“Challenging environment with weakened consumer demand”: This nosedive in a vast industry, affecting consumers and manufacturing, is happening even as GDP officially booms at 6%?
By Wolf Richter for WOLF STREET.
China’s market for new passenger vehicles, the largest in the world, turned into a mess in 2018, the first annual decline in the data going back about three decades, and then got messier. In December, passenger vehicle sales declined for the 18th month on a year-over-year basis, amid production cuts, layoffs, and plant closings. Particularly hard-hit were US automakers General Motors – second largest foreign brand in China – and Ford, which is just falling apart in China.
Sales of new passenger vehicles – this excludes commercial vehicles such as buses and commercial trucks – dropped 9.6% in 2019, according to data from the China Association of Automobile Manufacturers (CAAM) this morning. Note the huge surge in sales during the Financial Crisis, when the Chinese government threw enormous subsidies at retail customers. But not this time:
The CAAM, after consistently underestimating the decline for the past two years, said that it expects a 2% decline in total vehicle sales, which include commercial trucks and buses and which had been doing better than passenger vehicles. This would be the third year in a row of declines.
“We have moved away from the high-speed development stage. We have to accept the reality of low-speed development,” CAAM official Shi Jianhua told reporters.
Sales of passenger vehicles fell below 21.5 million units in 2019, but this still blows away US auto sales that have ticked down to 17.1 million units in 2019. China’s sales are now just above where they’d been in 2015. Over the two years, the decline amounted to about 13%:
Electrified-vehicle sales plunge in H2 after subsidies are cut further.
Back in 2018, the shining star amid the overall decline in vehicle sales that year was the category of “new energy vehicles” (NEV), which include battery EVs, plug-in hybrids, and hydrogen powered vehicles. In 2018, sales, powered by big subsidies had soared 62%.
NEV sales in 2019, after a strong first half, plunged later in the year as subsidies were cut, including a 27.4% year-over-year plunge in December, the CAAM said. And for the year overall, NEV sales fell 4% to about 1.2 million units. Because NEV sales fell more slowly than overall sales, their share of total passenger vehicle sales still rose to 5.9%.
Most of the NEVs are battery EVs; their sales ticked down 1.2% to about 972,000 units. Plug-in hybrid sales dropped 15% to 232,000; and hydrogen-powered vehicles amounted to less than a rounding error.
Ford got re-crushed in China.
Ford reported this morning that its sales in China plunged another 26.1% in 2019 from a year earlier to 567,854 vehicles, after a stunning 37% plunge in 2018. This was Ford’s third year in a row of sales declines. From its peak in 2016, with sales of nearly 1.3 million vehicles, and despite numerous turnaround strategies and promises of new products and whatnot, Ford’s China sales have now collapsed by 56% over the three-year period:
“2019 was a challenging year for the Chinese automotive market and for Ford in China,” Ford said in the announcement. Ford’s “value segment,” it said, was particularly impacted.
This time too, Ford recounted its rehash that it would “put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure.”
And it expects that “the pressure from the external environment and downward trend of the industry volume will continue in 2020.” In this respect, Ford appears to be in agreement with other automakers and with the CAAM: 2020 is going to be tough.
Here are some delectable morsels:
- Sales of imported vehicles plunged 32.7% to 10,861 units and now account for less than 2% of what Ford sells in China. Everything else is manufactured in China in joint ventures with Chinese partners.
- National Distribution & Services Division sales collapsed by 39.2% in 2019 to 253,499 units. These are largely the vehicles in Ford’s “value segment.”
- Lincoln sales dropped 15.7% to 46,629 vehicles.
- Jiangling Motors sales dropped 10.4% for the year to 236,222 vehicles
General Motors got battered.
GM isn’t in as horrible a shape in China as Ford is – but that doesn’t say much. It reported last week that its sales in China through its joint ventures plunged 15.1% in 2019, to 3.093 million vehicles, the second year in a row of brutal declines. Since its peak in 2017 of 4.04 million units, sales have plunged by 23.4%:
Despite the harsh declines, GM’s sales in China still exceed its US sales (2.89 million vehicles in 2019), and China remains GM’s largest market. But the comparison isn’t straightforward: In the US, the whole kit and caboodle is its own, and the US remains its most profitable market. But in China, GM manufactures and sells through joint-ventures with Chinese partners, including SAIC Motor, a state-owned enterprise and the largest automaker in China. The joint venture with SAIC manufactures Buicks, Chevrolets, and Cadillacs.
