Chinese Economics Thread

[AndrewS]

@Petrolicious88

Agreed. Tesla did give Chinese EVs a kick up the butt.

But the Chinese automakers and suppliers would have gotten to current development levels anyway, but perhaps 2 years later than in real life.

Hence my statement that "whilst Tesla single handily started the EV revolution in the West, that doesn't apply to China."
The Chinese EV revolution would have continued on regardless of whether Tesla existed or not.

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In comparison, if Tesla hadn't been able to obtain Chinese funding to build a Chinese factory in 2019, there's a high chance that Tesla would have actually gone bankrupt in 2019. Remember Tesla only had 1 month of cash in 2019.

Again, if Tesla had gone bankrupt, the Chinese EV revolution would have continued on regardless.

And also remember that the existing legacy automakers in North America, Europe, Japan and Korea weren't seriously interested in EVs.
They would have pushed their governments to slow down.

If it was up to them, they would kill off the EV market because it will reduce their sales volumes, reduce revenues and also require them to write off billions in ICE factories.

In comparison, the Chinese government would have pushed on regardless, because there are concrete benefits in terms of:

1. Reducing Chinese air pollution
2. Chinese EV automakers leapfrogging existing carmakers into a new technology
3. Reducing Chinese oil imports and also vulnerability to blockade

 

[Petrolicious88]

@Petrolicious88

Agreed. Tesla did give Chinese EVs a kick up the butt.

But the Chinese automakers and suppliers would have gotten to current development levels anyway, but perhaps 2 years later than in real life.

Hence my statement that "whilst Tesla single handily started the EV revolution in the West, that doesn't apply to China."
The Chinese EV revolution would have continued on regardless of whether Tesla existed or not.

---

In comparison, if Tesla hadn't been able to obtain Chinese funding to build a Chinese factory in 2019, there's a high chance that Tesla would have actually gone bankrupt in 2019. Remember Tesla only had 1 month of cash in 2019.

Again, if Tesla had gone bankrupt, the Chinese EV revolution would have continued on regardless.

Good points. It was def a mutually beneficial relationship. A chance to leapfrog veteran automakers is precisely why China wanted Tesla.

- But also remember that back in the early 2000s, all major automakers were still trying to reduce emissions by downsizing to 4 cylinders, using turbo chargers, variable timing, hybrids etc… NIO, Xpeng didn’t start until 2014, almost a decade after Tesla.

- Local Chinese governments hedged its bets on EVs and Hydrogen; they weren’t sure. Tesla’s success in the US/Europe settled that question. What would’ve happened if Tesla was instead a Hydrogen company.

 

[broadsword]

@AndrewS

You forgot to mention with the crazy number of EV makers in China, the competition there makes the technological push from Tesla moot. But Tesla sure provided business and employment to the locals that otherwise would have gone to other countries.

 

[Lnk111229]

Stumble across this video. Anyone have ideas what happened? And bonus Jai part right after Ubermensch part.

 

[PopularScience]

Exactly. I laugh when people try to discount Tesla's contribution to the EV industry. In the beginning, almost every established player thought it was impossible. Toyota, GM, VW, all thought it was a joke, while Tesla was already looking ahead with a nationwide charging network in the US. They couldn't imagine how a small time, loss making up-start could compete with established players with 150 years of experience.

China saw the potential with EVs (especially when it comes to gov't goals of reducing air pollution and carbon reduction), and Tesla helped a slew of Chinese companies become more competitive. Kicked started local suppliers to make increasingly sophisticated components. It the CatFish effect, and Tesla at the time was the biggest fish in China.

********The Shanghai government literally had an aneurysm trying to help set up the Tesla GigaFactory. Power and water was turned on in 12 days. Every single Tesla workers got masks when there was a nationwide shortage at the time. Tesla wanted cheap loans, subsidies, tax benefits, 100% ownership, it got it all.

BYD？

 

[AndrewS]

Good points. It was def a mutually beneficial relationship. A chance to leapfrog veteran automakers is precisely why China wanted Tesla.

Because Tesla had made a name for itself in the West, part of the thinking was that China might as well be the main production and export hub for Tesla. After all, this applies to most other industries in the world.

- But also remember that back in the early 2000s, all major automakers were still trying to reduce emissions by downsizing to 4 cylinders, using turbo chargers, variable timing, hybrids etc… NIO, Xpeng didn’t start until 2014, almost a decade after Tesla.

And BYD has been working on electric vehicles for over 15 years now, building out a completely Chinese supply chain.

