This is a topic I think this forum should spend some time on and would be of value to all of us.
My gut tells me that this will become the next "competition is coming" scare. I don't think it will so easy for China to make a huge impact outside of Asia soon. They will get there but it will take much longer than people think, imo. I had some exposure/experience in China during my career but it would be great to hear from others on this topic.
Here is why I think the Chinese EV expansion outside of Asia will be slower than expected:
1. To reach huge volumes, manufacturing facilities will need to be established in Europe and North America
2. There are currently not many Chinese huge end to end manufacturing facilities outside of Asia (some in North Africa . . Investments starting in Mexico).
3. Mexico will be key to entering the US market and in Mexico the 3rd Party Supply chain is not comparable to China's supply chain. The auto supply chain is there in Mexico but the Chinese companies will need to establish their supply chain and may find that efficiencies are not like China. China's supply chain network is the best in the world.
4. There will be cultural issues. Often Chinese companies will insert Chinese ex-pats in most of the senior management roles whom are not tuned to the local cultural differences and can create mistrust, frustration and poor performance. A friend of mine that works at a Chinese bank in South America tells me that in management meetings, the conversation at times can move to Mandarin. The ex-pats will speak in Mandarin for 10 min then summarize for the locals with 2 sentences.
China can start with exports but I believe to be a huge threat to Tesla they will need to build manufacturing capacity abroad and this will take time and come with some hiccups.
Please others with experience . . . chime in.
-Chinese OEMs are the ones Elon talks of as the best competition;
-Chinese direct investment in electrical infrastructure, hydroelectrics, photovoltaics, Electric vehicles ( BYD -started with building electric busses in Brazil in 2015);
-Chinese construction of non-Chinese brands has resulted in faster market success that is largely ignored, e.g.. MG, Volvo, London taxi;
-Chinese battery and photovoltaics have grown to global dominance;
- Chinese infrastructure leaders such as State Grid are almost always led by local and/or non-Chinese expats, with the Chinese executives usually less visible. For example BYD in Brazil has a Brazilian leading executive whose face is often seen in news specials and interviews.
- The Chinese, as the largest global producer of renewables and autos continue to do very extensive effort to put a purely local face around the world, with such strategies as purely local production by locally consoled companies. one example os CAOA in Brazil unknown outside Mercosur but producer of Hyundai and Chery domestically and regular recipient of highest quality awards, so Chery has followed Hyundai as high sellers and consumer favorites.
I am mentioning more brazil for obvious reasons. Geely, though, has been highly successful with Volvo, which is Chinese-owned, small minority Swedish public.
The US and now EU are beginning to put trade barriers to Chinese development, but entities such as VAG, TSLA, MB, BMW and GM are all having excellent results there, so more efforts are happening to follow the pattern of arrangements such as that of CAOA in Brazil, to decrease susceptibility of political impediments.
One highly successful example of that is Canadian Solar:
Dr. Shawn Qu, Chairman, President and Chief Executive Officer founded Canadian Solar (NASDAQ: CSIQ) in 2001 in Canada, with a bold mission: to foster sustainable development and to create a better and cleaner earth for future generations by bringing electricity powered by the sun to millions of...
www.canadiansolar.com
It is strange that the only informed people who do NOT see the Chinese clearly seem to be North Americans. With ~75% of Amazon sales in US being Chinese origin we should begin to see what has happened.
In much of Africa, South America, large parts of Europe, most of Asia the problem is finding NON-Chinese high quality and cost effective products including cars and essentially everything renewable. Try finding an electric bus around the world with no major Chinese components.
For every one of us who are TSLA investors all we really need to do is look at Tesla Shanghai and Tesla sourcing of major components. That will establish that, at a minimum BYD and CATL are globally powerful competitors. Then, just ask Elon for his views, as he expressed them this week.
Each time we dismiss the most advanced and agile competitors we miss just how TSLA is one of very few to actually exceed them in some ways.
Finally, we credit TSLA with Giapress, jsutififiably. We also credit IDRA, justifiably. Then, most of us ignore that it was only Chinese ingenuity and determination that helped Tesla to accomplish that feat. A typically modern Chinese approach is to be found in IDRA and Volvo.
Perhaps it is natural to ignore just how important Chinese talent and innovation are to our own investments in TSLA.