In its announcement last week, GM said that it also expects the “market downturn” to continue in 2020, that it anticipates “ongoing headwinds in our China business,” and pointed out the “challenging environment with weakened consumer demand.”
But luxury still sells. Consumers with plenty of money are still splurging, it seems. And GM’s luxury brand Cadillac was the standout in its report, with sales rising 3.9% in 2019 to a record 213,717 vehicles.
The Top Two Japanese Automakers Bucked the Trend.
Toyota and Honda both booked significant sales gains and market share gains in 2019, and luxury was hot, but the rest of the Japanese automakers weren’t so hot:
- Toyota Motor sales rose about 9% in 2019, to 1.62 million vehicles, with sales of Toyota-branded vehicles rising 8.4% to 1.42 million and sales of luxury-brand Lexus soaring 25% to 200,000 units.
- Honda sales – Honda and Acura combined – rose 8.5% to 1.55 million vehicles.
- Nissan did not disclose sales of its luxury brand Infiniti, but said that sales of Nissan-branded vehicles remained flat at 1.55 million units.
- Mazda sales fell 16% to 228,000 units
- Mitsubishi sales fell 7.6% to 133,000 units.
German luxury bands also booked gains.
Mercedes-Benz sales rose 6.2% to 693,443 vehicles in 2019, and became the #1 luxury brand in China. It said that more than three-quarters of the passenger vehicles its sells in China are built in China by its joint venture with BAIC Motor.
BMW sales grew 13% to 691,000 vehicles. A big hit was its redesigned crossover, the X3, built by its joint venture with Brilliance China Automotive, with sales exceeding 120,000 units.
Audi sales rose 4.1% to 690,100 units, but it wasn’t enough, and it fell off its perch as China’s #1 luxury brand that it had sat on through 2018. It’s now #3.
Audi’s parent Volkswagen Group remains the largest foreign automaker in China, but has not yet reported total sales for December and 2019.
These auto sales don’t portray a growing consumer economy. Luxury is doing well. But the numbers are small, and overall sales are now down for the second year in a row, by a combined 13%, in a market that could only grow before.
China’s auto industry weighs more heavily in China than the US auto industry in the US: The vast majority of vehicles that are sold in China are made in China. And the global component industry has resettled in China. China’s economy is still smaller than the US economy, but its auto industry is far larger. And this nose-dive in this vast industry that affects consumers and manufacturing is happening as GDP is officially booming at a rate of 6%? Something is amiss.
In the US auto market, it has been 20 years of stagnation interrupted by the collapse during the Financial Crisis and subsequent recovery. Read… US New Car & Truck Sales in 2019 Fell Below Year 2000 Level, 3rd Year in a Row Below 2016 Peak
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Makes me wonder if China and Japan are colluding on the electronic components. I always suspected the Toyota accelerator problem was a circuit board made in China, and Toyota was not forthcoming. Not sure who or how global anti-trust suits are brought but we live in a wild west of deregulation.
Spoiler alert: supranational corporations don’t have to abide by local laws. They can simply move any objectionable action to a new, more amenable locale. Doesn’t usually apply to cars but you know what I’m saying/.
With such great prospects I am sure the Chinese market will be the salvation of Tesla. All hail Elon and his business genius.
There were those articles about how Chinese citizens with iphones were frowned upon by everyone else. A new social norm to boycott American goods was taking effect because of Trump’s trade war threats and many Chinese were actively ditching their iphones. The same trend surely applies to cars, only being more expensive there would be more of a lag. When Elon’s sales numbers are low in China, then I’ll be expecting to see more of that level-headed behavior of his.
Tesla has bet big in China I think. Coming online at perhaps not the best time?
