Editor's note: In 2023, China's auto export business will leave a new footnote with 5.221 million units: China has replaced Japan as the world's largest auto exporter. With the arrival of 2024, everything seems to press the accelerator button. At the beginning of the year, BYD's first ro-ro ship "Explorer 1" loaded 5,449 new energy vehicles from Shenzhen to Europe; In the spring of this year, Lei Jun appeared with Xiaomi SU7 and sounded the charge of annual sales of 120,000 units; In the summer of this year, Li Bin and Qin Lihong drove the NIO ET7 on the highways of Europe for a "slow live broadcast".
Chinese automobile manufacturing is not only made for Chinese, but also into a wider international market. The perception is also rich: at the big auto show in Beijing, Shanghai, Guangzhou and Shenzhen, a group of bigwigs from the United States and Western car companies stopped to taste in front of the Chinese show cars; A group of bigwigs of Chinese car companies have called for "rolling in the wider world market, not behind closed doors" in various speeches.
Competition is not only limited to the peers of car companies, but also in the perspective of a higher dimension. The United States and the European Union have successively offered trade protection measures, tariff barriers, and entry thresholds, and have been built one after another, and it seems that a war of containment against "China's cars going to sea" is brewing. From introduction to going out, how can China's car manufacturing be successful? From industrial layout to policy support, why does the rise of China's new energy vehicles arouse the alarm of Western countries? Is it the ivory burning of the guilt, or is there a suspicion of the great power game? "Trend Capture" launched a series of planning "The Rise of China's Car Manufacturing".
U.S. Treasury Secretary Janet Yellen is trying to curb China's influence in the field of new energy vehicles. Speaking at a luncheon at the Economic Club of New York on June 13, Yellen said that China's "overly concentrated supply chains" pose a threat to U.S. jobs and recent investments aimed at building the U.S. green energy sector.
U.S. Treasury Secretary Janet Yellen
"Overly centralized supply chain" is undoubtedly another discourse trap to suppress China's new energy vehicles. However, Yellen also pointed out one of the outstanding advantages of China's new energy vehicle industry, that is, the "production and supply chain". However, when the United States cannot compete with China by normal means in the production and supply chain system, it will smear it on the grounds of so-called "excessive concentration".
In addition to advanced technology and a huge market, one of the important factors for the successful rise of China's new energy vehicle industry is a highly complete production and supply chain system. China is currently the only country in the world that has all the industrial categories in the United Nations Industrial Classification, and the scale of its manufacturing industry has ranked first in the world for more than 10 consecutive years.
To some extent, this is China's unique competitive advantage, which has been difficult to achieve in Europe and the United States due to years of deindustrialization and manufacturing outflow. However, there are two sides to things, in the past few years, under the impact of the new crown epidemic, geopolitical disturbances and anti-globalization ideology, China's new energy vehicle industry chain has been regarded as "excessive concentration" by European and American politicians, and the "de-sinicization" is carried out on the grounds of safety. How can the Chinese government and relevant companies face up to the reality and find a way to solve it?
▍ "Forming a closed loop" production and supply chain
According to the data of the enterprise check in recent months, there are more than 1 million new energy vehicle-related enterprises in the mainland. In the past decade, the number of registrations of new energy vehicle-related enterprises in mainland China has shown a continuous positive growth trend. Throughout the entire industrial chain, the number of related enterprises nationwide has reached more than one million, of which Guangdong Province has the largest distribution of related enterprises, reaching more than 100,000, followed by Shandong Province and Jiangsu Province with nearly 100,000 enterprises.
In the Yangtze River Delta, Pearl River Delta and other regions where the new energy vehicle industry is developing rapidly, a regional industrial chain and supply chain system has basically been formed, creating an industrial ecology driven by vehicle enterprises and supporting advanced intelligent network industry chains. In the Yangtze River Delta region, new energy vehicle OEMs can solve the supply of required supporting parts within 4 hours' drive, forming a "4-hour production and supply circle".
Shenzhen, Guangdong Province, relying on the developed electronic information industry, has built a first-mover advantage in the core "three electrics" (battery, electronic control, and motor); It has cultivated leading enterprises such as BYD, Huawei, Sunwoda, Inovance Technology, Beiteri, German Nano, Xingyuan Material, Capchem, Blue Ocean Huateng, Megmit, Wemyss, Encore, Xinrui Technology, Infineon, Suteng Juchuang, etc.; It includes all key links such as vehicles, core components, and infrastructure, and there are as many as 88 listed companies alone.
