> The skills built up by European carmakers over decades are simply not directly transferrable.
Germany does have a giant, excellent chemistry industry.
> China's interest in batteries is not a recent trend. It has been investing in their production for many, many years. It has been attempting to dominate not just the production of cells but also of the cathodes and anodes that go inside them - not to mention the chemicals used to make those electrodes. It has been firming up the entire supply chain - all the way down to the mines. And while you can find only so much lithium and cobalt in China, Chinese firms have been buying up mines in Africa and elsewhere for years.
The fun thing is that the west saw it coming and didn't try particularly hard to forestall it. Consistent, long term industrial policy is very effective.
> Consistent, long term industrial policy is very effective.
Yes. This is what kills the US in rare earths, cobalt, gallium, etc. US mines shut down when the price goes down. Sometimes they restart when the price goes up. Sometimes they don't. All this churn makes the business unprofitable in the US.[1]
China was refining rare earths without much concern for their own environment: they were basically ****ing in their backyard to provide the west with cheaper rare earths to work with.
This of course is unsustainable, and should have been stopped earlier by either Chinese or western governments with some concern for the environment as well rewarding bad self-destructive behavior.
To condense a few points. China generally out competes on a few points:
- strategic government investment
- lower cost of labour
- lower environmental regulation
- proximity to downstream consumers
The by products come after processing the concentrates from mining.
The largest non-Chinese supply chain globally is Lynas, concentrates from toxic waste free mining in W.Australia are shipped to Malaysia for processing where pools of low level radioactive waste and associated acids are created as by product.
Texas, USA, very much wants in on having "oceans of toxic sludge left after the" processing:
The United States Department of Defence will contribute $US288 million ($442m) to develop Seadrift, with a view the construction will be finished by mid-2026. Lynas bought the southern Texas site in July last year from Dow and planned to turn first sod before the end of this year.
Germany is IBM. Existing industries are too valuable and influential, and shifting something as entrenched as German auto industries is an expensive, difficult endeavour that isn't immediately as profitable as the existing business.
At least maybe we'll get to stick around as business consultants and selling mainframes to a handful of companies convinced by "nobody was ever fired for buying German".
Yes but the level of investment the Chinese have poured into battery production and EVs in general is also completely unparalleled. Industrial policy is nothing new for US and EU but just not at that level.
To be able to compete with China the West would need to:
- Match generous subsidies to companies, not just through banks but at the government level by building entire towns just for battery production.
- Making large parts of land uninhabitable for the cost-effective extraction of rare earths.
- Suppress wages at factories and engineering bureaus to be able to cost compete in manufacturing.
- Dramatically lower cost of energy production (only doable without renewables in the short term).
I just don't see any Western government having a strong enough mandate for any of the policy changes required to compete with China. The simpler reaction is just imposing tariffs.
Western nations have absolutely done this in the past. It’s the reason we are generally the richest and most secure nations in the world. The decision not to do this potentially means we forfeit those advantages for the rest of this century.
And China is hugely deploying renewables, which they happen to be able to produce very cheaply due to their industrial policy. The difference is that China is using their fossil fuel resources to make this investment, while the west is using its fossil fuel resources to shove crayons up its nose.
China didnt pour money into battery R&D. We did. Me, you, our parents, everyone with a phone since mid nineties. BYD stared out as a phone battery manufacturer, it took them decades to turn from cheap labor sweatshop into knowledge based company with own ideas and strategy.
China has far less farm land per capita compared to the US. Until the majority of excess farm labor are shifted off the land they do not need suppression to keep wages low. They just need to raise mobility, which they have done by building roads and railways.
I get the engine and transmission tech doesn’t translate over but the vast majority of the chassis, transmission and pretty much everything else stays the same in a car.
That being said, having driven my EV for a year or so I somewhat find ICE vehicles gross now. All that sputtering, poisons, jerkiness, continuous maintenance, loudness etc. just feels so primitive. The only place it still makes sense is for situations that require a lot of power like long distance hauling, heavy equipment etc.
Stellantis (which owns Chrysler, Jeep, Dodge, Fiat, and some other forgettable car brands) forgot how. The CEO was fired on December 1st, 2024.
His strategy had been to crank prices way up, add on post-sale service charges,
and get the biggest bonus in automotive executive pay history (not counting Musk's current litigated bonus.)
