The Joint Venture Dilemma in the Chinese Auto Industry

[@beaman_2000]

Interestingly,there are 20 cars to be launched or preorder in this specific week in China. Creazzzzy!🤯

[@memostothefuture]

VW is having its Nokia moment.

[@yashchirka4060]

Or Volkswagen is having it's Apple moment, which was almost dead in the nineties but came back bigger. Only time will tell.

[@memostothefuture]

@@yashchirka4060 There is historical precedent at VW, so you may be correct. Remember that they sold the Santana as the almost exclusive model in China until the mid 1990s, stating publicly that it was the car "Chinese consumers wanted." They had massive problems when other brands came in and sold their latest offerings but did manage a recovery. The difference was that all they needed to do is make models they had elsewhere available in China (the Audi A6 was one such example that became a huge hit in China). This time VW has been unable to find anything that Chinese consumers want and they don't have it in other markets, so the challenge is much more complex for them. They have to change what they are and, potentially who they are. This might mean finding a Steve Jobs. Given that Piech is dead and Ghosn can't travel I wonder who it could be.

[@naumangaze]

Things are moving so quickly in China Elliot Legacy in trouble! Thanks for keeping us in the loop 😊

[@electricelliotrichards]

sure are!

[@SomewhereInTheSolarSystem]

@@electricelliotrichards Disruption in full blown, while Vw and Bmw ten years of ZZZZZ. Why it is not possible to order a MB or Porsche on good configurations with vegan interiors is also about their poor handling of this disruption. Most probably some big groups will start becoming disintegrated, like Porsche out of Vw and Jeep out of Stellantis - and probably most of them out of China too. I suspect that Tesla will also take a lot of sales hit very soon.

[@jasonmugridge]

Thanks again for keeping us posted on this Elliot. Most people in the UK are totally oblivious to all of this and are going to get a big wake up call soon when something happens to a legacy brand. What amazes me with VW is that they've been in China for 40+ years, made a small fortune there and yet don't seem to have a clue about whats going on in that market. I know you only cover EV's but it would be great to get a video on the Chinese VW Santana, which they made for almost 40 years, as this clearly shows were they have gone wrong. This car was sold for only about 4 years in the west. Now I know back in the 80's China needed all the help they could get, but 40 years!!! Did they not think that people might want something a bit more modern or maybe get board of it. What did they think it was... a 911! At least in the west we got a new Golf every 4 or so years, ok it might not always have been much different underneath but at least people thought they were getting something new. This I think is a big reason why people don't want a VW and also why they want an EV given the dirty old tech engines they were still selling in China.

[@electricelliotrichards]

Its actually insane - the VW Santana. Sold up until I think 2016 - just 2 years before NIO bought out their first EV. I am sure they still sold it as it was cheap to produce and there was still demand (Taxi fleets) but just shows how little they look the China market seriously.

[@flukeylukey7559]

Chinese and most western people want new hi-tech evs that get updated like Tesla's, Vw need reinvent them selves as a new hi-tech brand, maybe like Geely/ Zeeker, but if Zeeker customers become unhappy like the protests in the stores then they will be forgotten about like Vw.

[@RPRosen-ki2fk]

Great editorial content here and your commenters are adding intelligent thoughts. How about discussing how protectionism is going to play out for the North American market in the 2 to 4 year picture? Also, it's about time for an update on your SC01.

[@electricelliotrichards]

A very good point. Next up I’m planning to cover the growth rate of PHEvs vs EVs and then I can dig into the protectionism across both the EU and the US. For the SC01 I can head back to Tianjin soon to get a drive, but it’s been a little quiet on the development front there.

[@RPRosen-ki2fk]

@@electricelliotrichards Sorry to hear that, I was hoping to hear delivery was soon, or you already had received it. With little news you could do a 2 or 3 minute bonus update video, or tack it to the end of your next release just to keep your long time viewers in the loop. You're doing good work keeping many western viewers informed about the largest automotive market in the world.

[@johnnyonline]

Here in Australia, the price of the MG4 dropped from $40K to $30K yesterday making is significantly cheaper than a Toyota Corolla. The line in the sand has been fully crossed, electric is now cheaper than petrol thanks to Chinese EV's. Social media went bonkers (both for and against) as expected.