He’s picked up 10 Billion dollars on the stock price rise in the last couple of months just by falling on his face presenting the CyberTruck, proving nothing matters.
Selling 40,000 dollar cars in a 15,000 dollar collapsing market where the government buys a lot of the vehicles is no problem, and besides, China may continue subsidies. And a lot of buyers were p’d off when they ordered last year because the price was going up, but the price went down instead. And maybe the government can buy Teslas instead of the cheap local EVs.
And maybe you never have to make money, and maybe we know nothing, because Tesla’s worth more than Ford and GM together, who make money and pay good dividends.
China let Tesla open a factory without partnering with a Chinese company. Why is that? Remember last year when Tesla offered all of his company’s patents to the world and nobody wanted them? No Chinese company wants to go into business with Tesla because they have no new ideas to copy. It’s 20 year old Li-Ion battery technology (supplied by Panasonic) and 100 year old electric motor technology, all wrapped in a Mazda look-alike body. I live in Qingdao and follow the EV market closely. A couple of years ago, the trendy set were driving a few Teslas. I would see one or maybe two a day in my travels around this city of 3 million. The fad is over. Now I see less than one a day. However, if I stand on any busy street I see several Chinese EVs a MINUTE. The New Energy Vehicles have a distinctive green and white license plate now. The rich trendoids are now sporting the BYD Tang SUV or even the new Hong Qi SUV EV . Also popular are Jaguar, Bentley, and Alfa Romeo ICE SUVs. Tesla had its 15 minutes of fame. I don’t think the Model 3 can even begin to compete with all the affordable Chinese EVs.
Tesla uses small batteries like can fit in a flashlight all glued together. Such genius. I can’t wait to see Cybercuck in a tug of war with the new elecric GMC Hummer.
What’s really interesting is the new opposed pistion gas engines. It’s a three cylinder with six pstons using a ww2 design combined with modern tech.
Archates already has huge contracts with the military.
Tesla doesn’t make the battery cells. Panasonic does. All EV batteries are based on the same principle. The biggest EV battery-cell maker is a Chinese company, having surpassed Panasonic.
Wolf, they don’t make the batteries, they just glue them together. I’m not kidding. There is a youtube called “A Look Inside The Tesla Model 3, Chevy Bolt, and BMW i3” that shows three automakers batteries side by side.
It’s a great video, if a little fanboy for Elon. If you are into the engineering of these cars they took all three cars completeley apart, including the motors.
Tesla batteries are gooped together with blue glue. Tesla batteries look like flashlight batteries and they use thousands of these little batteries per car. BMW and GM are using flat batteries that are more like cell phone batteries.
otishertz,
Your “flashlight battery” analogy is somewhat of a misnomer. They’re more like cellphone battery cells.
Hey, I was pointing out the design differences among batteries. As far as I know, batteries among any type all work the same.
In the video I mentioned above it shows the different shapes that are currently being used in cars on the roads right now. Some are flat like phone batteries, some are cylindrical.
Tesla batteries just look sloppy. I don’t hate to say that, they really look sloppy. The cooling system looks prone to “lasagna failure.” The soylent arguments of the fanboys for the superiority of cylinder batteries was that they were lower profile.
Ummm, flat batteries have low profile. fLIP EM OVER. dur. Watch the video with a sense of humor and you’ll see what I mean.
It’s enough to make you throw your avocado toast at your phone. My question is will the cybercruck have a center console with a fridge and a toaster.
First off, Tesla open sourced stuff that don’t really matter. That’s why nobody “wanted them”
The secret sauce is in the software parts that Tesla did not open sourced.
Make no mistake, China welcomed Tesla in open arms because there ARE still things to learn from it. Whether Chinese consumers will line up to buy the car is another story.
Well, yes. There is the battery management system that sets the car on fire. I’m sure the Chinese are lining up to copy that.
Hey roddy6667, how about you stick to the facts instead of your personal slant against Tesla? It’s not interesting to read hyperbole and skew.
You’re obviously a Troll…
Not a troll, but an American who lives in China and has been commenting here for years.
Roddy6667’s assessment is about as spot on as I’ve seen so far. It seems that nothing happens in China, or in Chinese business or finance, that isn’t at the approval of the Chinese Communist Party.
