China tells its EV companies not let legacy auto learn its technology

Summary

This video discusses China's stance on its electric vehicle (EV) manufacturers expanding production overseas. The Chinese government is urging automakers to avoid sharing advanced EV technology with other countries by setting up knockdown kit assembly plants abroad, instead of full-scale factories. China is concerned about maintaining its technological lead and preventing rivals from catching up. The speaker, Sam Evans, shares his own experience with Chinese EV technology and highlights how Chinese manufacturers are disrupting global markets like Thailand, while also noting tensions between Chinese policies and companies' global expansion ambitions.

Takeaways

• 🚗 China is cautioning its manufacturers against building too many factories abroad to protect its advanced EV technology.
• ⚡ Chinese EV technology, including fast charging and 800-volt platforms, is leading the world in innovation.
• 🛠️ The Chinese government prefers that manufacturers build assembly plants abroad rather than full-fledged factories to safeguard key technological components.
• 🌍 China’s automakers are expanding globally, with factories planned or being built in countries like Mexico, Turkey, Spain, Brazil, and Thailand.
• 🔧 China's strategy involves sending knockdown kits (CKD and SKD) to be assembled in other countries, rather than manufacturing everything abroad.
• 🚫 China is discouraging automakers from investing in India due to concerns over losing control of their technology and previous incidents of factory seizures.
• 💡 Chinese automakers like Great Wall Motor are already using the CKD strategy in international markets, as seen in their partnership in Malaysia.
• 📉 China's domestic EV market is becoming more competitive, pushing manufacturers to seek global expansion.
• 💼 The Chinese government is wary of foreign governments' incentives, fearing they might trick manufacturers into compromising their technology.
• 🚀 Chinese EV makers have disrupted markets like Thailand, where they’ve established a strong presence and challenged existing players like Toyota.

Q & A

Why is the Chinese government advising automakers to avoid sharing advanced EV technology abroad?

The Chinese government believes that its EV technology is more advanced than the rest of the world and wants to prevent foreign rivals from catching up by ensuring that key components and technology remain within China.

What specific strategy is China recommending for its automakers building factories abroad?

China is advising automakers to build factories overseas that function more like assembly plants, using knockdown kits where key components are produced in China and then shipped for final assembly abroad. This ensures that the core technology stays within China.

What is the difference between completely knocked down (CKD) and semi knocked down (SKD) kits in manufacturing?

Completely knocked down (CKD) kits involve shipping fully disassembled car parts for assembly in the destination country, while semi knocked down (SKD) kits include some pre-assembled components, simplifying the final assembly process.

Why are Chinese automakers building factories outside of China?

Chinese automakers are building factories abroad primarily to avoid tariffs imposed on Chinese-made cars in many foreign markets, such as Europe. By assembling cars locally, they can bypass some trade barriers.

What concerns does China have regarding automakers investing in India?

China has warned automakers against making investments in India due to past instances where the Indian government has seized factories from foreign companies. This creates a risk that China does not want its automakers to face.

What is China's Ministry of Commerce's role in automakers' foreign investments?

China's Ministry of Commerce has instructed automakers to notify them before making any foreign investments, especially in countries like Turkey, to ensure alignment with China’s broader economic and technological interests.

How has the Chinese government’s stance affected automakers like BYD (Build Your Dreams) that have already invested in India?

While the Chinese government has discouraged investment in India, companies like BYD have already built factories there. Despite this, BYD may not receive the same level of government incentives as other automakers for their India ventures.

What impact have Chinese automakers had in markets like Thailand?

Chinese automakers have significantly disrupted the Thai automotive market, which was traditionally dominated by brands like Toyota. Chinese EV manufacturers have built factories in Thailand, targeting local consumers and reshaping the market landscape.

How does the Chinese government’s strategy impact automakers' globalization efforts?

The strategy of keeping key production within China and limiting the scope of foreign factories to assembly lines could hinder Chinese automakers' ability to fully globalize, as it limits their technological integration in foreign markets.

Why does the Chinese government believe that foreign governments could trick their automakers into investing abroad?

China is cautious that some foreign governments, particularly India, may use policies like tariffs or factory seizures to trick automakers into investments that would ultimately disadvantage Chinese companies. This belief is based on historical instances of foreign government intervention in industrial operations.