Chinese cars are about to wreck the German market
Government subsidies for electric vehicles are hurting domestic suppliers
Will China be the car manufacturer of the future? If one reads some of the more recent headlines in German media, it certainly seems like it. The leading tabloid paper Bild was in full panic mode, worrying that Chinese cars “will overrun Germany” and that they have “tripled their market share”. A closer look at the data, however, reveals that this 300% increase took place exclusively in the electric vehicle (EV) market, and even there Chinese cars are not the most popular. Starting from very low historic sales numbers, the market share for newly registered passenger cars between January and April 2023 was a meagre 0.8%, compared to the almost 60% share of German car manufacturers.
Still, there are tendencies that could make Bild’s sensationalist headline more prescient than it seems now. The strength of the German car industry has been the internal combustion engine, and while VW, Mercedes, and BMW are beginning to put more resources into the development of electric vehicles, they are still outperformed by Elon Musk’s Tesla on their home turf, and the market share of cheaper Chinese models will most certainly continue to grow. Echoing Bild, Politico asked if “Das Auto” can survive the transition away from the internal combustion engine.
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What all these headlines ignore, however, is that this transition is not market- and consumer-driven, but instead a top-down project pushed by legislators, regulators, and the provision of massive subsidies. When the German government cut financial support to consumers for buying battery electric vehicles in early 2023, the sales numbers collapsed by 83% between December 2022 and January of the following year. Banning the ICE and subsidising EVs are bigger threats to the German car industry than China, although the latter will most certainly profit from these policies.
Conventional cars consist mostly of steel and iron, two input factors that are abundant in the world. EVs, on the other hand, are less complex from an engineering perspective, but require more rare minerals that go into the production of batteries and help make the car lighter, since these batteries come at significant extra weight. Not surprisingly, the supply of these minerals (often called “energy minerals”) is dominated by China, providing between 50 to 80% of what is currently required. Beijing is equally dominant in the production of batteries for EVs, with China the home of six of the 10 largest manufacturers, an unmatched position that is only reinforced by the vertical integration of the EV production chain. By way of comparison, Chinese has more control over these supply chains than OPEC has over the supply of crude oil.
In many ways, electric cars are a Chinese dream: they require fewer moving parts and are not as engineering-intensive as traditional cars, making their production at scale easier. The decades-old advantage of sophisticated German engineering could become less relevant compared to standardised mass production, a key strength of the Chinese manufacturing sector.
If Europe and the US follow through on their designs to force the internal combustion engine out of the market and replace it with EVs, it would do China a huge favour. Destroying one’s own domestic car industry to replace it with someone else’s vehicles is as close to a textbook definition of economic suicide as one could get.
In 1981 the most basic VW Golf cost 57% of median income in the UK. In 2022, the most basic Golf was 85% of the median UK income. And the electric Golf equivalent (ID3) was 120% of median UK income. European car manufacturers are about to reap what they, and their governments, have sown by allowing new cars to become unaffordable, and by allowing regulatory diktat, rather than customer demand, shape the market.
Excellent point. I’ve just started to think about renewing my 13 year-old Peugeot and the price of any car be it new/ used , EV / hybrid / ICE compared to what we paid 10 years ago is eye-popping. To hell with European car manufacturers, I’ll be first in line for a Chinese car if the price / quality criteria are on target.
I wouldn’t touch an EV with a barge pole. Net Zero insanity is slowly but surely being recognised – Danish Truckers, French Rural communities, Dutch and Belgian Farmers, Italian car producers and many a German who wonders what the point is now that Germany’s dash for gas over last winter sent vast numbers in Asia to dash for coal because they can’t outbid Germany on the LNG spot markets. Net Zero insanity is laid bare in the Government sponsored FIRES report.
P6 Graphic – in 27 years NO Maritime shipping, NO air travel and NO fossil fuels. The UK would face starvation with 70+Million people and not being self-sufficient in food.
Quite how any politician believes this garbage is beyond me, then again, Starmer appears to believe a woman can have b***s. As do Adidas apparently.
How Simple (I am sorry) but how true.
Nothing will persuade green terrorist, though.
I hope you have not got any children and grandchildren?
With thinking like yours, they will have no future.
Excellent post and important perspective.