What this looks like to me, is Elon Musk singing merrily whilst chasing pretty sea shells at the beach, where a giant Tsunami has sucked the ocean out, preparing to destroy all with its incoming tidal waves.
He seems terribly exposed now to non western forces which he cannot control or fool.
Am I wrong?
Luxury market, in which Tesla sells, is still growing.
I wonder if the T-fords, Beetle & 500 is dying. The market for people who buy their first car, which has to be a new, very cheap one because there are not enough second-hand cars to supply the demand. If that is the case than it is not that bad.
The Fiat 500 has gone to that great junkyard in the sky.
What happens to the Giga Battery Factories when Solid State comes to the fore?
It’s those damn scooters! Blame it on e-scooters! They art crashing the global auto market! Dang!
Seriously, I wonder how much micromobility and ride sharing is contributing to this trend.
I’m still in love with my 69 Impala. Thing is so long that when I line up with other cars at a light my drivers seat is even with the rear seat of most cars. It’s environmentally friendly too considering that I’m not leasing a new plastic shoe shaped mediamobile every year.
Otis:
HaHa…… had to laugh. Impala was a classic back then. The SS 396 was hard to beat. I’m driving an ‘88 Volvo 240 with 455k mi now and love it. Gets 27 mpg freeway, which is still a lot better than these guzzling F250s etc that costa lotta!
I have reliable transportation and no debts. And I’m way past the age of trying to impress anyone.
Indeed…no point trying to spend money we don’t have to buy stuff we don’t need to try and impress people we don’t even like …
Yeh, no debts here either.
Agree!!
At some point in their lives, adults, realize that the “fear or missing out” is nothing compared to the “fact of being stuck in”.
What we get is endless hype on everything. It has become numbing, to the point that I really don’t want to hear about the next iteration of any of the prior junk they sold us.
No debt here either. All are welcome to their believes and opinions, but not on my time.
A/C, I had an ’86 Volvo 245 with a B21 engine (non-interference engine, still have the Haynes manual). They were indestructible. I sold mine with 330k mi on it for the same as what I paid it (used). And no debts whatsoever then or now.
“new plastic shoe shaped mediamobile”
Spot on.
My big block Cutlass was heaven on the highway, but Hell in the city where I constantly had to avoid killing overcaffeinated morons in nimble, fast-stopping plastic shoe cars. Bought a Prius. Love it. I just wish gas prices would go up so I can feel more smug! $2.79/g just doesn’t do anything for one’s self esteem!
So everything is flying off the shelf in China except cars?
I understand from a logical perspective it is difficult to increase the scope of the article to include additional data points.
My point is that if cars sales are declining, sales of everything else is likely declining as well.
Thanks for what you do Wolf!
car sales really aren’t a good indicator of the overall economy anymore because the rise of taxi apps (ok just one, Didi) has completely changed the market. don’t have any concrete data to hand but whenever and wherever I go outside in Guangzhou and open the app it seems there are dozens of plush cars waiting to drive me around within a minute or two of my location – the convenience is extraordinary. why bother to buy a car, and tax, insure, maintain and park it, when you can get a heavily subsidised ride and driver – if you live in any urban area in China it doesn’t make sense (unless you want the car as a status symbol rather than mode of transportation, in which case you’ll probably start driving for Didi to help with the repayments – this ready supply of status-chasing suckers is a big factor in keeping prices down and quality of service up)
Don’t forget, drivers for ride-share companies are HUGE car buyers. They wear out their vehicles in a very short time. And then they have to buy another one.
I thought that occupationally imprisoned rise share drivers provided thier own vehicles.
well sure. but they also mean that ten other people don’t need to buy one :)
Or they don’t use taxis and public transportation because now they use Uber. Those two were/are the biggest targets of rideshare companies.
“unless you want the car as a status symbol rather than mode of transportation”
Right. Those seeking status symbol would go for the Model S or X, if they haven’t already. After the initial craze, will there be many consumers who want the Model 3?
