Another (former)auto EE here. Their own poor decisions resulted in China eating their lunch. They couldn't stop shooting themselves in the foot, high on their own arrogance of European hundred year old industry superiority. Man, I wish I had a way to digitally export
my memory of the townhall meeting in 2014 of a German luxury brand exec laughing on how bad Chinese EVs were. I bet, they aint laughing now, that's for sure.
Germans and Italians had a multi decade lead on EV motors, battery, self driving and electronic tech over China (why I entered the industry) but they shelved it because they wanted to sell more diesel engines, outsourced all R&D to the lowest bidder to save costs and invest all profits into share buybacks or dividends instead of R&D (why I exited the industry).
Are the German and Italian executives in charge of those decisions being held accountable for the mess they created, or are the enjoying a golden retirements/parachutes while thousands of workers are now being laid off and governments forced to spend taxpayer money to bail out their mistakes and rescue what's left to prevent further layoffs? What were the lavishly paid EU politicians and regulators watching over in that time?
To me this is another nail in the western industry players falling victims to their own short sighted greed coffin. If only there have been any past examples in history to serve as cautionary tales, cough, Kodak, cough. /s
> Their own poor decisions resulted in China eating their lunch.
China's approach was interesting. There was no giant state automaker, but about 70 of them. At one point, each province had its own auto industry. About like the US auto industry in 1910. There's been steady consolidation,
or elimination of the losers. Mergers of China auto companies seem to be rare.
Then came BYD. BYD won by sheer competence. They got good at batteries. They figured out how to make lithium iron phosphate batteries take up less volume and charge faster with their "blade battery". Now they could make safe electric cars with reasonable but not great range.
Somebody at BYD had an insight - the E-Axle. The motor is mounted to the axle and differential, like a railroad locomotive bogie. The power train for a basic car or truck consists of an E-Axle, a battery, an electronics power box that handles motor, battery, and charging inputs. The electronics box talks CANbus to the dashboard and controls. Using those standard, mass-produced components, a wide variety of cars and trucks can be built.
That got costs way down. Then BYD did some good car designs and got good at production.
The main government incentive was help on the charging infrastructure side. Also, it's been hard for years to get a registration to drive an IC car in Beijing. There's a very limited quota.
US companies are still trying to build gas cars with an electric power train substituted. This works but does not bring costs down. Tesla is electric-first, but has other problems.
The "Made in China 2025" plan [1], adopted in 2015, is now mostly complete.[2] After 2019, the government of China stopped publicizing the "Made in China 2025" in foreign media, but the plan continued to be executed.
South China Morning Post (2024): "The analysis found that China has met over 86% of the 260 targets
under MIC25, achieving or surpassing goals in sectors such as EVs, renewable energy, robotics, and
biopharmaceuticals. However, key targets in advanced photolithography, intercontinental aircraft,
and new materials were missed, with new materials having the lowest completion rate at 75%"
Thanks, this is something important I forgot about.
Tesla and BYD went fully vertically integrated by now, while EU car companies have done the exact opposite over the last 20-30 years in the quest for maximizing shareholder returns, outsourcing everything to the cheapest bidder and resorted to mostly badge engineering, assembling cheap parts from various OEMs under high markups sometimes not even in their own factories, hoping the brand prestige alone will carry them.
When you outsource everything, in time you also loose core competence. Bringing back core competence is difficult but not impossible except now they're in a recession so they have a lot less money than before to invest in innovation.
Tesla never really figured out batteries. The cell building sections of Tesla's battery plant are run by Panasonic or LG. Tesla's own people just package them up into a big battery box.
As far is known publicly, Tesla has no solid state battery program. Everybody else who's big in batteries in Asia has a major solid state battery program. Volume production is still hard, but one vendor has made over 2 million samples, some of which are in test vehicles.
The expected performance of solid-state batteries is 500Wh/kg, 5 minute charge, survive nail test without fire or explosion. China is mandating that safety requirement after July 2026.[1]
The beginning of the end of classic lithium-ion is in sight.
A lot of similar innovations ~20 years ago at German and Italian companies like Siemens VDO or Magneti Marelli. The issue is none of them were ever put into mass production, they were just left to rot on shelves while the Chinese out innovated them. It's the exact same story how Kodak invented the digital camera but shelved it to keep its film business alive till Canon and Nikon out innovated them.
>It's an impressive success of long-term planning.
