Could Chinese automakers be preparing to wipe out U.S. auto giant Watt?

From the Daily Caller

Nick Pope
Contributor

Analysis released by an auto industry consultant shows that U.S. automakers will need to make significant changes to their operations if they want to remain competitive with Chinese electric vehicles (EVs) that are about to flood the global market.

U.S. manufacturers currently do tens of billions of dollars of business overseas, but Chinese rivals are expected to capture about a third of the global market by 2030, driven by electric vehicles and plug-in hybrids. Growth was particularly strong in Europe, South America and Asia, where AlixPartners proposed hybrid projects in its report.

The auto market is moving in a direction that favors electric vehicles, in part due to policy choices by the Biden administration and other Western governments, and the consultancy concluded that if U.S. companies don't want to change their “business as usual” approach, they need to change direction.

Mark Wakefield said: “Over the past half century, the global automotive industry has experienced a number of turning points, including the emergence of Japanese production technology in the 1970s, the subsequent rise of South Korea, and more recently, the impact of Tesla of disruption. “China is the new disruptor in this industry – able to create must-have vehicles that are faster to market, cheaper to purchase, advanced in technology and design, and more efficient in manufacturing. For traditional [manufacturers]Keeping pace with China's strongest brands will require more than a course correction. (Related: ‘There’s a problem’: U.S. auto giants on edge as cheap Chinese electric cars heat up competition)

AlixPartners' report shows that the specific advantages of Chinese manufacturers include a 35% production cost advantage, the flexibility to weaken the impact of tariffs, a faster design cycle, and a focus on providing drivers with advanced technology features that enhance the user experience. These advantages cumulatively give Chinese automakers an edge over U.S. rivals in a growing market.

BYD, China's largest automaker, has begun exploring options to break into the U.S. market through Mexico, and critics of the Biden administration's push for electric vehicles have expressed concern that the approach could ultimately backfire by undercutting U.S. cars with China's production capacity status as the largest player in the industry. U.S. government concerns about Chinese companies' ability to do so and unfair trade practices led the federal government in May to impose or strengthen tariffs on electric vehicles, EV batteries and other related products.

The Biden administration has finalized a series of tough regulations for light, medium and heavy-duty vehicles in recent months, including a provision requiring manufacturers to ensure that electric vehicles account for 56% of new sales by 2032, with an additional 13% Percent sales of plug-in hybrids in the same year. Additionally, the government is spending billions to advance EV adoption, production, and infrastructure, but major U.S. companies are losing significant money on their electric product lines, and consumer demand doesn't appear to be taking off at the pace proponents expected .

“Automakers who hope to continue operating on a business-as-usual basis are not only going to get a rude awakening, they’re going to be obsolete,” said Andrew Bergbaum, global co-leader of AlixPartners’ automotive and industrial practice. “The revolution happening in the global automotive industry is driven by Driven by the incredible and once unimaginable maturity of Chinese automakers, these manufacturers are doing things differently in many ways.”

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