- Local Chinese governments hedged its bets on EVs and Hydrogen; they weren’t sure. Tesla’s success in the US/Europe settled that question. What would’ve happened if Tesla was instead a Hydrogen company.

No. The central government in China focused on electric vehicles some 10? years ago. You can read about this in Rifkind's New York Times bestseller "The Third Industrial Revolution". Rifkind also mentions Angela Merkel, Xi Jinping and Li Keqiang as big fans of the book, which outlines an electric future.

Electric vehicles were obviously better than hydrogen given:

1. The predicted declines in battery costs
2. All the promising new battery technologies in speculative development whereas hydrogen is a mature mechanical process with little room for breakthrough improvement
3. The predicted declines in solar and wind costs, with electricity significantly cheaper than coal. And how every building will end up with solar panels and how every electric car would be connected up as a grid storage battery.

It wasn't Tesla that settled the Hydrogen versus electricity debate.

Remember that electric bicycles, electric scooters, electric motorcycles, electric buses, electric taxis and small electric delivery vans all kicked off in China before Tesla's arrival. You could see that playing out in Chinese cities 5 years ago.

For example, by 2017, Shenzhen had already decided to completely switch to electric buses and taxis. And taxis are just electric cars that are driven a lot.

But you wouldn't realise this if you only consumed Western media output about electric vehicles, which only covered Tesla.

 

[FairAndUnbiased]

Good points. It was def a mutually beneficial relationship. A chance to leapfrog veteran automakers is precisely why China wanted Tesla.

- But also remember that back in the early 2000s, all major automakers were still trying to reduce emissions by downsizing to 4 cylinders, using turbo chargers, variable timing, hybrids etc… NIO, Xpeng didn’t start until 2014, almost a decade after Tesla.

- Local Chinese governments hedged its bets on EVs and Hydrogen; they weren’t sure. Tesla’s success in the US/Europe settled that question. What would’ve happened if Tesla was instead a Hydrogen company.

Hydrogen was never a serious option lmao what are you even talking about. Only Japan hedged on hydrogen, no Chinese company did. When was a hydrogen vehicle made? BYD started profitably shipping plug in hybrids in 2008 and full electric buses in 2010. Before that, BYD was a successful auto parts/electronics company. All it had to do was assemble its own auto parts and electronics that it used to sell to others into a self branded package.

Tesla had

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,

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. Any single one of which could've destroyed any other company (see VW diesel scandal) but thanks to unlimited state backed subsidy, media propaganda and regulatory monopoly, was kept on life support until it could finally have

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And even today, the part of Tesla that actually works is just assembling other's auto parts, the part that's Tesla core IP like self driving doesn't really work.

 

[AndrewS]

Tesla had

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,

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,

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.

From a certain perspective that is true.
They underestimated how difficult everything was, but now they've gotten past that learning curve and are finally delivering.

Any single one of which could've destroyed any other company (see VW diesel scandal) but thanks to unlimited state backed subsidy, media propaganda and regulatory monopoly, was kept on life support until it could finally have

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And even today, the part of Tesla that actually works is just assembling other's auto parts, the part that's Tesla core IP like self driving doesn't really work.

Tesla do actually design and make most of their components. They are the most vertically integrated automaker apart from BYD

 

[FairAndUnbiased]

From a certain perspective that is true.
They underestimated how difficult everything was, but now they've gotten past that learning curve and are finally delivering.




Tesla do actually design and make most of their components. They are the most vertically integrated automaker apart from BYD

Tesla

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. Tesla

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. Tesla's so called vertical integration is mostly marketing. They don't even have their own semiconductor fab.

BYD is actually vertically integrated because it was originally auto parts and electronics supplier since the 90's. It has its own semiconductor fabs and battery plants.

 

[AndrewS]

Tesla

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. Tesla

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. Tesla's so called vertical integration is mostly marketing. They don't even have their own semiconductor fab.

BYD is actually vertically integrated because it was originally auto parts and electronics supplier since the 90's. It has its own semiconductor fabs and battery plants.

Panasonic supply the battery cells, but Tesla does the modules.

Also Tesla are using gigacastings now, which means they can replace hundreds of components with a single casting. Presumably the legacy automakers would be buying all these components in.

Plus Tesla are amongst the first to use commodity processors / domain controllers and software to replace hundreds (thousands?) of MCU units.

So overall, I judge Tesla far more vertically integrated than any other automaker apart from BYD.