Sales went down. Way down. Chrysler now makes only minivans. Overpriced Jeeps are piling up in dealer lots. The "mild hybrid" power train, with 21 miles of electric mileage, is a dud.
The brand image is in the tank. Nobody wears a Stellantis T-shirt.
The US has 3 million unsold cars sitting on dealer lots. Some have been there for over a year. How many will still start?
None of them I would call "forgettable". Most of these brands have been there for more than a century. The only ones more recent than that are Abarth, DS and Ram. DS and Ram refer to iconic vehicles by Citroën and Dodge respectively and lately turned into their own brands.
Germany had a giant, excellent chemicals industry. It has been shrinking due to higher natural gas prices. Natural gas is a crucial input for many bulk chemicals.
What I find puzzling is that around 10 years ago Audi and VW committed fully to electric vehicles, investing $100 billion(?). So why do people now claim they missed the boat on EV development?
But focusing only on manufacturing is missing half of the picture. China is using for batteries the same playbook they used for PVs. They are spending a lot of money to hire all the top researchers they can in the field.
Truth is they are years ahead of most battery manufacturers in R&D.
What right wing news source is that? They paint a pretty one sided picture here. Some truths but not all. Germany was on its way to be energy independent with wind but that was blocked by Merkel and right leaning governments since 2010. Without that intervention we could be big in wind and having a lot of people work in that sector. Instead they turned back to gas and coal.
The dependence on cars and the incompetence to get excellent on software are a huge problem here in Germany. But the educated part of the people here saw that coming.
The will to change is what is dragging us down in Germany.
What left-wing ideology is that? If wind was so promising (providing cheap energy at scale 24/7) nobody would turn away from it.
Maybe it was "blocked" because it wasn't working?
Industrial policy will bring you up to a point, and apparently, no further.
Anyway, it was wildly successful in Japan, Germany, and the US. Up until the time it stopped working. It has been arguably less successful in China, but still good enough to create massive change.
Of course, China has also been a very different animal politically. There's also the whole demographic equation which factors into Japan, China, and (at least eventually) the US.
I don't really disagree. You need, sorry, effective capitalism and a legal structure underneath the policy but that doesn't replace entrepreneurship and broader cultural norms.
The problem is that industrial policy seems to be incompatible with effective capitalism and universal rule of law to some extent.
It's not very clear (at least to me) how and why. But it never seems to be a positive thing after some point, instead, it seems to have very negative impacts on more developed countries.
> It's not very clear (at least to me) how and why
It's good at the initial stages and unproductive later on. The problem is that when you need to remove it is also when its recipients are most powerful.
There's probably reasonable disagreement on the extent of anti-trust enforcement etc. in developed economies. We may see a case study in the coming years.
Japan does not have a big enough domestic market, which means their industrial policy requires a lot of foreign cooperation to be effective. Once others started seeing them as a threat their game was over.
As an IT industry analyst, Japan also seemed always determined to do things their own way--see Itanium. Which made things more difficult for selling to a wider marker. Could make some of the same comments for Europe for which I also attended a variety of industry events.
China tried to promote TDSCDMA for 3G, which also didn't work. At least they didn't make it their exclusive choice. In their more successful cases they didn't pick winners.
China is of no concern to Europe or the US. Most of their tech is stolen or trickles down from innovation elsewhere. It is unlikely China will find success in the US given the sentiment (antiChinese sentiment is rampant in most of the US). Also, there are many legislations in place that would prevent it. I will mention though that the US and Europe need to get their act together. Too slow on EVs (it took an outsider like Tesla to get it going), and there is still too much reluctance to get the ball rolling. I view the best solution as "forcing" the oil giants to innovate in this sector, but given their lobbying prowess, it is highly unlikely. In a highly democratic society, Shell in Europe and Exxon here would be paying their dues in electric infrastructure and battery tech
> Most of their tech is stolen or trickles down from innovation elsewhere
Overheard at a battery conference: western battery suppliers are actually copying (or in your words, stealing) the Chinese electrolyte formulas and other designs.
Great artists steal, the US and Europe play the same game.
I still think Europe makes the best cars. But being the best is never enough to also sell high volumes.
Europe is stagnating due to an ever-increasing set of regulations, higher taxes (partially required to enforce those regulations and a shrinking labor force) and specially the effect that those have on the motivation of the most skilled workers: killing it.