I lived in Asia and also China for some recent 11 years. The dont want the US old technology and old fashined cars. Same in Europe they dont like them anymore. Grat years of 1960 – 80 are over. Give them to the Cibans, the need to change their car park…?! They buy the German cars now, and they have already copied them as lot of them are manufactured in China. They make Merchedes, BMW, Audi, VW, etc. BTW did you know that they also assemble and distribute the iPhone out of the largest iPhone factory in the world from Zhengzhou, Henan Province, the little city there with 11 mil citizens. Where I lived. Large Mercedes and BMW factories too there.
I want that old car “technology..’
You put tariffs on goods and demonize the country, and guess what, the buyers stop buying. Why would Chinese folks buy anything American they don’t absolutely have to. This is a logical result of poor economic policy.
I am hoping Canada buys Huawei 5G, simply to send a message at the very least. We’ll see if Trudeau and ministers have the stones?
You nailed it.
Another of many examples is that Chinese coffee company that recently exploded in popularity, rivaling Starbucks, in China. People over there buy Chinese brands and abandon US brands more than ever. It is just common sense in this economical context.
I hope Huawei and other Chinese companies get around the Android ban soon enough with a mature alternative, so we don’t have to use phones loaded with US spyware that are also way too expensive for their hardware capabilities. My country – like most in the EU – is demonizing Huawei without any proof of wrong policies, while turning a blind eye to rampant US/UK spying (and extortion) activities. Way to go if you value technological progress …
“US spyware” in phones…. replaced by advanced, “clean” Huawei phones?
Now that is really funny.
Chinese Communist Government has infiltrated every channel of life, finance, and business to increase it’s own power and control.
@CreditGB:
apparently you believe all the nonsense spread by the MSM.
Huawei in recent years has offered complete access for checking their software/firmware for commercial partners from the West and even Western intelligence services. No real backdoor, spyware etc. has ever been reported on e.g. their 5G gear or recent smartphones, which is totally different from US brand gear (totally non-transparent and we KNOW NSA and some others have full access to all your smartphone data).
I agree with and support this full thread. Huawei remains the world leader in 5G and I hope they totally dominate. I have been saying since 2018 that neither the US nor Canada will settle anything major with China with a Chinese business leader still subject to arbitrary arrest and detention. I was shocked that Mr Trudeau let this frivolous US extradition request pass muster, as it was so obviously politically motivated. And where was Amnesty International on this one?
Amnesty (like many other heavily subsidized Western NGO’s) knows when to keep their mouth shut and when it pays to make lots of noise about human rights abuse. There are some other recent glaring examples ;(
MEANWHILE, Tesla closed at almost $525 per share today, making it a $94B company, the second largest car company in the world. A systematically loss-making company, with a negligible share of a rapidly shrinking industry facing headwinds.
If this isn’t one of the most epic bubble markets in history, I don’t know what is. If Tesla goes bankrupt, which is hardly impossible, it will wipe out almost $100B of shareholder value and some similarly large amount of creditor value.
I see capital destruction as an unsaid monetary policy.
Otis,
“i see capital destruction as an unsaid monetary policy.”
Keynesians hate private saving the way the Commies hated the kulaks – both exist to be liquidated.
ZIRP will destroy the economy to damn well save it…with the feature-not-bug that it hands DC more corrupt power by providing pseudo intellectual cover for printing and spending.
Keynesians don’t hate private saving. Our current monetary policy is well beyond anything Keynes would have advocated.
If Charles MacKay were still alive, he would be adding another chapter to
“Extraordinary Popular Delusions and the Madness of Crowds”.
I thought that too, but all you have to do is read the news every day!
There’s Greta and the Children’s Crusade, end of the world mania, bubbles galore; in other words, nothing’s changed.
Wolf,
I thought this was an anecdote worth reporting.
My dad bought a used GM car a few weeks ago from a dealership in Ontario, Canada.
He wrote the dealership a cheque. But the experienced salesman took a long time to figure out how to complete the sale.
This means that almost everybody is financing, doesn’t it?!
I bought a car a couple of weeks ago in the U.S. and the dealer told me 75% are financing, some upto 84 months. He also asked me why I wanted to pay cash when I could earn 26% a year in the FED-boosted stock market.
