China now driving car market | Brunell

In the 1950s, America’s “Big Three” automakers (General Motors, Ford and Chrysler) were the pacesetters for our industrial dominance. They had the skilled workers, the financing, the mass-production technology, the sales networks, the supply chains and the customer base.

In short, they had it all.

Presidents Dwight Eisenhower and John F. Kennedy even tapped their CEOs to be Secretary of Defense. “As General Motors goes, so goes the nation,” was commonly heard across our land.

In the last 25 years, however, our country’s manufacturing power has been increasingly challenged. As Japan and Germany rebuilt from World War II, and South Korea recovered from the Korean Conflict, their government and industrial leaders learned from American “know-how!” Now, foreign cars and trucks have put a dent in our production.

By 2016, in terms of car sales revenue, the top seven were Toyota, Volkswagen, Damiler, GM, Ford, Honda and Fiat Chrysler.

The cost of gasoline has fueled much of that change.

The shift away from gas-guzzlers, many of which were “Made in America,” accelerated with the Arab oil embargo of 1973. Gas was rationed, and the cost of a gallon doubled – 40 to 80 cents. Suddenly, smaller and more fuel-efficient European and Japanese models posted strong sales.

Furthermore, as motor vehicle sales extended far beyond the United States, Canada and Europe, the need for gasoline mushroomed. With millions of Chinese workers joining the middle class, car sales started skyrocketing. By 2009, the world’s most populated nation became its largest car market as well.

While China’s domestic auto manufacturers account for less than half of today’s auto sales in China, nine out of 10 electric vehicles sold there are made by Chinese automakers. With the heightened concerns over global climate change, China’s government is heavily subsidizing electric vehicle development and car buyers.

It is part of the government’s “Made in China 2025,” which is the first 10-year action plan designed to “transform China from a manufacturing giant into a world manufacturing power,” China Daily reported.

The plan features 10 innovative strategies, according to Miao Wei, the minister of industry and information technology (MITT). “China will basically realize industrialization nearly equal to the manufacturing capabilities of Germany and Japan at their early stages of industrialization.”

China is not only focusing on electric cars and enhanced battery technology but wants to dominate the driver-less vehicles market. However, even with subsidization, electrics and autonomous cars are costly. High battery prices are one of the main hurdles for companies trying to build vehicles the average wage earners can afford.

“In the U.S., the best-selling electric vehicles tend to cost more than $30,000. Globally, some electric vehicles sell for less than $10,000, but only after large government subsidies and rebates,” Eric Bellman wrote in the Wall Street Journal.

“In China, the world’s largest electric-car market, the Baojun E100 – made by a joint venture between General Motors Co. and SAIC Motor Corp. – sells for as little as $6,500, but only after more than $7,000 in government incentives,” Bellman added. Such concessions helped push China’s sales of electric cars to more than 600,000 last year – three times the number sold in the U.S.

In the long term, China is betting it will have the same dominance America’s “Big Three” had in the 1950s and electric and self-driving vehicles are the means to that end.

However, BP, in its 2018 energy outlook, still expects the transport sector to be “dominated by oil,” with oil demand accounting for around 85 percent fuel supply by 2040.

But keep in mind, as the world is learning “what the Chinese want, they increasingly have the power to get.”

Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.

.

Don C. Brunell can be contacted at theBrunells@msn.com.

More in Opinion

Legislature: History, investigations and new laws

The 2019 session of the Legislature included controversy, compromise, surprise, new law and more.

Max fix critical to Washington

Boeing needs to get the 737 back into service – safely and soon

KCLS provides summertime opportunities to read, learn and grow

June is the end of the school year, but it’s the beginning… Continue reading

Gov. Jay Inslee. FILE PHOTO
Governor’s watch: timing is everything

Inslee, possible candidates eye 2020 race

Burgers and fries or trains and rails?

A Sound Transit committee recently removed the Lowe’s/Dick’s site from consideration for… Continue reading

Washington’s big tax bump | Brunell

With the dust settling from the 2019 legislative session, the focus is… Continue reading

State, feds splash and clash over Washington’s water quality

President Donald Trump is ready to give Washington the clean water rules… Continue reading

Washington State Capitol. Photo by Emma Epperly, WNPA Olympia News Bureau
Interim House speaker takes on challenges of a tough seat

The Frank Chopp era is over. Washington’s longest-serving speaker of the state… Continue reading

New Montana law aims to keep people in their homes | Brunell

Montana’s legislature took the unusual step of exempting older, less-valued mobile homes… Continue reading

Democrats doing a victory lap, but other matters remain unfinished

Democratic lawmakers greeted the end of the 2019 legislative session with warm… Continue reading

KCLS fosters connections with local governments and library advocates

King County Library System fosters connections with local governments and library advocates… Continue reading

E-waste reduction requires innovative approaches

The vast majority of e-waste isn’t handled in an environmentally friendly way