China Is Going Big on EV Exports

New Chinese brands, plus more cars making their way overseas, point to a new global EV paradigm.

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BYD is introducing another marque as Chinese vehicle exports grow, California is pumping billions into charging infrastructure, and Ford and CATL may build a battery plant in Michigan. All that and more in The Morning Shift for Thursday, December 15, 2022.

1st Gear: Chinese Automakers Are Preparing For Export Sales

Automakers in China have done well on domestic dealings, selling cars from and for the market they know best. Now, it seems there’s a new focus from automakers in the country: The world beyond its borders. For starters, BYD is expanding its brand with a whole new marquee, per Reuters:

China’s BYD Co will launch a new “professional and personal” electric car brand in 2023, a senior executive said on Thursday as the automaker expands its range following a year of strong sales.

Brian Luo, the company’s branding assistant general manager, made the comments at a media event. The new brand will be an addition to Yangwang, a premium brand set for launch in the first quarter of 2023 that it announced last month.

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But other Chinese automakers are similarly working to expand their reach. Bloomberg has been tracking vehicle exports from the country, and found a massive surge of passenger cars over the last couple years — a trend that shows no signs of slowing. From Bloomberg:

Auto exports from China have surged this year as domestic automakers look to establish themselves beyond their home market.

Through September, a total of 2.2 million passenger cars, trucks, buses and other vehicles were exported from China. That’s up 54% from the same period last year and already more than double the average from 2012 through 2020.

Electric vehicles are the biggest contributor to the surge, with 342,000 passenger EVs exported in the first three quarters of the year. That’s 29% of all vehicle exports in this segment and a big increase from 2019, when EVs accounted for just 2% of exports. Another 314,000 low-speed EVs and 4,000 electric buses also were exported.

There are several factors driving China’s EV export growth. Its dominance of EV battery and materials supplies has allowed domestic auto markets to ramp up production. Western automakers are using the country’s lower production costs and established supply chain to churn out EVs for customers around the globe as interest in the technology takes off.

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Chinese-built cars are nothing new in the U.S. market, but Chinese brands are. I, for one, am looking forward to finally getting some of Great Wall’s better-named models.

2nd Gear: California Is Investing $2.9 Billion In EV Infrastructure

EVs are caught in a chicken-and-egg problem right now. See, their market share is small, because people have concerns about range and charging availability. But, in order for companies to see a financial incentive in deploying more charging stations, that market share has to grow. Essentially, there are no chargers because there are few EVs, and vice versa. But California seems to have found a loophole in the capitalist ouroboros: Government money. From Automotive News:

The California Energy Commission on Wednesday approved a $2.9 billion investment plan to accelerate the state’s 2025 electric vehicle charging and hydrogen refueling goals.

The investment will result in 90,000 new EV chargers across the state, more than double the 80,000 chargers already installed, the energy commission said.

Combined with funding from utilities and other programs, these investments are expected to ensure the state achieves its goal to deploy 250,000 chargers by 2025, it added.

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More EV infrastructure is, unequivocally, a good thing. EVs are fast, fun, and interesting, and deploying more chargers helps give them a real shot. More states should follow California’s lead here.

3rd Gear: Ford and CATL Are Considering A Michigan Battery Plant

Automakers are still sorting through the fallout from this year’s Inflation Reduction Act, with its insistence on U.S.-built cars and components. Automakers are flocking to the United States, spinning up new factories as quickly as they can, but battery makers are in a tighter spot — do they build factories in the U.S., with our international relations in flux, or will they have the leeway to build parts in Mexico or Canada? Ford and CATL are weighing all of these factors right now. From Automotive News:

Ford Motor Co. and China’s Contemporary Amperex Technology Co. Ltd. are considering building a battery manufacturing plant in Michigan in a complex arrangement designed to reap new tax benefits without running afoul of U.S.-China political sensitivities.

The state has emerged along with Virginia as a potential home of the multibillion-dollar facility, according to people familiar with the matter, who asked not to be identified discussing sensitive negotiations. The factory will provide lithium iron phosphate batteries for Ford’s electric models.

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The proposal is just one option that has emerged since the IRA was signed into law in August, and it’s still far from being a done deal, the people said. The lack of clarity around specific content requirements in the IRA is also impacting the decision, and sites in Mexico and Canada haven’t been ruled out.

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The U.S. keeps swinging back and forth on international relations, as fast as power changes hands between political parties. We must be really fun to deal with for international trade.

4th Gear: Tesla Wants To Double Its European Manufacturing Capacity

Tesla’s shiny new Berlin factory seems to have an interesting bottleneck: Water. Local groups are concerned about how much water the factory will use, as it aims to increase its production capacity from 500,000 cars per year to an even million. Tesla’s solution? Drill for more water. From Automotive News:

Tesla plans to drill for new water sources to supply an expansion of its electric vehicle plant near Berlin, according to local authorities and water associations, the latest move by the automaker to speed up German bureaucracy.

After the factory’s launch in March faced opposition from environmental groups over its water use, Tesla is taking matters into its own hands as it prepares to double the capacity of the plant in Gruenheide, Brandenburg, from 500,000 to over a million cars per year, pending approval from local authorities.

At a municipal council meeting last week, a Tesla representative said the company would pay for exploratory drilling to update a decades-old public database of groundwater sources, according to Gruenheide mayor Arne Christiani, who attended the meeting.

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It makes sense — if Tesla can find more water, it can use more water. Still, this seems like the sort of thing that one should figure out before building the factory.

5th Gear: EU Regulators Are Looking Into The Inflation Reduction Act

Oh, you thought we were done talking about the IRA after Ford and CATL? We’ve likely got months more of this to come. The Act sure seems to have brought some auto manufacturing stateside, but the EU has concerns that those development dollars may have been originally meant for Europe. Now it’s surveying member states to determine what — if anything — needs to be done about this whole “America” thing. From Reuters:

EU competition regulators are seeking evidence that businesses are shifting investment from the bloc due to the U.S. Inflation Reduction Act as they consider loosening state aid rules to deal with the impact, according to a European Commission document seen by Reuters.

The EU executive earlier this week sought feedback from member states amid concerns about the $430 billion act, which grants consumers tax credits when they buy U.S.-produced electric vehicles (EVs) and other green products.

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“We should find out first how big is the problem before we come up with measures...to alleviate these issues,” a senior EU diplomat said.

“For example, we feel it’s very important to understand the decision CEOs make when it comes to big investments, because it’s not only about money,” the diplomat said, adding that he thought there were still plenty of funds available in the EU budget to back investment in the digital and green transformations.

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Given legal scrutiny from around the world, it’s anyone’s guess as to what the final fate of the IRA will be. It seems the bill will have to hold up in international court against every challenge, while its opponents only need to get lucky once.

Reverse: And Then We Promptly Packed Up And Left Things Better Than We Found Them And There Were No More Problems For Anyone Ever

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Neutral: What Do You Think Of The Inflation Reduction Act?

On the one hand, I understand the desire to bolster the long-decaying American manufacturing sector. On the other, eliminating tax credits for many EVs seems bad for consumers at large — and the environment.

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On The Radio: The Kills - ‘Doing It To Death’

The Kills - Doing It To Death (Official Video)

Man, remember Titane? That’s arguably a car movie, kind of. This song was great in it, is what I’m getting at. Go see Titane.