China will put the final nail in ICE, not Tesla

PokerBroker · Sep 13, 2015

Chinese companies are rushing to put together electric vehicles of all types for their local market and the Chinese market has all the reasons in the world to support these efforts. Urban China will be quick to adopt these technologies in personal and public transportation creating very scaleable opportunities.

As these companies scale they will reap benefits of lower costs and refocus on quality standards required to enter foreign markets.

We may laugh at the first attempts of Chinese EV manufacturers in the U.S. Much as we did the Korean Hyundai and Kia efforts initially, but these companies will adjust to become prominent players. The short-sightedness of the "Big Three" and their failure to take alternative fuels seriously will ultimately cause their end at the hands of the Chinese.

The U.S. economy will experience a staggering blow as a result of the complete failure of the U.S. Auto industry and its suppliers and complementary/supporting businesses.

Tesla's head start and vision, along with their spot in the premium auto space will help them persevere. Their biggest growth opportunities in 10-20 years may just be supplying batteries to the handful of U.S. factories producing Chinese vehicles.

I brainstormed this on a whim to start a discussion and would love to hear all thoughts, positive and negative. Let's not make it personal

it is just a discussion starter.

drinkerofkoolaid · Sep 13, 2015

There are tens of millions of people in China, who require a vehicle to get from point A to point B, who aren't in a position to buy a vehicle that costs more than $5,000 - $10,000. Chinese knockoffs and very cheap electric Vehicles that might not adhere to the highest safety or performance standards, are being made for these people.

Those who can afford to pay a premium for an authentic and safe vehicle that is very unlikely to explode, will gladly pay a premium for their vehicle, and are not likely to give any thought to buying a knockoff, or rushed vehicle.

China may put the nail in certain traditional automobile manufacturers that are dependent on the Chinese market, since China is working to significantly reduce the number of low end gasoline vehicles sold and used in major cities.

Canuck · Sep 13, 2015

"We consulted with industry experts including Lonnie Miller, then director of industry analysis for R.L. Polk & Co. (now part of IHS Automotive) and concluded:

There is the prospect that one or more Chinese companies could just buy their way into the U.S. market…This may be the easiest way for Chinese companies to be represented in upscale markets, where market perception clearly trumps reality. The idea of a Chinese-branded car made in China might be too tough of a sell, even five or ten years down the road.

The public will buy most brands that are sold to and managed by other companies no matter where they’re located so long as they maintain the same ‘shape and feel’ to the product,” Miller explains. “The question here is whether the consumer will look under the hood and see a lot of Chinese script on the engine or are they going to be able to tell that it’s still a Volvo?”

We’ll finally find out a few months from now."

http://www.forbes.com/sites/jimgorz...-china-built-car-headed-to-the-u-s-this-year/

Considering where they are with ICE vehicles in North America, your theory seems highly unlikely regarding electric vehicles.

jerry33 · Sep 13, 2015

Tesla's function is to light the fire (and provide a great ride in the meantime).

eye.surgeon · Sep 13, 2015

Stumbling blocks will be their rapidly rising labor costs, their inability to innovate (they manufacture but don't innovate or design), and the pressure to conform to first-world standards of patent enforcement. Much of their economic advantage has been unlimited slave wages and intellectual theft on a massive scale across all industries. And if they want to sell cars in the US they will have to build them here, same as the Japanese, thus the advantage of slave wages is diminished. Realistically they will acquire Western marques just like what they are doing with Volvo. The West is light years ahead in alternative energy innovation, China is simply the cheapest place to build the hardware at the moment.

Kandiru · Sep 28, 2015

Here is the real motivation:

Jut to celebrate their parade for the victory over JP they had to halt
most industrial production around the capital for one whole week.

SR22pilot · Sep 28, 2015

eye.surgeon said:
Stumbling blocks will be their rapidly rising labor costs, their inability to innovate (they manufacture but don't innovate or design), and the pressure to conform to first-world standards of patent enforcement. Much of their economic advantage has been unlimited slave wages and intellectual theft on a massive scale across all industries. And if they want to sell cars in the US they will have to build them here, same as the Japanese, thus the advantage of slave wages is diminished. Realistically they will acquire Western marques just like what they are doing with Volvo. The West is light years ahead in alternative energy innovation, China is simply the cheapest place to build the hardware at the moment.

Sounds like what was said about Japan and Korea. Copying is the quickest way to catch up. There are bright people everywhere. Once caught up, they will innovate too.

I do think that Google and Apple offer hope in addition to Tesla. I am losing hope that Ford and GM will see the light.

wayner · Oct 1, 2015

But how will China generate the power to charge the EVs? Today their electricity primarily comes from coal so switching to EVs means putting coal in your tank instead of gasoline. Is that really the solution?

techmaven · Oct 1, 2015

wayner said:
But how will China generate the power to charge the EVs? Today their electricity primarily comes from coal so switching to EVs means putting coal in your tank instead of gasoline. Is that really the solution?