[@benedictchin5261]

Good informative news. Thank you

[@martrich1098]

Elliot - this is a fascinating subject that extends way beyond the auto industry - many thanks for sharing your excellent market intelligence. As an ex-GM of a wholly owned foreign enterprise (not in the auto industry) that was subsequently swallowed by a Chinese State Owned behemoth in Shanghai, I can vouch a little for the complexities of trying to work as a JV in China with Chinese companies. There are many many competing priorities for the companies involved and the national industrial strategies from the parent companies are often at odds as well. For western auto manufacturers these days times are tough as their slow, super-tanker like course has to respond to fast moving, agile, young (but well backed) Chinese companies who know how to scale up extremely quickly. Interesting times and it's great to have your insight!

[@electricelliotrichards]

Thanks - I can imagine you have quite a few stories to tell

[@mickjoebills]

A good geopolitical roundup. Perhaps publish on this subject regularly? This subject is particularly interesting to EV buyers in countries where there is a tusnami of new brands being introduced, such as Australia and NZ.

[@electricelliotrichards]

Absolutely - thats the plan, a view from 'on the ground'

[@chrismartin5129]

Great analysis, Elliot

[@electricelliotrichards]

Thanks Chris

[@zodiacfml]

top comments i've seen on videos about Chinese EV EU US tariffs are all negative or against the tariffs. Even if the US EU are successful blocking Chinese vehicle sales for years, the rest of the world will benefit from these great value Chinese cars

[@electricelliotrichards]

The rest of the world is big, and there's ~180 countries outside of the EU and US who will benefit.

[@metricstormtrooper]

I just want saic to sell the wuling cloud here in Australia, the same as they sell in indonesia, no glass roof would be good too, its just TOO SUNNY here to have one of those. Ive got the $ waiting to buy one.

[@electricelliotrichards]

strong agree!

[@MartDeursloten]

Next year, it could be cheaper to import an ID3 from China than buying one in Europe 😂

[@pinkelephants1421]

Tesla desperately needs to wake up and get a wriggle on with producing smaller hatchback style vehicles, particularly in China. Their vehicles are amazing, but, they are still tanks when compared to what many urban drivers around the world prefer. Larger vehicles appeal to our vanities (self image, impressing the Jones' etc), but smaller vehicles are simply more convenient for most people in urban environments, especially with regard to parking.

[@GForce162]

musks is troubled by the US-China tension that a model 2 is pretty much done for

[@pinkelephants1421]

@@GForce162 That's interesting. Why do you think that?

[@ians3328]

Could not agree more. Width of the Y was the final nail when i was looking at buying one.

[@jasonmugridge]

I think he should of made the Model 2 instead of the Cybertruck. The 2 works the world over, yes even in the US, but the Cybertruck only works in any significant numbers in the US. But then he did it purely to stick it to the US legacy guys, which is what it will start to do. At the moment the Chinese market is too hot for the 2 so no need to rush. What he def should do is increase the capacity of the S, give it a bit more of an update, reduce the price and sell it in RHD.

[@pinkelephants1421]

@jasonmugridge I'm both a dyed-in-the-wool Teslateer (&) Musketeer, BUT, as far as CYBRTRK is concerned - HUMPH!! - CEO's personal pet passion project and one whereby he clearly stated on multiple occasions that he didn't care if it was a commercial success, (despite) it being a basic part of his job's remit to care about the commercial success of (every) product Tesla offers. I totally concur with you that the Model 2 should have been the top priority, if for no other reason than a smaller, cheaper EV is directly commensurate with the company's stated mission and CYBRTRK is anything but since, as you rightly point out, it does little to nothing to speed the transition to fully electric transportation at the global level. Furthermore, as with the likes of the Hummer, Ford F150, Rivian R1T/R1S & CYBRTRK, for every one of those vehicles on the road, you could use the same or similar amounts of batteries to make 2 or even 3 affordable BEVs, making electric transportation more accessible to a far wider range of people, particularly those in lower income brackets - which, let's face it, is the majority. The S & X don't really need changing, but once economic conditions improve, a decent bit of traditional advertising, not the lukewarm nonsense they've dabbled in thus far, would do wonders for both their sales and the profile of Tesla as a whole. I'm no poo pooing Tesla's advertising approach as a whole to date, it's worked. But the EV market is radically different to what it was even 18mths ago, with far more companies and choices having come to the fore. I think the manner in which Tesla treated RHD S & X order customers in the UK and elsewhere was extremely shoddy. They should have at least honoured those LONGSTANDING orders before changing company policy. RHD markets may not have the same level of demand for S & X, but surely a clearly stated once a year delivery policy would work; there's plenty of wealthy buyers to who'd love to get their grubby paws on one if only it were possible & level of customer awareness was high enough. Plenty of other high-end brands only too willing to take a stab at taking a bite out of Tesla's customer loyalty base, many of which are Chinese.