He had a point.
IdahoPotato,
Not paying interest (by paying cash) is guaranteed zero-risk tax-free income. So if the interest rate on that car loan would be 4%, and you’re paying cash, you have the equivalent of a 4% income stream that is risk-free and tax free, guaranteed for the duration of the loan. That’s hard to beat in the fixed income world :-]
But the salesman who sold me the car is a day trader and made 28% last year. And his mom made even more. Didn’t want to rain on his parade. ;-)
Yep, it’s a cost of capital equation.
I can remember a dealer telling me basically the same thing when I paid in cash…just before the dot com bubble popped.
Pete in Toronto,
Yes (including leasing). And dealers HATE cash deals. Lots of times, they make more money on financing the car and selling what we used to call fluff-and-buffs than on selling the actual car.
Can’t buy a 69 eithout cash.
Damn scooters and Uber!
I had a dealer complain that I needed to fill our a form for the IRS because I gave them a certified check for a car. I told them no way, because it was a check from the bank and they handle the IRS stuff. They said, well, it is cash to us…. sigh.
Over here in Netherlands you can no longer buy a recent car with real cash (EUR banknotes, we don’t use cheques) because companies are officially not allowed to accept more than 3000 EUR in cash. Not too long ago paying cash got you a nice discount from most car dealers but nowadays you are suspected of money laundering when you try … although there are probably some workarounds for those in the know. Some foreign buyer was in the news lately because he purchased second hand cars from a Dutch car dealership for a total of 9 million euro’s, paid all cash; I guess the car dealer is in big trouble ;)
Back in the day, I was in college and bought a “newer” pickup from a Used Car lot and told them I would finance and worked them down on the price as far as I could. They took a crap ton off the price and the interest rate was super high (this was 1982). I filled out all the paperwork and made sure there was no early prepayment penalty – drove her home and then paid off the loan in 2 weeks. I did have to pay some Loan Doc fee ($150 or something), but I KNOW the cash price would have been $500 or more higher if I would have paid cash that day.
Speaking of buying a car for cash, I recently bought a 2015 Mazda Axela Sport (identical to the Mazda 3 hatchback in the U.S.) in Yokohama, Japan. Just to see if I could do it, I brought the entire price of the car (equivalent to $10,000 U.S. dollars, in Yen bills) in cash and paid on the spot. The salesman didn’t ask any questions or even blink, just counted it out and wrote up a receipt. The car had less than 35,000 miles on it (about 55,000 km) and they changed the oil, oil filter, wiper blades and battery for free. The salesman even gave me a free upgrade of the in-car GPS navigation system that changed the menu to English language. Not a bad deal and fantastic service!
If I tried that in the U.S., I’d still be out on bail after a S.W.A.T. raid and fighting money laundering charges in court. –Sigh–
Interesting that this still works in Japan despite so many years of near-ZIRP. IMHO in Europe one of the prime reasons for the clampdown on cash payments is so the banksters can drive rates further down. It definitely is NOT to prevent money laundering and other criminal activity, as all research shows that forbidding cash (or e.g. getting rid of the largest banknotes) is of little help – they quickly switch to other methods. Authorities want to make sure that if people withdraw their savings in cash the cash proves to be almost useless.
Pete,
85 pct of new auto buyers finance.
And the makers have long since responded by jacking up entry level prices (“thanks” to easy, low monthly pmts made possible by ZIRP – and whose risk is laid off to yield starved suckers made possible by ZIRP…)
Ditto the dealerships – you can’t have F&I f*ckery pokery to goose profits, without the F.
On July 20, 2008, Beijing implemented a temporary road space rationing policy, odd-even rationing policy, by allowing cars that have an even last number of their license plates to be able to drive on roads in one day while the cars that have an odd last number of their license plates could go on the road the next day….
also if you have “green” car — car with battery, you can drive every day…
in Netherlands somewhat similar policies are being tried to keep the most dirty cars (e.g. old diesels) out of congested cities, and in future possibly to keep them off public roads completely. Problem is every city is using their own policies for which cars are allowed to enter, park or have to pay extra etc. Also most policies are pretty stupid like forbidding diesels older than e.g. 10-15 years but still allowing ICE scooters that are even dirtier in some ways. It’s a total mess and the main reason is that our national government doesn’t want to take any environmental measures; kudo’s to China for taking the lead :)
Doesn’t China use coal fired plants for most of their electricity?
