China has become a powerhouse in electric vehicles. Its automaker BYD recently topped Tesla in global EV sales, with Elon Musk warning of Chinese carmakers, “If there are no trade barriers established, they will pretty much demolish most other car companies in the world. They’re extremely good.”
On Friday, the Alliance for American Manufacturing sounded the alarm, issuing a report entitled: “On a Collision Course: China’s Existential Threat to America’s Auto Industry and its Route Through Mexico.”
The report, which lists policy recommendations to combat overcapacity and unfair trade practices, notes that BYD is building factories in Thailand and Hungary designed to be regional export hubs. It then adds:
“More alarming, however, are Chinese firms’ heavy spending on plants in Mexico, through which they can access the United States by way of the more favorable tariffs under the United States-Mexico-Canada Agreement (USMCA). This strategy is, in effect, an effort to gain backdoor access to American consumers by circumventing existing policies that are keeping China’s autos out of the U.S. market.”
It isn’t a true Innovators dilemma because the petrol cars they make don’t require any further innovation.
All the innovation can happen in the EV drive train, any other innovations can apply equally to both ICE and EV models.
You’re right the innovation is also on the production line.
The fact is China is investing in technology and innovation has halted or been misapplied elsewhere.
Look at Motorsport. Formula E is dominated by Stelantis but a European and American conglomerate. F1 by Europe and Japan. New technology in endurance racing by Europe and Japan.
The US has one high quality player in the EV power train world and that is because they joined with other companies.
The US has fallen into the middle ground of not being high quality, and not being cheap.
The US auto sector has globally fallen towards the missing middle. They can escape by going in either direction. Or European and Japanese makers will take the premium market while China takes the basic volume consumer market.