Updated:
(NewsNation) — China is overtaking countries known for manufacturing, like Germany and the U.S., when it comes to making and selling cars.
The car industry is no longer centered in Detroit, also known as the Motor City. Now China is topping the list when it comes to car manufacturing, surpassing the U.S. and Japan.
Tune in to NewsNation’s “Rush Hour” to watch this exclusive reporting from Keleigh Beeson at 5 p.m. ET Thursday. Not sure how to find us? Use our ChannelFinder app to locate NewsNation on your TV.
As recently as 2007, Chinese-made cars were failing European safety tests, limiting the country’s reach, but things have changed. It’s left some experts asking how other countries could allow China to overtake such a large industry.
“The reality is China’s had an industrial policy that’s planned out every 10 years, with a 40-year focus of dominating industries. Western companies and for-profit companies and companies that are listed on stock exchanges typically have a short-term mentality,” said Ray Wang, CEO of Constellation Research.
China’s achievement is getting respect from industry leaders, including Tesla’s Elon Musk.
“They are the most competitive in the world, that is our experience. And the Chinese market is the most competitive. They work the hardest and they work the smartest,” Musk said on an earnings call two weeks ago.
Musk already does business in China, operating a Tesla manufacturing plant outside Shanghai, but he also sees the country as a threat in the near future.
“If I were to guess, it would probably be some company out of China as to most likely to be second to Tesla,” Musk said.
For now, the future of automobiles appears to be electronic vehicles. That means anyone who can quickly pivot from a V6 engine to a lithium battery will thrive, and that’s right in China’s wheelhouse.
“They’ve got the supplies, and of course, they’ve got the labor and the ability to actually mass produce manufacture. That supply chain is hard to beat, and any country in any global area that’s trying to beat China is going to have to think through their supply chain,” Wang said.
While China has been building up its own car companies, it has also been buying others. Volvo and MG are now Chinese-owned and European brands such as Dacia, Spring and the BMW iX3 are all being produced in China.
The pandemic may have helped camouflage China’s gain on the market as it homed in on Europe, Asia and Latin America. But no country wants to lose the lucrative race to become No. 1.
Ultimately, China’s cheaper price point, which gives it an advantage with customers, could become more expensive if other countries decide to slap tariffs on Chinese cars to slow their increased speed as an industry leader.
China’s sales did slow at the end of 2022 and start of this year. Industry analysts say that it is thanks to oil prices dropping and the expiration of EV incentives for buyers.
As an industry expert with a deep understanding of the global automotive market, it's evident that China has undergone a remarkable transformation in the car manufacturing sector, as highlighted in Keleigh Beeson's article dated February 9, 2023. This shift is not merely a recent phenomenon; it represents a culmination of strategic planning, industrial policies, and adaptability that China has demonstrated over the past few decades.
One key aspect is the planned industrial policy that China has adhered to, with a 10-year outlook and a 40-year focus on dominating various industries. This foresight has allowed China to outpace traditional manufacturing giants like Germany and the U.S. in the automotive sector. This approach stands in contrast to the often short-term mentality of Western and publicly traded companies. Ray Wang, CEO of Constellation Research, aptly notes this disparity in mindset.
The article emphasizes the significant advancements made by China since 2007 when Chinese-made cars faced challenges in European safety tests. The turnaround from those early setbacks to becoming a global leader in car manufacturing showcases China's commitment to continuous improvement and innovation. This journey has garnered recognition not only from within the industry but also from influential figures like Elon Musk, who acknowledges China's competitiveness and work ethic.
The rise of China in the automotive landscape is not confined to domestic production. The acquisition of established brands such as Volvo and MG, along with the production of European brands like Dacia, Spring, and the BMW iX3 in China, underscores the country's global influence in the automotive sector. China's prowess in mass production, coupled with a robust supply chain, has positioned it as a formidable force in the industry.
A critical point highlighted in the article is the growing importance of electric vehicles (EVs) in the future of automobiles. The ability to swiftly transition from traditional engines to lithium batteries is seen as a key factor for success in this evolving landscape. China's advantage lies not only in its abundant supplies and labor force but also in its ability to mass-produce electric vehicles efficiently.
The impact of the COVID-19 pandemic is also acknowledged, with China leveraging the situation to make gains in the European, Asian, and Latin American markets. However, challenges persist, as evidenced by the slowdown in China's sales at the end of 2022 and the beginning of 2023. Factors such as dropping oil prices and the expiration of EV incentives for buyers have influenced this temporary setback.
Looking ahead, the article suggests that China's cheaper price point, a key factor in its success, might face challenges if other countries impose tariffs on Chinese cars. This reflects the delicate balance between China's advantage in pricing and the potential consequences of protectionist measures by other nations.
In conclusion, China's ascendancy in the global car manufacturing industry is a testament to its long-term planning, adaptability, and competitiveness. As an enthusiast with an in-depth understanding of these dynamics, it's clear that China's impact extends beyond its borders, shaping the future of the automotive industry on a global scale.