That’s a really interesting snapshot. Are cars about to go the way of property in the UK?
Go team west!! We will outlaw ICE cars here, cripple our energy sector so we can’t produce EVs at a reasonable cost, and then import them from China, which has by far the highest emissions in the world and is creating cheap power by burning coal. If you can’t see the logic in this, you clearly need to tap into the regime media because you are grossly misinformed.
Not to mention crippling the electrical power system by eliminating reliable base power (natural gas, coal, nuclear) so we routinely experience rolling brown and blackouts and can’t consistently charge the EVs.
Misinformed? Try wilfully ignorant / fantasy / elves in the bottom of the garden !
Not only is the banning of the sale of ICEs but also the crippling of its energy generation sector.
We put the mental in environmentalism.
Lovely. I’m going to pinch that if you don’t mind! 😉
It won’t happen in 2030 Matt. Not enough charging points thankfully.
I’ve long thought that cars manufactured in the West have been over-engineered. Safety features apart, the inclusion of all the additional bells, whistles and buttons to press results in (potentially) a major distraction from the main task – concentrating on the road and other road users.
I enjoy driving my car, and bought it for its pedigree and excellent power-to-economy ratio but don’t use half the features it’s fitted with it, which means i’m paying over the odds for it. I appreciate other people do use them, but i suspect if the Chinese are able to produce safe, reliable, economical vehicles without all the added paraphernalia they will indeed sweep the market – and deserve to.
Excellent point. The introduction of touch-screens being a classic case – they demand more attention for longer than simpler, more immediate controls. If I want to alter the aircon I don’t want to run through a bl00dy menu for crying out loud. To quote my brother, ‘what’s wrong with a knob?’
Fortunately it’s not a problem I have to deal with, as I drive a 19-year-old VW which was the last model not to have an electronic key fob. So no-one can hack my keys. And it has a CD and a tape cassette player. Truly, I live the dream.
It isn’t just the German car industry.
My wife has a Mazda 3 – hardly exotic. The handbook is the size of the King James’s Bible, though sadly less coherent. It has many features that appear to be solutions to problems that don’t exist. My own two old cars are reliable, cheap to service and repair and have user manuals the size of a shopping list – Start, Go, Stop.
The best cars are those where you can see the road if you open up the bonnet. Sadly they are now called ‘classics’ and cost more than an EV.
Nothing, apart when it is in government.
And we have quite a few in current one.
The Japanese swept away British Leyland.
Have we not learned?
British Leyland committed Hari-Kari. As a student in the 70’s during holidays I used to drink with the Friday shift from one factory who never went back after lunch – “The monday shift can catch up.” being the answer to questions such as “Aren’t you going back to work to build some more cars?”
The most interesting explanation of ‘how’ the Monday shift caught up was to NEVER change the paint colour. Select red then paint everything red because that was the easiest colour to use and get a decent finish.
You are right – Not going back to work after a ”friday lunch” was prevelent in those days – especially if the whole enterprise was massively subsidised by The Tax Payer.
Many forget that electricity is not clean. If all ICE’s were banned they would have to be replaced by much bigger engines called power generators that will burn a lot more fuel (when the wind turbines aren’t turning) to charge up millions of EV’s. In the case of the UK Drax power station that’s a lot more imported trees to burn as “biofuel”. So all we’re achieving is moving the pollution to a different location!
If the car had been invented recently, it’d have been banned.
Chinese cars have most of the same crap toys. It’s what the people want. I’m a classic car enthusiast, and I follow the market closely. It’s been evident for years that younger buyers have no interest in the “car-ness” of cars. Toys is where it’s at for these muppets.
THE DULLNESS OF MODERN CARS
Cars used to come in a wide range of engineering varieties. They even used to have national characteristics. Nowadays, all cars are converging to a global bourgeois mean. Of course, all electric cars essentially will have the same engine. About as interesting as fridges.
As I noted in a blog about how tediously homogenous and boring modern cars are:
“All new cars are bourgeois new cars. Every new car has the personality and flair of a 42 year old certified suburban accountant. Safe, predictable, worthy, respectable, designed to assuage status anxiety, suspicious about driving or fun. Changes every 2 years for the newer screens.”