Not sure on the percentage.
Coal is a resource they can mine. So yes, they continue to build plants add capacity.
they still use a lot of coal but they are also very active in cleaning up those coal power plants. Cleaning up a power plant is much easier than cleaning up millions of old cars …
Of course all is not well with the environment in China, but their ambitions for the next ten years or so are WAY higher than what I see in Europe (“we will do it but only if we find the money or it otherwise doesn’t cost us anything”) let alone the US (“climate / pollution is irrelevant unless we can make money from it”).
China has put off ending EV subsidies. Fuel operating costs for electric vehicles (EV) are lower than for gasoline fueled vehicles. Diesel truck engines spewed toxic byproducts.
I read reports of improving battery technology for cars and power grids.
Australia recorded its hottest year ever in 2019. We need ways to store renewable electricity.
Of course they love EV. They have the resources ( COAL ).
One of the best ways to store renewable electricity is do like nature does, make biofuel from sunlight, CO2 (= carbon neutral) and water and use it in modern combustion engines, hopefully in much lighter an efficient cars than the current SUV monsters. Wind energy could also be used for the same process with a twist.
We can’t store and use solar energy in the form of sugars like plants do (doesn’t work very well in an ICE …) but we could produce carbon-neutral bioethanol or similar fuels with special bacteria or “artificial leaves”. In many ways this is better technology than electric batteries and theoretically you could generate those fuels with a small panel on the roof or in the garden; much of this research was stopped one generation ago in favor of fossil fuel and nuclear, but it’s accelerating again and might be viable in 5-10 years.
Until then we should concentrate on building smaller, lighter cars and discouraging needless/wasteful consumption.
Have you ever seen pictures of methane-fueled cars pre- and during-WW2 with the big bags strapped on the roof? Thanks, cows and piggies. Coal gas was used too. Like EV, range was the problem, but if you’ve got no other fuel, it gets you there.
http://www.offgridding.com/bio-gas.html
robt,
Compressed natural gas (CNG) and propane (LPG) work just fine to power vehicles. Been done for decades. No balloons required, just a fuel tank and a slightly modified ICE engine. Ford even made of version of its F150 to run on CNG and LPG. City buses run on it, forklifts run on it, etc.
In the US, CNG powered cars just never took off though the fuel is cheaper and performance is similar to gasoline.
LNG is now being used in heavy trucks for drayage operations, etc.
Much of the current “clean” alternatives have a very long history. Obviously the newer technologies are vastly superior and in many ways similar to current ICE cars, the big difference being that the fuel can be carbon-neutral and otherwise very clean in production, and burns cleaner too (depending on kind of bio-fuel that is used and ICE technology).
As long as an EV battery with the equivalent range of 20-40 liters of bio-diesel weighs many hundreds of kg that have to be hauled around for every trip, it is difficult to make an EV competitive.
Looks like China caught on fast to American cars while Toyota and Honda sales rose. Improve your quality GM and Ford. Why keep cutting corners? I need a 150k free warranty before I get suckered again.
No, it has to do with the “trade war”.
More Chinese just stopped buying US brands.
I believe China is now having “the best” public transportation in the world especially in the urban and surroundings of the urban. For example, China has lots of networks of high-speed trains power by magnetic fields where the train has no wheels sliding and grinding on steel rails as being used in most parts of the world. China also has very extensive networks of subway and other mass transit systems perhaps Monorail and Light Rail Transit (LRT). Also, lots of people in China are now using ride-sharing similar to Uber in North America and Grab in many Asian countries. That is probably why the sell of American automobiles in China has been plunged.
