New Energy Vehicles (NEVs) in China

To add to this, there are a number of advantages to the Chinese government continuing to promote EV adoption full steam ahead

1. China would further increase its dominance in the EV supply chain and force foreign automakers to become enmeshed if they want to survive. This makes it far more difficult for other countries to consider sanctioning China. It also means China has more to lose in the event of any war

2. Chinese companies would become more competitive in China and globally

3. Air pollution in China will get better quicker and there will be fewer carbons emissions. The overall operating cost of an EV is significantly cheaper than its ICE equivalent over a notional 10-15 year car lifespan. That is better for society, the world and the consumer overall

4. It reduces Chinese imports of oil. So less money is spent on imports and it lessens China's strategic vulnerability to a potential oil blockade by the US

5. It also means greater demand for solar panels (they produce the lowest cost electricity). Parked EVs can charge up during daytime hours when people are either at work or at school. Furthermore, an entirely electric vehicle fleet has sufficient battery capacity to completely balance out electricity demand/supply during the course of an entire day. Just run the numbers. And there is currently a huge buildout of solar polysilicon plants in China which will likely result in a glut of cheap solar within 2 years time.

Tension in the Biden Administration: Should the US allow Chinese battery factories and metals mines to help jumpstart the US battery industry? No decision yet, but the likelihood right now is a hostile 'no'.

escobar said:

Tension in the Biden Administration: Should the US allow Chinese battery factories and metals mines to help jumpstart the US battery industry? No decision yet, but the likelihood right now is a hostile 'no'.

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Given the lack of LFP expertise in the USA, that would mean US cars would end up with Ternary batteries which are more expensive and not as safe. The required minerals are also in short supply, which means they will have difficulty scaling production (apart from Tesla which has the capacity to buy/obtain what it needs).

Based on the ONE battery factory announcement, it will take another 5 years to get the first LFP battery plant to full capacity in the USA. Even then, that factory isn't very big.

But by that time, China will likely be at 90%+ electric vehicle sales.

AndrewS said:

Given the lack of LFP expertise in the USA, that would mean US cars would end up with Ternary batteries which are more expensive and not as safe. The required minerals are also in short supply, which means they will have difficulty scaling production (apart from Tesla which has the capacity to buy/obtain what it needs).

Based on the ONE battery factory announcement, it will take another 5 years to get the first LFP battery plant to full capacity in the USA. Even then, that factory isn't very big.

But by that time, China will likely be at 90%+ electric vehicle sales.

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拜振华 doing good work again

AndrewS said:

Given the lack of LFP expertise in the USA, that would mean US cars would end up with Ternary batteries which are more expensive and not as safe. The required minerals are also in short supply, which means they will have difficulty scaling production (apart from Tesla which has the capacity to buy/obtain what it needs).

Based on the ONE battery factory announcement, it will take another 5 years to get the first LFP battery plant to full capacity in the USA. Even then, that factory isn't very big.

But by that time, China will likely be at 90%+ electric vehicle sales.

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It sounds like US is voluntarily dismantling its EV industry before it even starts. In fact, you probably thought too much. I bet in 2024 Trump will come into office, take a good look at state of US car industry, and go back to ICE cars.

GodRektsNoobs said:

It sounds like US is voluntarily dismantling its EV industry before it even starts. In fact, you probably thought too much. I bet in 2024 Trump will come into office, take a good look at state of US car industry, and go back to ICE cars.

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Well, Trump doesn't have the power to change this as it is already law.
So in 10 year's time, the US will likely have a complete EV supply chain without Chinese involvement.

But these American electric cars will be more expensive and worse than their global competitors.
So American automakers will end up retreating from the world back to the US.
At the same time, Korean and Japanese automakers will suffer as they can't access as many subsidies, so their exports to the US will decline.

I think it's hard to tell how the IRA will affect American EV industry. We know that currently, you can't mass produce without the Chinese supply chain. The Japanese/Koreans all rely on the Chinese supply chain for their batteries. The current US market is really just not large enough to justify that imo. Maybe Tesla will try to do it, but they often seem to be all talk.

So, you could get to a scenario where it is just so much cheaper to produce LFP batteries in China, that directly importing them from China will be cheaper than building them all in America (even accounting for Tariffs and IRA) and then automakers will just import them directly (like Tesla is doing with BYD battery in Berlin) rather than building them in America.

Also, Republican party doesn't like EVs. So, they can revoke this law anytime they want. It's really not set in stone.

AndrewS said:

I think BYD will still see healthy demand even if it is producing 6 million vehicles per year (25% of the Chinese market)

Today Toyota has 40% of the Japanese market even though there are many *competitive* rivals.

But BYD faces a lower level of *effective* NEV competition in China and globally, so I think they could get to 35-40% of the Chinese market alone as long as they continue launching enough new models/brands.

So I think 2023 would be another year of adding 280-290K of monthly capacity. That would end up as a run rate of 10 million per year.

At 10 million per year in 2024, BYD would almost certainly have the distinction of being the world's largest automaker, as BYD would have taken significant sales from Toyota/VW.

That status automatically gives BYD the credibility to further expand globally.

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Adding another 280,000-290,000 of monthly capacity would make it 600,000 per month. That would be 7-8mil per year and that would be astounding.

tphuang said:

I think it's hard to tell how the IRA will affect American EV industry. We know that currently, you can't mass produce without the Chinese supply chain. The Japanese/Koreans all rely on the Chinese supply chain for their batteries. The current US market is really just not large enough to justify that imo. Maybe Tesla will try to do it, but they often seem to be all talk.

So, you could get to a scenario where it is just so much cheaper to produce LFP batteries in China, that directly importing them from China will be cheaper than building them all in America (even accounting for Tariffs and IRA) and then automakers will just import them directly (like Tesla is doing with BYD battery in Berlin) rather than building them in America.

Also, Republican party doesn't like EVs. So, they can revoke this law anytime they want. It's really not set in stone.

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Revoking the law requires Congress, the Senate and the President to all agree. That is not going to happen.
And even if they do, US companies will sue for losses because of the investments already made.

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As for imported LFP batteries being cheaper than US batteries, I don't think this will happen.
The value of US subsidies is greater than the cost of the actual battery. See below

$3750 when selling an electric vehicle assembled in North America
$3750 when selling an electric vehicle with a battery that has no Chinese involvement

There is also the following for US production of:

10% of the cost of battery electrode active materials
$35/kWh of battery cell capacity
$10/kW of battery module capacity (or, for a battery module that does not use battery cells, $45/kWh)
10% of the cost of producing a battery mineral

So if you take a Model 3 with a 50 KWh battery, there's around $10K in subsidies.
The battery pack itself only costs $5-7K

AndrewS said:

Given the lack of LFP expertise in the USA, that would mean US cars would end up with Ternary batteries which are more expensive and not as safe. The required minerals are also in short supply, which means they will have difficulty scaling production (apart from Tesla which has the capacity to buy/obtain what it needs).

Based on the ONE battery factory announcement, it will take another 5 years to get the first LFP battery plant to full capacity in the USA. Even then, that factory isn't very big.

But by that time, China will likely be at 90%+ electric vehicle sales.

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At 90%+ electric vehicle sales, what if there is power outage? What about a drought that would reduce hydro power?