Me and my wife have tried starting a couple of businesses, but it’s incredibly complicated to navigate and deal with German bureaucracy, and all the effort gets awarded with an incredibly high tax rate of around 50%.
So lots of smart people in my environment are actually walking the path backwards and they have either stopped side projects or simply started to reduce working hours. Either that or just moving to other countries like Switzerland, Singapur or the US.
The situation is even worse in Netherlands, France or Spain.
The taxation system in those countries creates negative incentives as it makes you feel punished if you become economically successful with a new product or idea. I really think it should be the complete opposite. And it’s not a matter of lack of budget for public services: public education, healthcare and justice are usually covered with around 30% of the public expenditure.
Well, maybe the previous gen cars but Europe doesn't have an outlier in EVs.
Anyway, I don't think that it has anything with regulations or taxes. It's the attitude of Europeans. You can see how European GDPs have fallen short after 2008 but that's not because regulations kicked in in 2008 but because, IMHO, the way they handled the economical crisis.
Also, Europeans have a different understanding of what startup is supposed to do, they appear to think that its computer based high margin small business and Americans appear to believe that its supposed to be a business that should grow extremely fast and doesn't have to have any profit until it captures the market and establishes monopoly.
The American way creates huge wealth but creates a lot of suffering and stagnation once the startup reaches the profit making phase. This is a no-go for the Europeans, its something that the public demands be tackled and its something that EU tries to do with giant tech corporations and that's what makes the American businesses hate EU.
I don't know if European public will accept having american-like wealth concentration at the top. The vibe in Europe is that we should all have a dignified life quality and un USA they are O.K. with having people in extreme poverty at the same street with 40 Billion dollar company HQ. When they are too annoyed by all that poor, their solution ideas are something like "let's move somewhere else", "let's buy a land and create a new city where we don't have these people around" or "let's kick out these people and make them someone else's problem".
Yes, the American way creates huge wealth but I'm not convinced that its an improvement over over European way. Also, don't look just for EU vs USA, take at look at China, Japan and Singapore who also managed to built great wealth or innovation without forcing part of the population in poverty.
A few months ago I was looking for an EV. Went to the local Citroen/Peugeot dealership (I live in France), asked what they had. They told me I could have the new e-C3, the basic model, with 300KM range, for ~35000€. I asked how long it would take to have the car once I ordered it. They told me six months.
A few weeks later I went to the local MG dealership. They told me I could have an MG4, the high-end model (heated seats, automatic AC, fast charging), with 420KM range, for ~35000€. I asked how long it would take to have the car once ordered. They told me I could have it the next day, I would just need to choose a color that's in stock.
I bought the MG.
Basically, the European manufacturers sell cars made to order. You tell them the exact model you want, the color you want, and they put it on their roster, to come out of the factory months later.
The Chinese bring over thousands of cars to Europe, and they just sell whatever is in stock. When they have too much stock, they reduce the price. They don't even really care about those pesky European import tariffs.
Those Chinese cars are better equipped, have longer range, and cost less than the European ones. Meanwhile, the Europeans are busy selling their old petrol-burning models to south America in exchange for cheap south-American meat [1]. No wonder they're losing the EV war.
For how long though as China is building large shipping container ports as well as EV car factories in South America and Central America. Now a lot of US media and politicians are saying China is doing it so that they can access US markets. But I don't think so they are building these so that they get access to the huge market. As ev plus solar keep getting cheaper and a lot of countries dependence on oil for energy for economic growth will be removed they are building a market for their electronics as well as a suppliers for their food requirements.
The US car makers are also doing their best to screw it up.
Chevy had an EV, the Bolt, that gets pretty good reviews. They had some kinks the first few years but seem to have gotten them worked out. And with the tax EV tax incentives a Bolt was around $20k (around $28k without incentives). Range of around 250 miles (400 km).
Then they announced in early 23 that it was being discontinued to make room for their "new generation" of EVs. That newer generation was going to be bigger cars and more expensive cars with nothing comparable to the Bolt.
They did later add a next generation Bolt to the plans, with manufacturing to start in 2025 for the 2026 model year, and supposedly it is still going to be around $28k. The next generation uses their "Ultium" architecture which is probably a good thing--they are using that in all kinds of products, including military products, so it will probably have good long term support. But they are also dropping CarPlay and Android Auto, instead going with some in-house system, and those generally don't have a great track record compares to CarPlay or Android Auto.
