Until recently, I kept that midnight vision to myself, except for an occasional dinner-table chat after a second glass of wine. Frankly, it all seemed a bit much for prime time. Even electric passenger vehicles, much less semi-trucks, faced two key barriers to widespread acceptance in America -- range and cost. In the upper Midwest where I live, a cold winter's day can cut the 300-mile range of an electric car like a Tesla to just 150 miles. Although I could make the 250-mile drive in an electric vehicle from the state capital of Madison to hike or ski in Northwoods Wisconsin, there's no public charger anywhere nearby. So there's no way to get back. And cost? While you can get a reliable gas-powered Honda Civic for $24,000, a comparable electric vehicle like the Hyundai Ioniq now costs $39,000.
But just last week, I was surfing the EV (electric vehicle) test drives in Edmunds and Kelly Blue Book when a web page popped up with the title "7 Long-Range Electric Cars from China." I was stunned to read that a car I'd never heard of, the NIO ET7, comes with a standard 649-mile range and complimentary access to "3,000 battery swap stations across China."
Was my midnight vision becoming clearer? Yes, the article said, "the battery swap stations allow you to exchange your depleted battery for a fully charged one in just a few minutes, minimizing downtime." Another cutting-edge Chinese car few in America have ever heard of, the ZEEKR 001, can load a 300-mile charge in 11 minutes flat, less time than it takes to pump an equivalent-mileage of gas. And a Chinese car unknown here, the XPENG P7, has an innovative battery that "operates optimally" in temperatures ranging down to -22 degrees Fahrenheit, ending the cold weather battery loss that makes EV driving so frustrating in Midwest winters.
And what about their price? While Detroit is maxing profits by pricing the tricked-out Ford F-150 Lightning EV truck for $87,000 and GM's similar Silverado EV costs $96,000, China has gone back to basics with a latter-day Model T Ford -- reliable, affordable cars for the average worker.
European companies were hand-crafting cars for the rich as early as 1890. The Detroit auto industry didn't get a jump-start until 1908 when Henry Ford mass-produced the Model T for what began as a reasonably affordable $850 and soon had dropped to $345 -- unprecedented pricing that ramped that car's production relentlessly up to an impressive two million units a year. In just 10 years, half of all the cars in America were Model Ts.
Following Ford's time-tested lead, China's largest automaker, BYD, is selling its Dolphin hatchback EV for a low-low $15,000, complete with a 13-inch rotating screen, ventilated front seats, and a 260-mile range. Here in the U.S., you have to pay more than twice that price for the Tesla Model 3 EV ($39,000) with lower tech and only 10 more miles of driving range. In case $15K beats your budget, the Dolphin has a plug-in hybrid version with an industry-leading 74-mile range on a single charge for only $11,000 and an upgrade with an unbeatable combined gas-electric range of 1,300 miles. Not surprisingly, EVs surged to 52% of all auto sales in China last year. And with such a strong domestic springboard into the world market, Chinese companies accounted for more than 70% of global EV sales.
It's time to face reality in the world of cars and light trucks. Let's admit it, China's visionary industrial policy is the source of its growing dominance over global EV production. Back in 2009-2010, three years before Elon Musk sold his first mass-production Tesla, Beijing decided to accelerate the growth of its domestic auto industry, including cheap, all-electric vehicles with short ranges for its city drivers. Realizing that an EV is just a steel box with a battery, and battery quality determines car quality, Beijing set about systematically creating a vertical monopoly for those batteries -- from raw materials like lithium and cobalt from the Congo all the way to cutting-edge factories for the final product. With its chokehold on refining all the essential raw materials for EV batteries (cobalt, graphite, lithium, and nickel), by 2023-2024 China accounted for well over 80% of global sales of battery components and nearly two-thirds of all finished EV batteries.
Clearly, new technology is driving our automotive future, and it's increasingly clear that China is in the driver's seat, ready to run over the auto industries of the U.S. and the European Union like so much roadkill. Indeed, Beijing switched to the export of autos, particularly EVs, to kick-start its slumbering economy in the aftermath of the Covid lockdown.