Shenzhen-based BYD will produce 3.04 million new energy vehicles in 2023, a year-on-year increase of 62%, which is behind the almost entire chain of "Made by BYD". There are not only core components such as batteries, electric drives, and electronic controls, but also automotive chips, new materials, semiconductors, etc.
At present, Shenzhen's first-mover advantage in the electrification of the new energy vehicle industry is extending to the intelligent field, and some of Huawei's technologies of "intelligent driving, intelligent cockpit, and intelligent networking" have reached the world-class level. Liu Hua, executive chairman and secretary general of Shenzhen New Energy Automobile Industry Association, said that Shenzhen is the most complete city in the world's new energy vehicle industry chain, and has formed a closed loop, and a large number of key parts and core material enterprises of new energy vehicles have become dazzling "beads" in the industrial chain. It is precisely for this reason that CATL, the global leader in lithium batteries, and Xiaomi Auto, a new force in car manufacturing, have also increased their layout in Shenzhen.
▍Under the competition of major powers, Europe and the United States promote the reconstruction of the production and supply chain
According to the data, at present, China's new energy vehicle power battery loading volume accounts for more than 60% of the world's total, and 6 power battery companies such as CATL and BYD have entered the top 10 power battery loading volume in the world; The shipment of key materials for power batteries such as cathode, anode, separator, and electrolyte accounted for more than 70% of the world's total; The market size of electric drive and electronic control enterprises such as Fodi Power is leading in the world; A number of software and hardware enterprises that develop and manufacture high-end chips and intelligent driving systems have developed and expanded; China has built more than 9 million charging infrastructures and more than 14,000 power battery recycling companies, ranking first in the world.
This is certainly a great achievement and a strong competitive advantage. However, the logic of the current global production and supply chain has changed - due to the impact of the epidemic, geopolitical disturbances and the surge of anti-globalization ideology, the development trend of regionalization, localization and short-chain of the global industrial chain is obvious.
In the past, in the context of globalization, there was a clear division of labor in the economies of various countries. Due to its efficient government, labor advantages and huge market, China has become an indispensable manufacturing and processing end in the world. However, in recent years, various uncertainties have been intertwined, and there are risks in the long-distance global division of labor, and the industrial chain has been adjusted from the main emphasis on efficiency in the past to the emphasis on efficiency while taking into account safety.
In the face of a complex and changeable environment, countries have begun to promote the diversification of their domestic supply chains, especially in the high-value new energy vehicle production and supply chain, European and American countries based on geopolitical and other considerations, trying to smear and snipe China, which is a reality we have to face.
In fact, the United States is actively following China's footsteps in the field of electric vehicles through legislation, technology investment, and incentives for local electric vehicle and parts companies, and reducing dependence on China's battery production and supply chain, as part of the United States' grand strategy of "de-risking" China.
On June 12, the European Commission announced temporary punitive tariffs of 17.4% to 38.1% on EV imports from China. The EU move follows the Biden administration's mid-May tariffs on a range of high-tech products from China, including a 100 percent tariff on electric vehicles from China and a 25 percent tariff on electric vehicle batteries.
On June 25, Premier Li Qiang attended the Summer Davos Forum in Dalian and delivered a speech, revealing his concern about the situation. He said that all countries should work closely together to oppose bloc confrontation and decoupling, maintain the stability and smoothness of industrial and supply chains, and promote trade and investment liberalization and facilitation. We cannot slow down the pace of green transformation for the sake of short-term economic growth, nor can we engage in protectionism in the name of green development or environmental protection.
On June 25, Premier Li Qiang attended the opening ceremony of the 2024 Summer Davos Forum in Dalian and delivered a speech. Source: Xinhua News Agency
▍The globalization of the production and supply chain
However, this move by Europe and the United States cannot stop the pace of globalization of China's new energy vehicles and their production and supply chains, but objectively accelerates this process.