And, for driving enthusiasts, it’s only getting worse. Audi cheerfully admits that, when designing its forthcoming A8 model replacement, the “drive system and the handling are no longer at the top of the design specifications in this new generation of cars. Instead, the starting point is the interior, the occupants’ living and experience sphere while traveling.”
*Travelling*! They don’t even bother to say “driving” any more …
Whereas, for people like me, drivetrain and handing are front and centre.
And, as the alarming success of the unashamedly Big Brother-y Alexa reveals, this lamentable state of high-tech serfdom is what lots of people want. The interior mock-ups of Audi’s 2025 A8 limo replacement are revealing. Audi is modelling the modern “driver” experience, not on driving, but on travelling, and, specifically, on first class airline travel, where the most you need to do is get the recline angle right on your seat as you settle back to do precisely nothing. How boring is that? Great for the visually impaired, and for drunk people (who now won’t need to get a taxi home), obviously, but pretty tedious for the rest of us. Even the flipping steering wheel is retractable(!), for those increasing-duration periods when you won’t even need it.
I can see the appeal, for some. Increasingly, my perception is that many younger drivers find driving stressful and boring, and they’re not very good at it anyway. People will lap this up. And, being Audi, it’ll be well made and nicely-finished (none of your Tesla panel-gap shonkiness here). Teslas are among the most badly-built cars on the planet.
For enthusiasts though, it’s a loss.
Imagine a skiing holiday where skiing was banned and replaced with rides up and down the mountain in the gondolas / cable cars. The new skiing – no effort needed – why did nobody think of this before?
That’s more or less what new cars will be like. Great for folks who can’t ski. And safer and more relaxing, obviously. And you still get to see the fab scenery. But overall, a bit rubbish for those of us who like to, er, ski … or drive …
It is fair to say that this loss of freedom and loss of interactivity was in train anyway – EVs may well speed up and facilitate the dumbing down and increasing surveillance of cars, but it was happening anyway.
PRICE GOUGING IN THE EV MARKET
The blatant price gouging is despicable, and it will drive many drivers off the roads, in 2 ways:
1. Massive price hikes for cheap-to-produce EVs compared to ICE cars; and
2. The end of bangernmomics. My daily driver is a 1997 car, in tip-top condition. That doesn’t work with a battery car, as, like smartphones, the battery degrades continually. A 20 years old battery car will have no range to speak of. Battery cars come with massive built-in obsolescence, and the old idea that the poor and the thrifty and the retro enthusiast had up to now, namely maintaining old cars for ever, will be impossible. The buying culture will be forced into the same over-priced disposability mania that is such a feature of the stupid smartphone market.
THE DANGEROUS LUNACY OF SCREENS IN CARS
As I noted in a blog about this:
“The only thing that will stop this so-called technological “progress” b/s is a relative of someone killed by a distracted driver suing, not just the killer driver, but the idiot manufacturer who designed a fundamentally unsafe vehicle which was deliberately designed to take your attention off the road.
Cars are changing, and traditional car culture – with its emphasis on individual responsibility, and responsibility’s concomitant attribute of freedom, and freedom’s concomitant attribute of fun – is disappearing fast. Solo, independent driving, with minimal state supervision, has always been a reliable indicator of freedom in a democracy. No surprise that the women-hating Taliban has recently banned all long road trips by women drivers.
Badass cars are no more; all cars now are bourgeois.
The new breed of car driver is a navel-gazing wuss, more concerned with his poxy screen time than with driving. Increasingly, new car sales nowadays are concluded without even a test drive. Once you’ve checked that the screens work, what would you need a test drive for? The new breed of car “driver” is a social-media addicted twerp who is wholly divorced from the machine that they’re nominally in charge of. They dislike driving; and they want someone else to do it for them, preferably the government.
We need to be protected from such people. Their feeble minds are unlikely to be up to the serious business of driving in any event; but it makes matters immeasurably worse if the car manufacturers are now hell-bent on introducing guaranteed sources of lethal distraction for them.”
THE DOUBLE STANDARDS OF THE ATTACK ON ICE CARS
Note how there is such an assault on ICE engines in cars, while ICE engines in ‘planes are not subject to any compulsory end date, despite being responsible for way more pollution – even though cars are way more important to most people than ‘planes are.
