Trump Won't Give The Chinese A Free Pass
Page 1: Trump Won't Give The Chinese A Free Pass
Page 2: Electrics • Autonomous • Ride-Sharing • New Deals
Chinese automakers continue to gear up for the American market. Five companies - Guangzhou Auto, NIO, Byton, Zotye and SF Motors - have announced plans to sell in the US by 2020.
Driving China's overseas push:
1. Sharply lower growth in China - the 2018 market may see its first decline in 30 years. Overcapacity is a painful new reality across the industry.
2. Much improved Chinese quality. Guangzhou Auto scored better in JD Power's Initial Quality Study than several global brands, including Ford and Chevrolet.
Up until now, the plan has been to manufacture in China and export to the US - just as the Japanese and Koreans did in a previous era.
But the Trump Administration will make direct exports from China difficult. Instead, lead trade negotiator Robert Lighthizer will allow the Chinese to sell in America only if they build the cars on American soil.
Lighthizer is basically playing a reciprocity card. He is not wrong to do so.
Of the 4 million cars and trucks GM and partners will sell in China this year, 99% will be built in China. Of the 600,000 cars and trucks Ford sells in China this year, 96 percent will be built in China. And so on. China remains the most protected major market in the world, with imports accounting for less than 4% of the 29 million vehicles to be sold there this year.
Just hours after the meeting in Buenos Aires this week, President Trump tweeted out that China would "reduce and remove tariffs" on American cars (which now stand at a prohibitive 40%).
Trump's words are a blunt reminder to the Chinese: If you want free and easy US market access, let American automakers export to China.
What have we got: America's free trade system adopts protectionist tools to confront protectionist state capitalism. Now, China's move.
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ELECTRICS • AUTONOMOUS • RIDE-SHARING• NEW DEALS
>> NIO. Will launch the ES6 compact SUV on December 15th at the NIO Day in Shanghai.
Takeaway: NIO still plans to enter the European and US markets in late 2020 or early 2021. The company will identify and fix the inevitable early production faults in the China market before stepping into America where consumers can be unforgiving.
>> Enovate. Introduced the ME7 SUV prototype at the Guangzhou Auto Show last month.
>> Takeaway: Led by smart Chinese auto industry veteran Zhang Hailiang, formerly the top boss at Shanghai Volkswagen’s joint venture. Focusing on building a smart, connected car.
>> Nvidia. Will deliver its Xavier platform to three Chinese start-ups for autonomous driving: Xpeng, Singulato, SF Motors. Xavier is Nvidia's new AI computing system embedded on a chip.
Takeaway: Chinese car companies historically looked to global car companies for tech leadership. Now they go directly to advanced tech firms like Nvidia.
China As No. 1? >> Respected German consultancy Roland Berger says China ranks highest in potential to develop autonomous driving.
Takeaway: If autonomous commercialization requires a trifecta of (1) willing customers, (2) supportive regulations and (3) world-class technology, China already leads in the first two categories. And PRC companies like Baidu, Roadstar and TuSimple are catching up fast in the third.
>> Ofo. The company colors still look bright and cheerful. The financial numbers do not, Ofo is losing customers, money and investor confidence.
Takeaway: Remarkable that Alibaba invested more than $300 million in this company and stands to potentially lose it all. Bike sharing, we understood, was all about consumer data capture. But it seems investor patience is running out, tired of ink running red.
>> WeRide. Alliance Ventures (Renault-Nissan-Mitsubishi) has become the lead strategic investor in WeRide, formerly known as Jingchi. WeRide nows calls itself a smart mobility company.
Takeaway: Nvidia and Qiming Ventures were leads in earlier investment rounds. Global headquarters are in Guangzhou, the emerging new center of autonomous tech in China.
>> PlusAI. On November 15th, PlusAI secured fresh funding from Sequoia Capital China. SAIC Capital, an arm of Shanghai Auto Industry Corp., is also an investor.
Takeaway: National boundaries get fuzzy. PlusAI runs co-headquarters in China (Beijing and Suzhou) and Silicon Valley (Cupertino). The company was founded in 2016 by David Liu and Hao Zheng, Stanford classmates from the 1990s. In 2018, the Chinese government named PlusAI one of the top 20 AI innovators.
>> Chanje. Fedex is buying and leasing 1,000 delivery trucks from Chanje, a Chinese-funded, Los Angeles-based company.
Takeaway: Chanje is one of several Chinese-funded EV and AV companies, with California-based headquarters, which appear to be tech-savvy American companies. R&D in California, produce in China.