Maroc - EURASIAREVIEW.COM - A la une - 23/Dec 16:45

EV Wars: Japan Is Now In – OpEd

"If there are no trade barriers established, they [Chinese EV manufacturers] will pretty much demolish most other car companies in the world. They're extremely good.” -- Elon Musk, CEO of Tesla Motors  Another key page is being written in the battle over car and related vehicular manufacturing.  The importance of automotive manufacturing in the world industrial system cannot be underestimated.  Car manufacturing in the United States, United Kingdom, some European Union countries, Japan and South Korea have contributed substantially to the economic growth and prosperity of these countries. In addition to the tens of millions directly employed, a larger number work in the supply chain and related services. The industry is an important component of the taxable base of countries as well as a key indicator of the standard of living of the citizenry. Ever since its origin, the industry has been dominated by the use of internal combustion engines (ICEs). However, in an unanticipated and extraordinarily rapid development which has caught nations monopolizing ICE vehicle production with their pants down, electric vehicles (EV) have transformed the automotive industry.  Since their early market introduction after 2010, the growth of the EV component of the car industry has been spectacular. Today, EV sales are growing even more rapidly. They are now expected to overtake ICE sales sooner than expected for several reasons.  Advantages of EVs over ICEs Firstly the price gap between EVs and ICEs has closed and is at parity in some markets already. Secondly, car manufacturers are now compelled by the latest fuel efficiency standards to offer more fuel-efficient vehicles of which EVs have a tremendous advantage. It is estimated that EVs convert up to 91% of energy into power, while ICEs only convert about 12% to 30%. Perhaps the most important factor for car buyers is the lower total cost of EV ownership with the savings from lower fuel and maintenance costs outweighing any higher upfront cost.  Today, we are witnessing a scramble amongst previously dominant ICE manufacturing countries to adjust to this. This adjustment development has become one of the most important battlefields in geopolitics. It is taking place simply because the world's leader in EVs is China. Over the past decade, China has become the world's largest EV market, commanding half of the global sales of electric passenger cars and over 90% of the sales of electric buses and trucks.  What's unacceptable to the West and other major ICE manufacturing countries is that China produces two thirds of the world’s EVs, accounts for just as much of global sales and is also the world's leader in EV batteries which make up a significant component of EV cost. The marketability of Chinese EVs is further reinforced by their innovations in software, design and increasingly, in overall quality. Perhaps the most telling and worrying statistical evidence of the prominence of China in the global automotive industry - worrying, that is, for anti China politicians and policy makers in Japan, the West and its allies - is China's displacement of Japan as the world's leading car exporter. In 2023, Japan exported 4.42 million vehicles according to data released by the Japan Automobile Manufacturers Association.This compared with the 4.91 million vehicles shipped from China, according to the China Association of Automobile Manufacturers (CAAM). Regional Battlefield Strategies  The offensive to take down this Chinese ‘threat’ in fact began several years ago. Today it has morphed into a no holds barred politics plus economics plus media propaganda war to ensure that the dominance of ICEs in the world's automotive industry remains intact; and China's EVs, whatever their advantages and clear superiority over fossil based ICEs on their environmental impact, are pulled down. What we are seeing is the emergence of three distinct regional strategies - all showing the inseparability of politics and economics. The first adopted initially by the US saw the Biden administration attempt to slow down the rate of change by US based auto manufacturers by lowering pollutant standards.This was followed by the ramping up of tariffs on China EVs and batteries despite the knowledge that it would slow down the nation’s clean air and zero emissions targets. Trump's election will see a further use of the high tariff wall strategy on Chinese EV and other exports to the US.  In Europe, the policy strategy, while claiming to want to avoid a trade war with China, has followed a similar high tariff wall approach although this has been complicated by the highly profitable position that European car manufacturers such as Mercedes Benz, BMW, Porsche and Audi have enjoyed in China for over 20 years, and are still reliant on to stay afloat and support their bottom line. The EUs tariffs are currently on hold as European ICE manufacturers negotiate with their own governments not to follow the US example. They are reminding that an anti China EV policy is a zero sum game that will hurt Europe more than China. The last of the regional players to emerge is Japan where according to Carlos Ghosn, the ex-chairman of Nissan, the two giants of the car industry - Honda and Nissan - recently announced consolidation, and possibly merger, plans to meet the challenges of a transformed automotive industry at the behest of the country’s powerful Ministry of International Trade The discussion, while not specifying China, clearly aims at bringing together the formidable technological expertise and financial resources of the two companies, to survive the turbulence generated by China's EV progress.v What the regional and global battles will mean for car buyers in Asia outside China is not fully clear yet in view of the historic and current dominance of legacy car manufacturers in this part of the world. But if this battle results in cheaper, cleaner, higher quality, and less costly to maintain vehicles, then many, possibly most consumers, in Asia and other parts of the world, regardless of politics, will welcome it