China's outward direct investment (FDI) in the NEV value chain could hit a new record in 2023 as Western countries step up scrutiny of China's development model, according to a report by Rhodium Group, a for-profit think tank based in New York that is known for its research on China. According to Rhodium Consulting, these policy restrictions in Western countries have spurred more foreign direct investment in Chinese EV factories, and Chinese battery makers are bringing more supply chains into their overseas expansions in response to increasing market demand and pressure for the industry to return home. For example, BYD is building a new energy vehicle plant in Hungary, and Gotion Hi-Tech has invested in a battery plant in Slovakia.
In fact, globalization and agglomeration effects are the prominent characteristics of the development of the automobile industry. From the perspective of international experience, major automobile exporters will generally shift from vehicle exports to global production capacity layout to solve the problems of efficiency and barriers. In the 80s of the last century, Volkswagen entered China, first settled in Shanghai. After years of hard work, the localization rate of parts for the first model Santana has increased from less than 4% to more than 90%, and a number of parts manufacturing enterprises have developed and expanded, realizing a "win-win" situation between Volkswagen and China.
On April 11, 1983, the first Santana produced in the CDK method rolled off the assembly line at the Shanghai Automobile Plant.
A similar scene is being staged in the process of China's new energy vehicle companies "going overseas". On February 28, 2024, Great Wall Motor's honeycomb energy battery pack project in Thailand was officially mass-produced. Cheng Jinkui, president of Great Wall Motors ASEAN region, said that through the construction of the project, Great Wall Motors has changed from a new energy vehicle manufacturing enterprise to a new energy ecological enterprise in Thailand. The local layout of core components of new energy vehicles such as power batteries in China has created the possibility for Thailand to build a manufacturing hub for electric vehicles in the ASEAN region.
At the same time, China's new energy vehicles to the world welcome global auto companies to actively integrate into China's new energy vehicle production and supply chain, injecting strong momentum into the transformation of the global auto industry. A number of major foreign-funded projects such as Audi FAW, Volkswagen Anhui and Beam Automobile have landed in China, Volkswagen and Mercedes-Benz have set up global R&D centers in China, and more and more multinational automobile companies have accelerated the transformation of electrification and intelligence with the help of China's new energy vehicle industry chain enterprises.
It is not difficult to find that, in contrast to Yellen and other European and American politicians, European and American automakers recognize Chinese manufacturers as respectable rivals and partners, and even oppose the imposition of tariffs. The difference is worth playing, and it is quite a bit of the absurdity of "the emperor is not in a hurry to die a eunuch". When European and American countries use "de-risking" as an excuse to build so-called "resilient supply chains", their real motivation is to exclude China from supply chains. Yellen testified on Capitol Hill on April 30 that the Inflation Reduction Act's restrictions, which will go into effect this year and next, will "severely restrict" or even "almost completely" prevent clean car battery components or minerals and processing produced in China.
Only by firmly taking the road of globalization can China's new energy vehicle production and supply chain "hedge" the "de-risking" strategy of Europe and the United States, which requires the government and enterprises to form a joint force.
China's Ministry of Commerce has repeatedly stated that China is willing to deepen cooperation with other countries in the new energy supply chain, promote technological innovation and industrial development, promote inclusive economic globalization, jointly respond to global climate change, and promote the building of a community with a shared future for mankind.
The "Opinions on Supporting the Healthy Development of New Energy Vehicle Trade Cooperation" issued by the Ministry of Commerce and other departments proposes to encourage new energy vehicles and their supply chain enterprises to make efficient use of global innovation resources, set up R&D centers overseas in accordance with laws and regulations, actively establish strategic cooperative relations with foreign research institutions and industrial clusters, and integrate into the global new energy vehicle innovation network; Guide new energy vehicles and their supply chain enterprises to give full play to their own advantages, carry out technical cooperation in relevant countries, and build an industrial chain and supply chain system jointly built and shared by all parties.
No matter how Europe and the United States promote "decoupling and chain breaking", the Chinese government and new energy vehicle industry chain enterprises will continue to promote the construction of a global production and supply chain system with extensive participation of all countries, complementary advantages, and shared dividends, so as to build the supply chain into a "win-win chain". This is not only an objective requirement for the development of the automotive industry, but also a practical need to hedge the "de-risking" strategy of the United States and Europe, and another embodiment of China's responsibility as a major country.
Source丨"Trend Capture" WeChat public account