Yes.

They are rapidly turning off their older coal plants and installing newer, far cleaner coal plants. The difference in emissions just between coal plants is startling. They are also aggressively moving to alternative energy sources including solar.

Even at 100% coal, BEV's have better greenhouse gas emissions than equivalent ICE cars. However, PM2.5 emissions is a problem given the average emissions from US coal plants. But the cleanest coal plants have brought down emissions dramatically. It is easier to regulate emissions at central power plants than individual mobile power plants (vehicles). Also remember that China has a lot of vehicles that have very poor emissions profiles.

The comparison is also often biased against BEVs since the data about power plants is provided is far closer to actual emissions while data provided for ICE vehicles tends to be for vehicles in new condition. As vehicles age, their emissions tend to go up.

Further, the mix of generation is moving rapidly away from coal, therefore, over time, emissions will get better for the EV fleet. Emissions do not get better per ICE vehicle without changing fuels, and the impacts of switching to ethanol or other biofuels is still debatable.

MichFin · Oct 1, 2015

Tesla has made going electric cool, fun and prestigious as they roll out their Model 3 and the Chevy Bolt and Nissan Leaf come out with 200+ mile range you will all sorts of people join the EV ranks. As with most things there are millions of customers that would buy electric but are waiting for it to be more mainstream.

I don't think China has a head start but they do have a government that is pushing the transformation where as 1/2 of Americans still think climate change is not real. Or at least that's what their told to believe

CraZ8 · Oct 1, 2015

Having been to China recently (the wife is from Shanghai) I can tell you that many preconceived notions of China from as few as just 10 years ago are wrong. There is a tremendous amount of disposable income at least in the cities and you will see elevated 8 lane highways everywhere filled with mostly new shiney cars including lots of premium euro and American offerings. It was a real eye opener for me after reading all those National geographics for years expecting three wheel two cycle put- puts as the main source of transportation. I rode on the Maglev line from the Shanghai airport hitting speeds of 430 KPH. The chinese are hell bent on modernizing their economy
The wife is working with the largest supplier of car parts in Taiwan/China who is ramping up to produce EVs shortly in the next year or so. Tesla will have some big time competition soon.

wayner · Oct 1, 2015

The other thing about China, and I go to either Beijing or Shanghai pretty much every year, is that you see far more larger cars on the road than you see in Europe despite the fact that the population is so much denser. And unlike NY or London the cities are not set up to allow you to easily walk from place to place as the cities are very spread out. So cars are much more necessary there than in major cities like NY, London or HK.

jerry33 · Oct 1, 2015

wayner said:
But how will China generate the power to charge the EVs? Today their electricity primarily comes from coal so switching to EVs means putting coal in your tank instead of gasoline. Is that really the solution?

Even when powered from coal you are still better off with an EV, if for no other reason than the pollution is not local. And as others have said, China is getting off coal.

stopcrazypp · Oct 1, 2015

China is actually doing a lot more natural gas nowadays. Even coal is not ideal. Of course the newer coal plants are a lot cleaner than before. For the US, the average for the coal plants are bad because we still have some very old coal plants running (although recently there have been moves to shut them down).

EVger · Jan 9, 2016

Some data re ramp of EV sales in China (2011-2014) and beyond

"In fact, Chinese EV sales were on track to more than double to 180,000 in 2015, with 'China becoming the largest EV Maker in the world and also the largest market for plug-ins globally.'"

What This Washington Post Column Gets Wrong About Electric Cars | ThinkProgress

1208 · Jan 9, 2016

Good news.

sandpiper · Jan 11, 2016

SR22pilot said:
Sounds like what was said about Japan and Korea. Copying is the quickest way to catch up. There are bright people everywhere. Once caught up, they will innovate too.

I do think that Google and Apple offer hope in addition to Tesla. I am losing hope that Ford and GM will see the light.

There are bright people everywhere, and certainly a lot of bright people in China. But, without going into a diatribe, they've got a lot of changes to make before they seriously challenge the first world on high value-added products, where cheap labour is not the major advantage. It's a mistake to look at the Korean / Japanese experiences and draw parallels. The Chinese social and business cultures and the political systems are vastly different. For one, I do hope they succeed, but I think it's at least another 50+ years.

Festerfeet · Jan 13, 2016

I think this is is only partly true nowadays.

Chinese social and business structures are changing, the political monolith is now making policy based on social media reaction (it is starting to learn to listen - a bit)

BYD have more patents on battery and charging technologies than almost anyone else and there are a lot of companies with vast amounts of cash going into or preparing to go into this market.

Don't discount China just yet.

heleauto · Jan 17, 2016

China will put the final nail in ICE, not Tesla

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