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

The Electric Viking

13 Sept 202408:07

Summary

TLDRThis 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.

Outlines

00:00

🔧 China’s EV Manufacturers Told to Limit Tech Sharing Overseas

China's government is advising its manufacturers, especially in the electric vehicle (EV) sector, to avoid sharing their advanced technology with other countries. While Chinese companies like BYD and Xpeng are building factories worldwide in places such as Mexico, Europe, and Thailand, China fears that this will expose its technological edge to rivals. The government is urging manufacturers to retain key innovations domestically, including the use of cutting-edge tech like 800-volt platforms and Giga casting. Despite joint ventures with major global automakers, China is becoming more protective of its EV advancements.

05:00

🚗 BYD and Other Chinese Automakers Face Restrictions in India and Turkey

Chinese automakers, including BYD, are expanding operations internationally, such as building factories in India, but are encountering opposition from the Chinese government. China has restricted automakers from making investments in India due to geopolitical concerns and fears of losing technological control. Automakers are required to notify the Chinese government if they plan to invest in Turkey. These restrictions reflect China's increasing caution regarding global competition, even as Chinese automakers seek to grow globally to offset domestic market challenges.

Mindmap

Keywords

💡EV Technology

EV technology refers to the advanced technology used in electric vehicles, such as the 800-volt platforms and Giga casting mentioned in the video. The video highlights how China is leading in this field, producing EVs with incredible charging speeds (10-80% in 20 minutes) and advanced software, making them competitive on the global stage. The Chinese government is concerned about this technology being shared with other countries, which is a key issue in the discussion.

💡Knockdown Kits

Knockdown kits refer to partially assembled vehicles that are shipped overseas for final assembly in another country. The video explains how China wants its automakers to follow this model, where key components are made in China and then assembled abroad. This approach allows Chinese companies to bypass tariffs while still controlling key technological aspects of production.

💡Giga casting

Giga casting is a manufacturing process that allows the production of large, single-piece vehicle components, improving efficiency and reducing costs. While Tesla is known for using this technique, the video points out that Chinese EV manufacturers are now utilizing it, and in some cases, even surpassing Tesla in the process. This is part of the broader theme of China's advancements in EV manufacturing.

💡Globalization Efforts

Globalization efforts in the context of the video refer to Chinese automakers' attempts to expand their market presence by building factories and assembly plants outside China. However, the Chinese government is wary of sharing advanced technology with other countries and is advising automakers to maintain key production within China. This tension between globalization and protecting intellectual property is a recurring theme.

💡Trade Barriers

Trade barriers are restrictions imposed by governments, such as tariffs, to limit imports. The video discusses how countries like those in Europe are enacting trade barriers to Chinese-made cars, which is prompting Chinese manufacturers to build factories in those regions to avoid these barriers. These geopolitical challenges are influencing the decisions of Chinese automakers on where to build factories.

💡Assembly Plants

Assembly plants, as described in the video, are facilities where vehicles are assembled from parts shipped in from elsewhere, rather than being fully manufactured on-site. The video stresses that many of the overseas ‘factories’ built by Chinese EV makers will primarily function as assembly plants, allowing them to skirt trade restrictions while keeping key manufacturing processes in China.

💡Advanced EV Technology Export Control

This refers to the Chinese government's efforts to prevent the export of advanced EV technologies by limiting the extent to which its manufacturers can produce abroad. The video mentions that China is cautious about losing its competitive edge in EV technology and has asked automakers to avoid sharing core innovations with foreign partners, a policy aimed at keeping China ahead in the global EV race.

💡Joint Ventures

Joint ventures in the video refer to partnerships between Chinese EV manufacturers and foreign automakers like Volkswagen and Mercedes-Benz. These partnerships involve investment and collaboration in EV technology, but the Chinese government is wary of these alliances leading to the transfer of advanced technology out of China. The tension between collaboration and control is highlighted throughout the discussion.

💡CKD/SKD Models

CKD (Completely Knocked Down) and SKD (Semi Knocked Down) models are strategies used by Chinese automakers to export vehicle components in a disassembled form to be reassembled in foreign factories. The video explains that this method allows manufacturers to comply with the Chinese government's directive to keep key production in China while still expanding into international markets through assembly plants.

💡Foreign Investment Restrictions

Foreign investment restrictions are policies imposed by the Chinese government to limit where and how Chinese automakers can invest abroad. The video specifically mentions restrictions on building factories in India and Turkey, illustrating China's control over where its manufacturers expand and its concerns over geopolitical risks, such as the seizure of assets by foreign governments.

Highlights

Chinese manufacturers are expanding their operations globally by building factories in countries like Mexico, North Africa, Turkey, Europe, Thailand, and Brazil.

China's government is discouraging its automakers from sharing advanced EV technology with other countries, aiming to retain their technological edge.

Chinese automakers are developing highly advanced electric vehicles (EVs), including 800-volt platforms and giga casting technology, which can charge from 10% to 80% in just 19-20 minutes.

Chinese automakers are forming joint ventures with global companies, including Volkswagen, Mercedes-Benz, and Audi, investing heavily in China's EV sector.

China's Ministry of Commerce is advising automakers to focus on assembling cars abroad, rather than manufacturing key components outside of China, to protect EV technology.

China is promoting knockdown kits (CKD and SKD models) for overseas factories, allowing final assembly abroad while retaining core manufacturing in China.

Some automakers, like Great Wall Motor, have adopted the knockdown kit strategy, partnering with international assembly companies such as EP Manufacturing in Malaysia.

China's government has banned auto-related investments in India, urging automakers to avoid the market due to past issues with nationalization and risk of losing control of assets.

China is closely monitoring automakers' investments in Turkey and other countries, requiring government approval before proceeding with overseas ventures.

China's strategy of retaining key production in the country could slow the globalization efforts of Chinese automakers seeking to expand into competitive international markets.

Despite government restrictions, some Chinese companies, such as BYD, are building factories in India, reflecting a complex relationship between the company and Chinese authorities.

Many Chinese automakers are facing tough competition in their domestic market, pushing them to expand aggressively into foreign markets.

Chinese manufacturers are disrupting traditional auto markets, such as Thailand, where they are challenging Japanese automakers like Toyota by building factories and capturing significant market share.

Chinese EV companies are playing a crucial role in reshaping the global auto industry by expanding overseas, despite the government's concerns about sharing technology.

China's caution about sharing EV technology stems from fears that rivals in other countries could use it to catch up and compete more effectively in the global EV market.