[@flukeylukey7559]

The Tesla phenomenon, if old auto companies don't try to keep up then companies will be a shadow of their former selves, even older Chinese brands have this issue, this why Changan, Geely, Gac, Jac, Chery and even new comer Forseven will join Nio in battery swap, they know if they don't keep up people will move on to something better and more convenient. Can Tesla and legacy auto keep up, might want to pay attention and be flexible, unfortunately this not their strength.

[@ians3328]

We did the same with the textile industry selling the equipment and knowledge to other countries and then were surprised when they started doing it better and much cheaper.

[@westendthug1408]

the entire western world did this with almost every single industry. I dont know why it was allowed to happen. execs pull golden parachutes and sell all IP and manufacturing ability to china.

[@lm3718]

Love this video! The inside China view is very interesting indeed. To me, the USA car makers are largely useless and have given up - although I do have a soft spot for Rivian. Tesla could have stayed at the forefront, but their CEO is too distracted with trying to find a personality. Punitive tariffs and software bans scream acquiescence. The Europeans have to develop faster and stop their constant overpricing - haven't they worked out that we can get fully specc'ed Chinese cars for 1000's of dollars less?? The Korean offering is outstanding but I suspect they are going to have to rethink their premium pricing at some stage.

[@havencat9337]

tesla should buy rivian...they have the power to market that SUV

[@trevorhartley5166]

Volkswagen 39plants 😮

[@connclissmann6514]

VW seem to be hell bent on self-harm. Any shareholders must be thinking about selling. Many pension funds must be holding VW shares.

[@Dagr888]

VW has massive debt, so it will be a M&A target .

[@chrisnewman7281]

if the opinions had their way, Europeans would be paying a premium for evs. Perhaps they should stick with selling appealing to the top end of the market and leave the bottom end to Chinese.

[@Percy-c5v]

This is all very fine and dandy, but it leaves us consumers here in the EU pulling our hair out seeing all these lovely Chinese EV’s and not being able to get our hands on them. Zeekr for example (one of my favourites), they’re hiding away somewhere in Sweden and the Netherlands, having produced an excellent vehicle (001) but a bit too pricey and sporty for most. Theyv’e also got the Zeekr X which seems to be a great idea for the European market, but once again seems to be very shy, hiding away. Then we have the Zeekr 7X. I mean what’s that all about. They show us beautiful videos of the 007, which is a magnificent sedan, then they decide to chop its bum off and call it 7X because they think that the only thing we want here in Europen are estate cars. Note to Zeekr, check out Tesla. I won’t even go on about the SU7, my point being is that we seem to be in the candy shop, but not allowed to touch the sweets!

[@zelcpavle5494]

I dont want an Ev ...so 🤷😄

[@gavinhagan8357]

Pain for the legacy oems. Who know where it will go. Lots of popcorn being consumed.

[@corellian2011]

Seems the only companies doing joint ventures are companies who are both failing? NIO is only partnering with other successful companies.

[@electricelliotrichards]

JV was the only way to access the Chinese market up until Tesla came in.

[@Ben-qe8cx]

@@electricelliotrichards因为中国人需要特斯拉进来竞争，中国人不害怕竞争，所以才有今天中国电动汽车的快速进步。美国欧洲害怕竞争是错误的，中国消费者欢迎他们像特斯拉那样带来创新和进步的技术，一起在全世界竞争。选择提高关税和禁止中国电动汽车将会自我毁灭的，全球市场那么大，中国电动汽车会占领下来，并且变得更强大！美国欧洲的汽车只能躲在家里哭泣，这样做只是延长死亡的时间而已，毫无意义。

[@urbanstrencan]

Tariffs are wrong thing to do the end users will suffer them the most