If I gave you a choice – you can either never fly again or never drive again, most people would choose their car. The vast majority of flights – business meetings that could be done over zoom, going to Malaga to get trolleyed – are simply not necessary. But, for a rural dweller with non-existent public transport, going to the shop to taking your kids to school is necessary.
Yet airlines (owned by billionaires) get a free pass while cars (owned by the hoi polloi) are hammered.
” A 20 years old battery car will have no range to speak of.”
Wouldn’t you just put a new battery in, like we do with batteries now, when they’ve had it? (Hopefully there would be some recycling involved!)
Right, replace the battery for $15,000-$30,000 a pop.
The way I understand it, the batteries in EVs are built into the structure of the car, basically part of what could be called the “frame”. (This is why minor accidents often result in total losses.) And they have their own computer chips built in to optimize efficiency, so that a) they are not compatible with other manufacturers, and b) they are not user-replaceable. So they can be replaced, but it’s pretty expensive; certainly not the kind of thing that a person just getting by can take on, as is done now with minor, and often quite major, repairs and maintenance. On one hand I think this will change, but on the other I see no reason for the manufacturers to purposely lock themselves out of the revenue generated from the planned obsolescence.
What I can’t shake is the idea of not having a “doomsday-scenario” way of going somewhere. With a ICE car, one way or another, everybody knows somebody that can make the thing go. Will EVs ever be the widespread hobby that ICE cars always have been?
Regarding the new drivers that don’t really care about driving, you ain’t seen nothing yet. I can almost guarantee that driving (“traveling”?) will be turned into a subscription model and people will eat it up.
Having just had major problems buying a new car and finally settling instead for a very low mileage 2012 Ford Fusion. I really enjoyed this amusing rant. Sums it all up. Why don’t you tidy it up a bit and publish it as an article?
Well worth the effort.
Get a motorbike instead.
I agree with most of this, but the answer to your last point is obvious: EVs do work and there is currently no alternative fuel source dense enough for the much greater energy requirements of aircraft.
You make many great points but as a driving enthusiast (similar to vinyl enthusiasts) you focus on stuff which is not relevant to most people.
Even as a car enthusiast you are ignoring amazing developments in quality and performance of modern cars.
I have mates who are really into driving and they say there is no comparison between modern Porsche or M3 BMW and 30 years old one.
As a former skiing instructor I would say your skiing analogy is way off.
I started skiing in early 60s on wooden skis then racing on metal ones etc.
There is no comparison between even 30 year old racing ski and modern one.
I know. I tried my 205 cm Volkll ski last year and I was struggling to properly turn the first few runs.
I am not much of a driver but I bet you that it is similar experience with modern cars against old ones.
My brother has a Chinese (it was by far the cheapest) EV, which he can run entirely from the solar panels on his roof. So that it is quite tempting: buy a car and never have to visit a service station again … but, as for all the rest of us being able to follow his example, well, this is interesting:
Germany will definitely be the biggest loser in the mad-dash to EV. Chances are the whole dash is another “diesel engines are best” scandal – Hydro is coming up fast. Buses in London have been running successfully on this for years and years.
German politicians laughed at UK for years because (so they said) UK didnt make anything – its all services. Strange that as UK remains 5th or 6th largest manufacturer on the planet.
Well the automotive industry is in massive self-imposed turmoil and it will be interesting yo see who has the last laugh.
Does one get a felt pen with each Tesla, to write ” Saddoe” on one’s forehead?
Just add tariffs- problem solved.
When the Japanese auto industry entered europe 1960s With most reliable cars .The body work was extreemly light .
European cars were and still are well made and still have replacement parts available even after 80 years
Only time will tell if Chinese Manufacturers come to the level of European manufacturers.
Remembering competitively is King
When the deprecation is taken into account the majority of European units will far exceed the Asian counterpart .
Gosh, one of the better articles on Unherd, even if making obvious points.
Problem is that nothing is going to persuade net zero fanatics that West is comiting economic suicide.
Out of about dozen greenies , of various ages, I sent it to, only one said it is worrying.
The rest just said so what?
Tried to comment but ” awaiting for approval”.
Is it even proper English.
I guess what triggered idiots writing censorship script was my use of “economic su***de”?
Strange writing Communism is fine.
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