Comment by aucisson_masque
9 hours ago
BYD is also heavily subsidized by the Chinese government.
If the us were not to fight back, the non subsidized industries would die, Chinese would stop subsidizing, rack up the price and competition would be too difficult to start again because of the monopoly on lithium and advance on technology.
It's been done thousands of times with other industries and countries.
Most recently Google, who had been giving Android for free when windows phone were licensed and Samsung tyzen cost money to develop, then forced manufacturer to accept outrageous terms to ship Google play service in their phone when all competition was already dead, is now under scrutiny for antitrust.
China’s approach to funding BYD is meant to replace much of the capital it might raise in freer markets, providing subsidies, tax breaks, and preferential policies to offset limited access to liquid equity and debt markets.
This support, totaling $10-12 billion from 2018-2022 plus in-kind benefits, mirrors the role of U.S. automakers’ $160-220 billion in public market raises and $50-100 billion in private capital, but with less financial risk for BYD due to state backing.
I think what people are missing is that EVs can be dramatically simpler to manufacture than internal combustion vehicles. This leverages manufacturing advantages and so with or without subsidies, China has big advantages due to its advancements in manufacturing tech.
Recall when China started making hoverboards for a fraction of the price of a Segway? Making EVs at scale required largely the same manufacturing pipeline.
It is the foresight of China’s industrial policy, not the amount of subsidy that has created the manufacturing powerhouse China has become.
US attempts are crude (sledgehammer) methods that leave the market far less free with mostly downside for everyone and no industrial policy goals, only domestic incumbents being protected from reality.
The lack of freer markets is itself a response to the biggest subsidy the Chinese government provides its manufacturers, the currency controls.
RMB is undervalued by ~10-30%, with latter being extreme estimates, pegged to usd with small floating band. It's minor advantage vs executing competent industrial policy that durably drives production costs down fraction vs competitors. Add 10-30% to PRC EV production costs and western (especially US) producers still nowhere near.
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> It's been done thousands of times with other industries and countries
False
Not a terribly compelling argument