2024/4/17 19:38 China's EV Market and BYD Show the Future Is Already Here - Bloomberg
Opinion | David Fickling, Columnist
China’s EV Market Shows the Future Is Already Here
By midyear, half of all cars sold in the country will come with a plug. BYD is leading the charge.
2024 年3月28日 at GMT+8 04:00
By David Fickling
David Fickling is a Bloomberg Opinion columnist covering climate change and energy. Previously, he worked for
Bloomberg News, the Wall Street Journal and the Financial Times.
Offshore brands have been left behind. Photographer: Brendon Thorne/Bloomberg
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Forget everything you’ve heard about how electric vehicles are running out of charge. In
the biggest car market, they’re on the brink of victory — and the rest of the world will
soon follow.
Battery metals such as lithium, nickel and cobalt are down by, respectively, 80%, 30%,
and 25% over the past year. The cells made out of them are heading the same direction,
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2024/4/17 19:38 China's EV Market and BYD Show the Future Is Already Here - Bloomberg
with Goldman Sachs Group Inc. predicting a 40% drop in pack prices between 2023 and
2025, putting the global average well below $100 per kilowatt hour.
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That’s a level that carmakers have long viewed as analogous to the technological
singularity, the point where AI theorists believe machines will irreversibly take over.
Below $100/kWh, electric vehicles will be cheaper than petroleum-powered
counterparts to buy as well as run. The days of the internal combustion engine will be
strictly numbered.
Charging Ahead
Six of China's 10 top-selling cars in February came with a plug
Drivetrain Price (yuan) % change Sales % change
Tesla Model Y EV 259,000 -4.9 24,668 -4.3
BYD Qin Plus DM-i PHEV 91,401 -28.5 21,502 37.9
Nissan Sylphy ICE 103,113 -10.6 19,702 -4.2
Aito M7 EV 295,323 -2.3 19,095 1,304.0
VW Lavida ICE 108,934 -2.4 15,597 -24.1
BYD Seagull EV 76,194 -6.9 14,548
VW Sagitar ICE 124,465 -10.7 14,500 15.0
Great Wall Haval H6 PHEV 152,385 10.2 14,215 9.0
Wuling Hongguang Mini EV EV 41,404 -7.4 12,648 -58.2
Changan CS75 Plus ICE 111,283 -8.6 12,430 22.0
Source: Bloomberg
Note: Data is for February 2024. % change figures are relative to February 2023. EV=electric vehicle. PHEV=plug-in hybrid.
ICE=internal combustion engine.
In China, the future has already arrived. Six of the 10 best-selling cars in February came
with a plug. Wang Chuanfu, chief executive officer of market-leading EV-maker BYD Co.,
expects half of all cars sold by the middle of the year to be either battery or plug-in
hybrid. You might feel tempted to dismiss that as an executive’s customary bullishness,
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but the China Passenger Car Association, an industry group, expects such new-energy
vehicles to already comprise nearly 46% of sales this month.
BYD’s annual results Tuesday confirm the solidity of this shift. It’s a truism in other
countries that it’s impossible to turn a profit selling EVs, but even after China abolished
purchase subsidies in 2022, BYD’s net income came in at 30.04 billion yuan ($4.16
billion). That’s an 80% increase on the previous year, meaning profit is accelerating
faster than the 60% increase in sales volumes.
This didn’t happen in the middle of a cosy, stitched-up market, either. Savage waves of
discounting over the past year have left China’s car sector resembling a battle royale
where non-battery cars are being squeezed out by a dizzying array of cheaper, more
exciting electric models, even as BYD maintains steady margins that are likely to be
around $1,000 per car.
March is traditionally the peak season for China’s car industry as consumers return from
the lull around Lunar New Year, and sets the tone for the year. With lower battery prices
promising relief on costs, EV-makers this year are going in for the kill with price
reductions that conventional vehicles will be unable to match.
BYD’s Seagull, a zippy battery compact which is unlikely to be offered in many overseas
markets, now sells for less than $10,000, as Bloomberg News reported this week. The
Qin Plus, a plug-in hybrid with the range and specs to compete head-on against
mainstream sedans, is barely more costly at $11,000. If you’re really short of cash, the
Wuling Hongguang microcar can be had for less than $6,000.
New Moon
Shares in battery-makers CATL, BYD and Samsung SDI are up around 20% since markets
returned after Lunar New Year
Samsung SDI LG Chem SK Innovation Panasonic CATL BYD
140
120
100
80
Feb 19 Mar 1 Mar 15 Mar 25
2024
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Source: Bloomberg
Note: Rebased. Feb. 19, 2024=100.
That’s particularly damaging for offshore brands, who’ve been slow to ramp up their
electric offerings. Volkswagen AG’s sales in China last year were their weakest since 2011,
while Honda Motor Co. sold the smallest number of vehicles since 2015. Volumes from
Nissan Motor Co. and General Motors Co. have fallen about 40% since 2019, when they
were respectively the fourth- and sixth-biggest auto brands in the country; neither is
even in the top 10 now.
The industry outside China can’t expect to stay immune for long. The average price of
EVs in the US continues to decline, but at $52,314 in February is well above the 100,000
yuan to 150,000 yuan ($14,000 to $20,000) range where BYD and its rivals are
competing most aggressively. Even with a 27.5% import tariff and up to $1,000 of
shipping costs, a Chinese import offers drastically better value than anything available in
Europe or North America, one reason that they’re likely to take up about a quarter of
Europe’s EV market this year.
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It’s not impossible that governments in developed countries try to tighten restrictions
even further to protect local industries, as we’ve argued. Still, those industries have
vocally opposed such moves, especially in Europe — both because they’re fearful of
retaliation from Beijing, and because they hope to take advantage of China’s low
production costs to export to the rest of the world from their factories there.