Still, even if the 2026 Bolt turns out well they did introduce a 2 years gap where no Bolt was available. The only Chevy EV choices are the $42k Equinox, the $49k Blazer, and the $96k Silverado.
If instead of discontinuing Bolt and then scheduling a reintroduction for 2026 they had continued making the current generation and just rolled out the 2026 as the next generation (like basically every other auto maker does when they change generation) I'd seriously be looking at getting one now. I had planned on an EV sometime in the next 4 years, but with the incentives likely to go away under Trump moving that up to now could make sense. But Bolt, at $28k before incentives, was the cheapest EV on the US market.
Second cheapest is Nissan Leaf at just a little more than a Bolt, but it only has 150 miles of range and they still use an air cooled battery. After that was Mini Cooper SE Hardtop at $32k. That thing is cute, but only 114 miles of range, and I'm rather large so even if I fit in the thing it would probably feel claustrophobic.
So, in summary, Chevy had the lowest cost reasonable EV on the US market, and nobody was really even challenging them for that...and they just gave that up.
You don’t need a big city. A train station, a taxi service or local public transport, and maybe a car rental for the infrequent occasions where using a car makes sense is generally sufficient. Especially with e-bikes nowadays.
The whole article seems like typical apologism to me.
If you look at that graph showing thee difference in price for various components, the difference in "distribution" and "body and chassis" (in absolute dollars) is greater than the battery.
Add to this China's ability to sell a car for $20K Australian, shows that it's not just the battery. And as noted in other comments, the US and Europe both also make a lot of batteries.
The biggest problem is that incumbent equity holders just want to keep making more money, while making the same product. The rest (including the tariffs) is just apologism, and a distraction from the core facts.
Of course everyone wants a car that's at least $80K! If GM shareholders aren't going to increase their returns, why would anyone even drive a car at all?!
> tried to enter the Chinese market only to get the crap kicked out of it
That's a massive rewriting of history.
VW was one of the earliest foreign automotive manufacturers to enter the Chinese market.
In the 1990s and 2000s, the Volkswagen Jetta was China's Model T. And until 2023, VW was the top selling car brand in China.
And that was the crux of the issue - VW grew complacent by leveraging "Made in Germany" branding to sell in China, while not investing in innovation.
This meant that when Chinese challenger brands like BYD could outcompete VW in China, VW as a whole suffered.
Already VW has lost significant market share in the US after the emissions scandal and is functionally non-existent in Japan, Korea, Brazil, and India.
China was their last growth market within which they held dominance, and they lost it.
This is a common story for "Made in Germany" - German manufacturers strategically chose China in the 2000s for greenfield FDI, and unlike most other European countries, Germany's economy is extremely coupled with China (France and the UK were more diversified with France leveraging LatAm and India and the UK leveraging NA and India).
> VW grew complacent by leveraging "Made in Germany" branding to sell in China
Designed in Germany, almost all VWs sold in China (including black Audis government officials loved) were made in China under three 49/51 JVs (with VW as the minority owner). The majority owners in tern graduated with VW technology/know-how and combined with EV tech to sell under their own brands, although not as successful as BYD. Even BYD had its own 49/51 JV with Mercedes for a decade.
The only foreign auto manufacturer allowed to operate in China outside of a minority JV is Tesla.
Did people in the US really stop buying VWs because of the diesel emissisions stuff? Almost nobody in the US buys diesel passenger cars anyway. I could not care less about a cheat on roughly zero percent of cars sold. Diesel emissions could be totally unregulated and it would not make any difference -- nobody buys them anyway.
Germany does have a giant, excellent chemistry industry.
> China's interest in batteries is not a recent trend. It has been investing in their production for many, many years. It has been attempting to dominate not just the production of cells but also of the cathodes and anodes that go inside them - not to mention the chemicals used to make those electrodes. It has been firming up the entire supply chain - all the way down to the mines. And while you can find only so much lithium and cobalt in China, Chinese firms have been buying up mines in Africa and elsewhere for years.
The fun thing is that the west saw it coming and didn't try particularly hard to forestall it. Consistent, long term industrial policy is very effective.