Hello everyone, this is Akito from Singapore.
China’s cost-competitive electric vehicles are making inroads all over the global market. Here in Singapore, for example, it’s not uncommon to use a ride-hailing app and be picked up by a driver in a BYD EV.
Given the circumstances, it is perhaps not surprising that Europe has voiced concerns about an influx of cheap Chinese-made EVs, as we explored last week.
But similar problems have occurred throughout the automobile industry’s history, most notably between the U.S. and Japan in the 1970s and ’80s.
In the wake of the oil crisis, small, fuel-efficient cars exported from Japan, such as Honda Motor’s Civic, won over American drivers, hurting the performance of major U.S. automakers like General Motors. Large-scale layoffs in the domestic car industry followed, sparking angry backlash in automaking hubs like Detroit, where “Japan-bashing” demonstrators smashed Japanese cars with hammers.
Japanese automakers countered this criticism by expanding local production in the U.S.
Honda began making its Accord in Ohio in the early 1980s. Toyota Motor and others soon followed suit. Reducing exports from Japan, increasing investment in the U.S. and creating local jobs helped Japan’s automakers turn public sentiment in their favor.
Fast forward to 2023, Chinese EV companies are moving before their EVs get hammered.
Strategic shift
Several Chinese automakers have announced plans to start manufacturing in Europe, emphasizing job creation in hopes of reassuring local authorities increasingly worried about the influx of cheap EVs, write Nikkei staff writers Shunsuke Tabeta and Takashi Tsuji.
This activity comes as the European Union investigates China’s use of subsidies for domestic EV makers. The bloc is increasingly concerned that Chinese state support is distorting the market to the detriment of European automakers, putting jobs at risk. Beijing has denied that subsidies influence its automakers’ EV prices.
An executive at state-owned SAIC Motor said this month that the company has begun the process of choosing a site for a European assembly plant. Others were moving even before the EU announced its investigation on Sept. 13. At this month’s Munich auto show, a BYD executive said the company will select a location for a vehicle factory in the region by year-end.
While these moves echo those of Japanese automakers decades earlier, there is a crucial difference. In the past, the likes of Honda and Toyota had no choice but to expand beyond their island nation into the U.S. market if they wanted to grow. Chinese EV companies have an extensive home market, which even European auto giants, notably German ones, depend on. If the EU escalates its aggressive stance toward China, European automakers could risk being forced out of China.
TSMC comes to town
In the small Japanese town of Kikuyo, traffic jams, skyrocketing property prices and battles for staff have become the new norm since the arrival of Taiwan Semiconductor Manufacturing Co., Kana Inagaki writes for the Financial Times.
Kikuyo and the surrounding prefecture of Kumamoto, on Japan’s western island of Kyushu, are now heavily tied to the country’s bid to revive its reputation as an international hub for chip manufacturing, as the world seeks diversified semiconductor supplies to mitigate rising geopolitical risks.
The changes in Kumamoto also offer a microcosm of the broader challenges for Japan after a long period of stagnant growth and employee wages. From a severe labor shortage to infrastructure constraints, TSMC and its new fab are forcing the country to confront problems that have been simmering for years.
Power drain
Japan’s electric vehicle charging infrastructure is at risk of getting old before it gets used, writes Nikkei’s Yukiko Une. So far this year, the country has lost over 2,700 charging stations, about 2.5 times more than in all of 2022. That leaves Japan with 22,500 standard charging ports and 9,700 high-speed charging ports as of the end of August, according to Gogo Labs.
Chargers have a service life of eight to 10 years and tend to malfunction if used longer. Installations rose across Japan in 2014 and 2015 under a subsidy program run by the Ministry of Economy, Trade and Industry. The cost of replacing old chargers with new ones, however, can run to tens of thousands of dollars, with additional fees for maintenance and yearly inspection.
With electric cars still making up just a tiny fraction of the country’s passenger vehicle sales, it is little wonder that many charging station operators are deciding the numbers no longer add up.
Working overtime
Huawei said it was “working extra hours” to meet surging domestic demand for its smartphones after the Chinese tech company quietly unveiled its first 5G-capable handset, Nikkei Asia’s Cheng Ting-Fang and Cissy Zhou report.
Despite U.S. sanctions that have cut off the company’s access to vital chip supplies since 2020, Huawei stunned observers with its 5G-capable Mate 60 Pro smartphone, which went on sale on Aug. 29.
“We are urgently working extra hours to manufacture our handsets,” Richard Yu, CEO of the consumer business group, said during Huawei’s autumn launch event on Sept. 25.
His comment suggests the company was struggling to meet demand for its latest smartphones, which came out just weeks ahead of Apple’s latest iPhones.
Huawei also unveiled several new products, including tablets, smartwatches, smart displays and wireless earbuds, some featuring chipsets designed by the company.
One analyst said that Huawei had not given up on its consumer business, particularly in China, despite the disruptions from the U.S. clampdown. “It has worked hard to continue introducing devices such as wearables, smart TVs, tablets and earphones. For example, its smartwatches are still ranked No.1 in the domestic market,” the analyst said.
Suggested reads
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