China and CCP really shined at this, contrary to western expectations who thought it would be another USSR 2.0 waiting for it to collapse under state mismanagement and have them sweep in and buy the nation's assets at a discount. Then in a twist of irony, the opposite happened as China turned out to be better at maneuvering capitalism than the inventors of capitalists.
While the western business leaders only plan for next quarter and western politicians only plan for next election, all of which leads to short sighted greed driven "get rich quick while you still can then pull the ladder from under you" decisions on all fronts, leaving the future generations to pick up the tab and try to fix the past mistakes, all of which bogs down development, China moves at lightning speed.
I've often wondered if this long-term planning and foresight is fundamentally incompatible with a democracy running on sub-decade cycles. I imagine the two could coexist if voters themselves were more aware of their candidates' long term effects, but they need to trust politicians to actually produce results (and not get voted out next cycle).
>but they need to trust politicians to actually produce results (and not get voted out next cycle).
Due to the lack of accountability of politicians and the greed of wealthy elites who own them, most of the democratic west became low trust societies, where people can't trust politicians to have their interest at heart anymore.
That's why you see people voting the most extreme and destructive anti-establishment candidates in almost every major democracy, because voting the least worst option as was the norm, simply resulted into a slow march towards feudalism: unaffordable housing, higher taxes, stagnating wages, decline in quality of public services, increased illegal migration, etc.
So why would people choose to vote for the same thing for multiple decades? That would be the definition of insanity.
> Due to the lack of accountability of politicians and the greed of wealthy elites who own them, most of the democratic west became low trust societies, where people can't trust politicians to have their interest at heart anymore.
That is the core problem of the United States today.
In a low-trust society, it's hard to do anything low-margin but useful. The overhead of hostile action makes it unprofitable. Yet most of the goods and services people really need are low-margin.
China has formal Five Year Plans. Currently, the fourteenth Five Year Plan is finishing up, and the fifteenth, to start in 2026, is being worked on. They're published openly, but few in the West read them. They're general in the sense that they don't specify who does what, but specific in that they specify what should be emphasized and funded.
Historically, the Five Year Plans were aspirational and political through at least the 1980s.
There were some major disasters. Search "Great Leap Forward".
Some time in the 1990s, the planning system seemed to gain focus and started to become effective in guiding industrialization.
The Five Year Plans drive capital allocation. If a company wants to do something that's in the plan, it's easier to get money, loans, land, and such than for business areas not in the plan.
This is different from Soviet central planning, which was more like a very sluggish manufacturing scheduling system that told specific plants what to do.
Updating was annual, which is far too slow for that level of control.
Search "Gosplan".
Do you remember the EV offerings from European car companies back then? Ugly, weird shapes, "futuristic" features instead of utility.
They made those because regulation requires them to but they didn't really want to sell many of them.
It felt as if they were trying to torpedo their own success in EVs. Even BMW managed to make an ugly car, their EV i3.
Funny thing is, the rest of the industry has now caught up to this particular ugliness, so as it turns out it was futuristic. I really disliked the look of the Nissan Leaf ten years ago, but I now own one and whilst I don't love it's stylings, it's not stand-out-in-the-crowd ugly like it used to be - not because it's changed, but all the other cars have caught up (to the ugly, unfortunately).
I just wonder whether they made them look like 'normal' cars back then would they have sold better?
The i3 was arguably a pretty interesting idea; it didn't work out, and people wanted more 'normal' electric cars, but it was a reasonable experiment.
(VW kind of had the opposite problem; whereas BMW went "let's make the weirdest possible electric car", the eGolf and eUp were so normal-looking that I think people generally didn't realise they exist; a lot of people thought that the id.3/4 were their first electric cars.)
Especially the range extender version is very interesting, since it comes with 100 miles of electric range and a little less petrol range. Theoretically perfect for electric most of the time and hybrid for trips.
For some reason they made it ugly and expensive, but I guess that’s all BMWs over the past decade or so.
Ah yes, the classic "let's blame the customer for not buying our shit products", amirite?! How come they were buying Teslas like crazy in 2014-2020 though, if they "didn't want to buy EVs"? The problem is European makers just didn't want to sell EVs to begin with, it was just an annoyance for them so they were doing the bare minimum for compliance and virtue signaling to the EU regulators, and only making some low volume ugly EVs or ICE platforms that they converted to be crappy EVs. European makers were even giving Tesla money for their CO2 credits lol, that's how much they didn't want to sell EVs. Just let that sink in for a second that European companies would just rather pay off an US car company than sell EVs and somehow nobody in the EU thought this was a problem?! I feel like I'm taking crazy pills.
