Why We All Should Pay Careful Attention to China and Its Carmakers

I’ve lived most of my life in a country that loves to refer to itself as “the country of the future.” It has great potential to be way more than it is, but it never gets there. One of this country’s ambitions was to have its own automaker. All attempts to get there failed despite highly talented folks trying to make that work. After watching the Bloomberg video below about China, I finally understood why.
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The Asian giant managed to have some automakers. Still, most of them emerged from joint ventures with international manufacturers that were forced by the Chinese government to associate with local companies. Chinese leaders realized they could not get there on their own. When the electric shift became obvious, China saw the opportunity to finally lead the pack. Bloomberg’s video is about that.

Before some people start accusing electric cars of being part of a plot from China to dominate the world, make yourself a favor: ignore them. China was forced to adopt cleaner transportation means to preserve the lives of the people that live in their megacities, many with more than 30 million inhabitants.

Imagine so many people concentrated in confined areas. Most of them want to drive cars. Some cities needed to impose measures that limit vehicle ownership because traffic led to unbearable pollution levels.

Anyone willing to buy a car has to have a license plate, which can cost a real fortune, if one's not lucky enough to win it at a lottery. This is why there are so many luxury models in the streets of some of these Chinese megalopolises: anyone who can afford a license plate prefers to put them on fancy cars.

It’s been a while since the automotive industry realized that the combustion engine was doomed. It depends on a finite resource that was estimated to disappear in 50 to 100 years before climate change showed we should keep crude oil right where it is: underground. That’s where it traps massive quantities of carbon. Burning these reserves until the end would increase carbon levels so much in the atmosphere that the worsening of the greenhouse effect would raise the world temperature by much more than it already has.

Supposing we could start using renewable fuels all of a sudden, the combustion engine would still be an incredibly inefficient machine. The best ones waste 60% of the chemical energy they store. Most turn only 20% of that energy into movement, throwing the rest away as heat and pollutant gases. What the automotive industry did was to try to buy some time before it had to give up on all its investments in combustion engines.

China’s merit was to realize that before most other countries, incentivizing the shift. Its citizens that could drive electric cars did not have to through license plates hell use them. That created the demand for EVs. China then helped companies willing to sell them as well as to produce batteries with the necessary funding for research, development, and production. Not by chance, the country currently is one of the leading battery producers in the world.

Curiously, that still did not drive people’s attention to China. Most don’t care about automotive news coming from that country. Some even keep the prejudice that cars made in China are poorly manufactured.

The truth is that the Chinese market is so vast that there is room for every sort of company: the cheap ones and those with a high level of craftsmanship. Foreign brands used to be the preferred ones. The Chinese manufacturers were more prevalent in less populated areas, where people didn’t have the same purchasing power. This is why we used to see so many copycats there: the local brands tried to offer customers with shallow pockets products with the same looks of more expensive cars that were “en vogue.”

That started to change with electric cars. Apart from Tesla, the EVs that really sell well there are from local brands. NIO and Xpeng top the preferences of used car buyers. BYD is launching more and more options thanks to its new e-platform 3.0 and the Blade Battery.

You may have never heard about any of them because these brands did not need to expand abroad. China’s approach toward freedom of the press, free speech, and the language barrier also does not make that any more accessible, but there’s an economic reason for that.

Unlike Japan or South Korea, China has a vast territory and even more people inside it. Selling at times more than 20 million cars per year, the Chinese market was more than enough for these manufacturers to try their luck. It has more demanding customers than any other market in the world. If anything sells well in China, there’s a great possibility that it will do well anywhere these automakers are willing to export their vehicles to. Now, they are ready to ship.

Norway buys Chinese cars for quite a while, and NIO has just arrived there. If all goes well, the company will start selling in Germany and other European markets in 2022. NIO already said that it intends to use the idle capacity of European carmakers to manufacture its vehicles locally. In other words, you’ll soon have to decide between known brands and Chinese ones. It will not hurt if you knew a thing or two about them before they arrive. Because they will – probably sooner than you would expect.

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About the author: Gustavo Henrique Ruffo
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Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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