Given that it was already the world's industrial powerhouse, China's auto industry was more than ready for the challenge. After robotic factories there assemble complete cars, hands-free, from metal stamping to spray painting for less than the cost of a top-end refrigerator in the U.S., Chinese companies pop in their low-cost batteries and head to one of the country's fully automated shipping ports. There, instead of relying on commercial carriers, leading automaker BYD cut costs to the bone by launching its own fleet of eight enormous ocean-going freighters. It started in January 2024 with the BYD Explorer No. 1, capable of carrying 7,000 vehicles anywhere in the world, custom-designed for speedy drive-on, drive-off delivery. That same month, another major Chinese company you've undoubtedly never heard of, SAIC Motor, launched an even larger freighter, which regularly transports 7,600 cars to global markets.
Those cars are already heading for Europe, where BYD's Dolphin has won a "5-Star Euro Safety Rating" and its dealerships are popping up like mushrooms in a mine shaft. In a matter of months, Chinese cars had captured 11% of the European market. Last year, BYD began planning its first factory in Mexico as an "export hub" for the American market and is already building billion-dollar factories in Turkey, Thailand, and Indonesia. Realizing that "20% to 30%" of his company's revenue is at risk, Ford CEO Jim Farley says his plants are switching to low-cost EVs to keep up. After the looming competition led GM to bring back its low-cost Chevy Bolt EV, company Vice President Kurt Kelty said that GM will "drive the cost of E.V.s to lower than internal combustion engine vehicles."
Will Tesla Be Toast?
What about Tesla, America's pioneering EV maker? With its CEO Elon Musk off playing pretend president, its worldwide vehicle deliveries fell last quarter for the first time in a decade, even as BYD's global sales shot up 12% to 1.76 million, beating Tesla by a 20% margin to become the world's biggest EV car-maker. Even though Tesla still accounts for almost half of this country's EV sales and has a current market capitalization of $1.3 trillion, Musk's model line-up now seems increasingly outmoded, over-priced, and unappealing, exemplified by his latest launch, the "weird" Cybertruck with a "nonsensical exterior," which starts at $82,000 for a minimal 330-mile driving range. Even though Tesla is still the world's "most valuable automotive brand," stock pickers and short-sellers take note: its car sales could be toast within five years, though its still-small division making electrical semi-trucks has real growth potential. (And take note as well that I'm not giving stock advice, just making a point on where I think our world's heading.)
Realizing that their auto industries are facing a carmageddon of Chinese competition, the U.S. and Europe are already slapping heavy tariffs on imports from China. With its robotic factories cranking out one complete car every 76 seconds, China is ready to crush rival car companies and build 80% of all the world's autos, as it already does with solar panels. Last June, the European Union imposed additional duties of 17% on China's BYD and 38% on SAIC, but the Biden administration had already beaten that with a flat 100% duty on all Chinese EVs. And count on one thing: that's just the start. In his second term in office, Donald Trump has already promised an additional 10% tariff on all Chinese imports, cars included -- protecting the U.S. auto industry just long enough for it to decline into technological obsolescence.
In our integrated global economy, cars are a commodity like copper, oil, food, or textiles. In capitalist societies, commodities are not just products but the sinews that bind together nations on an otherwise disparate planet and a force like water that always finds its own level. Even if those tariffs manage to keep American workers buying overpriced, outmoded vehicles, the big four of the U.S. auto industry -- Ford, GM, Stellantis, and Tesla -- can hardly afford to lose their overseas markets. Last quarter, China's motorists accounted for a hefty 40% of Tesla's total worldwide sales, so Elon Musk faces an impossible contradiction: how to get President Trump to protect his U.S. market with high tariffs on Chinese cars while somehow avoiding Beijing's wrath. Finding a way through that conundrum will likely prove challenging for Tesla.
Autos and America's Future
So, what does all this mean for America? In the past four years, the Biden administration made real strides in protecting the future of the country's auto industry, which is headed toward ensuring that American motorists will be driving $10,000 EVs with a 1,000-mile range, a 10-year warranty, a running cost of 10 cents a mile, and 0 (yes zero!) climate-killing carbon emissions.
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