Also, on the topic of EU EV demand since you brought it up, a lot of Europeans are more urbanized, living in apartment buildings compared to US single family homes, so most don't have chargers at home to justify an EV purchase but still need cars to get to work, so of course that without matching charging infrastructure at home or at work, Europeans couldn't justify the purchase of an EV especially given the lower purchasing power compared to USaians. Not to mention that as a double whammy, EU city dwellers are also more likely to be tenants than owners which again, doesn't incentivize owners to invest in EV infrastructure.
I live in a supposedly rich EU country on paper, and public charging infrastructure is still severely lacking. Only newly built post-2018 apartments have power sockets in the garage so you can install a charger, the rest? God speed. Government action here has been lacking on public EV infrastructure front, they just gave subsidies for EVs which were ultimately just handouts to businesses and rich people who owned their own single family homes with chargers and solar panels, but now that market of house owners is saturated, since they already own EVs so of course sales have tanked, d'uh!
It was just another politically driven short sighted move, and now again, they're looking at fixing just the resulting effect and not the root cause. So in a Kafkaesque way, the huge amount of EU regulation, protectionism and interference had done more harm than good to the EU EV industry versus ripping the band aid during the good economic times and letting free market run its course, so now the industry is stuck with an economic recession to boot waiting for more regulations to save it, which might again, harm it more in the long term instead of making it competitive.
This feels vaguely ahistorical; the best-selling manufacturer of EVs in Europe in any given quarter has usually been VW AG (European) for a while now.
> but now that market of house owners is saturated, since they already own EVs so of course sales have tanked, d'uh!
How are you defining tanked? They stalled for about a year but have resumed growth.
> Europeans couldn't justify the purchase of an EV especially given the lower purchasing power compared to USaians.
And yet, somehow, Europe remains a larger market for electric cars than the US (of course, China is far larger than either).
> so now the industry is stuck with an economic recession to boot waiting for more regulations to save it
Again, VW etc seem fairly healthy. Stellantis not so much (though they are somehow still profitable), but their strategy of just owning all the brands that everyone thinks no longer exist and not doing much with them always seemed fairly incoherent.
All in all, this feels like you've come up with a narrative, and are just running with it regardless of reality, tbh.
I understand why you'd feel that way but let's remember that Nokia and Blackberry also had their strongest year ever in 2008-2009 years after the iPhone launched so it can be pretty deceiving to decide the future is fine just by looking at a graph of today.
What's your thesis here, that BYD et al will totally replace the European car industry or something? This doesn't seem to be particularly plausible, and, as above, pretty much everything you have claimed is dubious or flat-out incorrect.
>What's your thesis here, that BYD et al will totally replace the European car industry or something?
You're putting words in my mouth that I never said. I never made such claims. Obviously it will not, since the auto industry gets more government protections than the likes of Nokia or Blackberry did, but a good indicator is to monitor sales in regions that don't have specialized tariffs on Chinese vehicles to protect western ones, like Australia maybe.
>pretty much everything you have claimed is dubious or flat-out incorrect.
YOU think they are incorrect. I don't think everything I said is incorrect, especially the parts about manufacturers outsourcing critical innovation causing them to fall behind, EV infrastructure in my EU country being deficient leading people not to buy EVs, and consumer purchasing power/habits. The only part where I am wrong is about current sales numbers, but spot sales and rarely an indicator of the general industry trend or future.
Germans and Italians had a multi decade lead on EV motors, battery, self driving and electronic tech over China (why I entered the industry) but they shelved it because they wanted to sell more diesel engines, outsourced all R&D to the lowest bidder to save costs and invest all profits into share buybacks or dividends instead of R&D (why I exited the industry).
Are the German and Italian executives in charge of those decisions being held accountable for the mess they created, or are the enjoying a golden retirements/parachutes while thousands of workers are now being laid off and governments forced to spend taxpayer money to bail out their mistakes and rescue what's left to prevent further layoffs? What were the lavishly paid EU politicians and regulators watching over in that time?
To me this is another nail in the western industry players falling victims to their own short sighted greed coffin. If only there have been any past examples in history to serve as cautionary tales, cough, Kodak, cough. /s