exclude foreign brands with lines outside the USA from federal incentives (federal tax credits of up to 7,500 dollars). Incentives which at the moment represent the only way to push users towards new engines, otherwise still too expensive for the pockets of the middle class.
With such a move, the White House also hopes to be able to mitigate the price of domestically produced electric cars, making them competitive compared to the much lower and more inviting price lists of the Chinese brands that are arriving in the 50-state territory.
A strategy that is now more necessary than ever for US industry, especially after Joe Biden sided in favor of the strike carried out from September to Thanksgiving by the UAW, the main blue-collar union, protecting internal employment levels: now in exchange the automotive bigs ask for preferential treatment.
BIDEN CONFLICTS WITH HARSH REALITY
It's just a shame that Biden's protectionist plans are colliding with harsh reality. Applied to the letter, in fact, the White House provisions would exclude all cars made in the USA, requiring that the critical minerals of the accumulators do not have foreign (read: Chinese) origin.
This is why the Treasury Department intervened by softening the legislation that excludes any models from federal tax credits of up to a total of 7,500 dollars for those who purchase an electric car. In fact, there will be tolerance quantities and probably other exemptions.
WHO ARE THE EXCLUDED
But the constraints will remain very tough, banning between 2024 and the following year any battery component produced by companies owned by a "foreign entity of concern" (Feoc, or "foreign entity of interest"), or batteries with over 2% of critical minerals extracted, processed or recycled by Feoc. Also excluded are companies controlled by Feoc, or in any case in the shareholding structure (25% of the board or voting rights is enough).
FORD'S MOVE TO DISGUISE THE FEOC
This is why US brands that have existing alliances with the Chinese for electric cars are taking action by pushing their partners to establish their own supply chain on US soil. The most striking case probably concerns Ford, which intends to build a new plant in Michigan together with the Asian battery manufacturer Catl. If so, since the partnership would bring value and jobs to the United States, it should fall under the exemptions.
DON'T CALL THEM CHINESE SERIES
Many things can be said about Chinese cars, but not that they are chinoiserie. If China has established itself on the global car market it is because it has implemented far-sighted policies starting from 2009 when local authorities in the Asian country were encouraged to equip their taxi and bus fleets with electric vehicles, thanks to subsidies of the central government up to 60,000 yuan (7,700 euros) for cars and 100,000 yuan for buses. Thanks to public funding, BYD has become one of the most competitive brands globally.
Not only that, in a way not dissimilar to Joe Biden's anger, China in the recent past has supported the battery sector by forcing producers to use Chinese batteries so as to turbocharge CATL, which in 2020 dethroned the Korean Panasonic by becoming leader world of the sector. At the end of 2022,
BYD'S RACE SENDS TESLA, VW AND THE OTHERS OFF THE ROAD
BYD had dethroned Volkswagen by becoming the first seller of single vehicles in China and surpassed the production of cars on tap from the House of Elon Muk. In the first months of 2023 the Shenzhen brand had already sold 1.4 million cars, all electric, half a million more than Tesla.
Most BYD models are priced between 100,000 and 200,000 yuan ($13,700 and $27,300 respectively), significantly lower than Tesla and other Chinese competitors such as Nio and Li Auto, whose models sell for more than 300,000 yuan each (about 41 thousand dollars).
BYD's July-September net profit was 10.4 billion yuan ($1.4 billion). The previous profit record of 7.3 billion yuan recorded in the fourth quarter of 2022 was therefore broken and not even by a significant amount. The third quarter profit translates into +82.2% compared to the same period a year ago and in a +53% quarter on quarter.
In the third quarter, revenue grew 36.5% year-on-year to 162.2 billion yuan. BYD, which had dethroned Tesla as the world's largest electric vehicle company in 2022, sold 822,094 vehicles in the three months ended September, up 17.4% from the previous quarter and a quarterly record.
A quarterly result made even sweeter for the Shenzhen-based company by the fact that Elon Musk 's car brand experienced its first real setback in the same period.
While its rivals, even at home, are slowing down, affected by what many have already defined as the "electric car bubble", in September the company controlled by the Chinese billionaire Wang Chuanfu recorded sales of 287,454 units, +4.8 % compared to August, rewriting its sales record for the fifth consecutive month. In short, it would seem that the old but never tamed Warren Buffett was right this time too, investing in the Asian brand through his Berkshire Hathaway.
For the first nine months of 2023, profits reached 21.4 billion yuan (2.77 billion euros), more than double compared to the same period of 2022. Last but not least, it should be underlined that just this month the group also became the first manufacturer in the world to surpass the symbolic milestone of 5 million electric vehicles produced. Put together, all these data suggest that the Chinese champion is now ready to face the challenges of internationalization.
EUROPEAN COLONIZATION
BYD will launch the challenge to Tesla from its first European assembly plant which, according to what was reconstructed by the Frankfurter Allgemeine Sonntagszeitung , will be built in Hungary, where the Chinese already produce electric buses in Komárom, west of Budapest. The decision would have already been taken also following dialogues between the Chinese leadership and Viktor Orbán , not surprisingly among the politicians of the Old Continent most active in advocating the need for the new Silk Road.
And it is no coincidence that the Frankfurter Allgemeine Sonntagszeitung newspaper is following the dossier closely. The Germans have in fact courted Byd for a long time, trying to replace Ford in Saarlouis . Instead, according to the Frankfurt newspaper, the Chinese will settle in the Hungarian country, to be precise in Szeged, in southern Hungary.
It won't be the only gigafactory to be built outside of Asia. The international expansion strategy in fact involves the construction of a plant in Brazil (already well underway) and the construction of a further plant in Mexico.
WHAT IS THE SECRET OF THE CHINESE ELECTRIC CAR?
It is no mystery that China moved earlier and better than the West. But, above all, it has moved in a very different way from the European Union, with a legislative tactic that most have defined as "carrot and stick", i.e. subsidies in one hand and impositions on the other to force citizens and public administrations to switch to the new engines.
The EU, however, has so far only held the stick, forcing the car industry of the Old Continent into a race for which it was not prepared. The consequences have already begun to be seen in Germany, the engine of the European automotive industry. There the main manufacturers, in order to be competitive, in the absence of subsidies are forced to enact draconian cuts.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/mamma-li-cinesi-i-turchi-temono-le-auto-elettriche-di-pechino/ on Fri, 15 Dec 2023 13:12:50 +0000.