“Protectionism is a value destruction move,” Mercedes-Benz Group AG Chairman Ola
Källenius told investors in February. VW’s Chief Executive Oliver Blume makes the same
point. “It is important to have a free world trade,” he told investors this month. “We are
concerned of rising of protectionism.”
Rich countries where the EV revolution is still yet to break are missing what’s happening
in the rest of the world. They’re about to find themselves wrong-footed by the pace of
change. Oil demand will keep growing into the 2030s because moves toward
electrification outside of the developed world are slowing down, Russell Hardy, chief
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executive of commodities trader Vitol SA, said in February. Try telling that to a Chinese
car dealer.
More From Bloomberg Opinion:
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Want more Bloomberg Opinion? OPIN <GO>. Or you can subscribe to our daily
newsletter.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP
and its owners.
David Fickling is a Bloomberg Opinion columnist covering climate change and
energy. Previously, he worked for Bloomberg News, the Wall Street Journal
and the Financial Times.
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China’s Hands Are Tied Against Tangle of US Alliances
Beijing has few good ways to fight back against the multitude of new security partnerships the
US is forging in the region.
2024 年4月17日 at GMT+8 03:00
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By Minxin Pei
Minxin Pei is professor of government at Claremont McKenna College and author of "The Sentinel State:
Surveillance and the Survival of Dictatorship in China."
Blocking more Philippines ships could backfire. Photographer: Jam Sta Rosa/AFP/Getty Images
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With last week’s trilateral summit between the leaders of the US, Japan, and the
Philippines, China faces an ever-tightening cordon of alliances around its periphery.
Chinese officials rail against this US-led network as an unwelcome and destabilizing case
of “bloc politics.” In reality, there’s not much else they can do.
Developing a “latticework” of partnerships around the Indo-Pacific — through
arrangements such as the US-Japan-Philippines relationship, a similar trilateral with
Japan and South Korea; the AUKUS alliance with Australia and the UK; and the Quad
grouping with Japan, India, and Australia — is a central pillar of US President Joe Biden’s
strategy for containing China. Interlocking defense ties between all those nations greatly
strengthen the US ability to deter Chinese aggression, especially toward Taiwan, and
increase America’s chances of victory if a conflict does break out.
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In many ways, Beijing has only itself to blame for Biden’s success. In the last decade, its
in-your-face approach to Japan, South Korea, and the Philippines has thoroughly
alienated nations that might otherwise have stayed on the sidelines of the Sino-
American rivalry.
China now finds itself boxed in. Its options for countering the US strategy are all
unappealing and, more importantly, unlikely to succeed.
One obvious temptation would be to retaliate. China could more aggressively confront
Japanese vessels patrolling near contested islands known as the Senkakus in Japan and
the Diaoyu in China, or it could block the Philippines from supplying its marines on a
rusting warship beached on Second Thomas Shoal, a submerged reef which both
countries claim. China could also seek to exert economic pressure on offending
countries, erecting new import barriers or choking off exports of critical minerals.
Such actions, however, would likely hurt China more than its intended targets. The Sino-
Japanese economic relationship, already strained by rising bilateral tensions, could
deteriorate faster and further. After declaring an “ironclad” security commitment to the
Philippines, Biden might order US naval vessels into the waters around the Second
Thomas Shoal, forcing Chinese President Xi Jinping to decide whether he is prepared to
escalate.
Alternatively, Xi could try to make nice with China’s neighbors, scaling back naval
confrontations (Chinese coast guard ships have entered waters around the contested
Japanese islands every day since mid-December last year) and seeking to offer economic
carrots instead of sticks. China’s ailing economy has fewer of those in its arsenal than
before, though, and even a tactical withdrawal now could lead to a loss of face. Worse, it
would probably come too late: The security worries that have led countries such as
Japan and the Philippines into the arms of the US are by now deeply ingrained.
Other moves all carry high risks. Providing North Korea more support to keep Japan and
South Korea off-balance could instead lead them to deepen their partnership. Moreover,
North Korean leader Kim Jong Un would likely pocket the favor but keep his distance
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from Xi, who is not exactly a fan of the unpredictable young dictator. Having just
boosted his own ties with Kim, too, Russian President Vladimir Putin may fear China is
trying to undercut his influence.
Trying to distract the US by supporting its adversaries in the Middle East could backfire,
too. Economically, a wider war in the region could hurt China just as much as the US if
trade and oil shipments are disrupted. Providing Iran with weapons would fray Chinese
ties with its other regional partners such as Saudi Arabia and the Gulf states.
The US would almost certainly retaliate, either by imposing more economic sanctions
on China or by granting more military and diplomatic support to Taiwan. And, unless
the US gets sucked into another land war in the Middle East — a quagmire Biden
obviously wants to avoid — bipartisan pressure to stay focused on China will not lessen.
This leaves Beijing only one sensible option: to play for time. Rather than trying to break
the new bonds the Biden administration has forged, China would be wiser to see
whether internal tensions weaken them naturally.
Fully realizing the potential of these partnerships will require sacrifices on all sides —
from increased defense spending and tighter cyber-security from Japan to greater
willingness from the Pentagon to share technology and intelligence with its new
partners — which are far from guaranteed. Potential changes of administration in Seoul,
Manila, and Washington could quickly erode support for deeper ties. A second Donald
Trump administration might well be more interested in bullying allies than wooing
them.
China has created many of its own problems in the region. Its best bet now may be to
hope the US does the same.
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newsletter .
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP
and its owners.
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Minxin Pei is professor of government at Claremont McKenna College and
author of "The Sentinel State: Surveillance and the Survival of Dictatorship in
China."
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