In addition with the on-going trade war between America and China which has been started by American, why would Chinese in China want to buy American automobiles anyway? The only few reasons that they are still buying American automobiles in China in lesser quantities may be because they partly owned by Chinese automobile corporations, buying status symbol brand such as Cadillac, and cheaper prices of American automobiles comparing to Japanese and German automobiles.
They don’t have a lot of maglev lines, but it is true that they invest alot in public transport
China has less than 60km of mag-lev in the entire country…
Rail has not and will not replace cars in China. Yes, the transit system is superior to the Americans or the Communist Canadians in every regard, but that has nothing to do with the distribution of sales among the automotive brands.
Those that have the means will buy luxury until the economy stalls, so that bodes well for Euro and Japanese brands as they are perceived as the better luxury car. Those that don’t have the means buy on price, and the local brands will beat the American brands every day and twice on Sunday.
Only 60km? I have taken from Shenzhen to Guanzhou, and from Shenzhen to Xiamen. With a total of some 5 hours travelling at an average of 190km/hr, that amounts to a little more than your 60km….
Are you sure those were maglev trains Ron Barker? I highly doubt it.
They’re not maglev. It’s old-style rail that can do 300km/h+. Very fast, absolutely. Maglev, nope.
The longest maglev in China is the one to PVG airport in Shanghai, runs for 30km/h, goes up to 400km/h only during certain times of day because of noise to neighbours, and even then only for a handful of minutes. It’s been a money loser since day one.
“trade ear which has been started by American”
China manipulated its FX value for over 25 yrs (to prevent trade balancing) for over 20 yrs before DC managed even to say f*cking boo once.
The trade war was started decades ago…by China.
FX manipulation was okay for decades when US was pleased with the super cheap Chinese labor that fed the US consumption hunger and fatten the US corporations.
FX manipulation was not okay when US finally realized its people needed jobs to buy the inexpensive China-made products and that China no longer remained a country of cheap labor and weak.
Trade war started… by US.
Like Mexican field workers, the Chinese do a lot of work Americans don’t want to do. The largest category of Chinese exports to US is consumer electronics at 27%. Next is apparel including foot ware at 19%.
Ex niches, there is no US industry in either. The US was out of consumer electronics before China was in: last US TV Zenith 1995. Nor do Americans want to sew clothing panels.
The fundamental reason for the US buying so much stuff from China is that the US is a very rich country while most of the people making stuff in China are poor. During the big Chinese holidays a lot of adult couples will return hundreds of miles to their villages on 175 cc Yumbo MCs, a kids starter bike in the US.
By all means play tough with China on patent infringement etc. but the biggest factor in the trade imbalance is poor people working for rich people.
Want to have clothing made in US? Pay up.
neo-liberal nonsense. the us was out of consumer electronics before china because of japanese imports. there are plenty of americans who would do low level jobs, if they paid a decent wage. globalization of production grows the world economy but at a great increase in income disparity.
Those plenty of Americans being paid a higher wage would increase the price of the product they produce, and all those other Americans who buy based only on price would not buy the product. So those Americans who need to be paid more than non-Americans for doing the same work, never get the chance to do so because their labor would never produce a product that would sell. Isn’t this obvious? Why can’t you see that this is obvious?
All in all, the US wants its cake and eat it too: cheap products, low taxes, collect most of the profit of the trades, have someone else doing the jobs they don’t want but keep that “someone else” poor and weak.
Maybe they should fix the systemic issues at home that feed inequality and not blame the other players or the game that they promoted in the first place.
The trade war was started by the US. There are tools the US could have used to negotiate with China other than a massive freaking sledgehammer that damages everything in its vicinity.
I’m not sure about that — China is known to not respect intellectual property whatsoever. Maybe it’s fair given the things that American doesn’t respect, such as sovereignty of other nations, but from the U.S. perspective, I don’t think there were many options for trying to force China to adhere to intellectual property rules. They just were not going to do it. For what it’s worth, I think they still are not going to do it, even after all that Trump tried and failed to do.
China now has over 35,000 km of high speed rail…. USA has zero. Economic Growth in Asia/africa averages around 6%…. USA is 3% or less. Follow the growth.
OK let’s get down to cases. Which African country are you citing? I can’t think of one that is stable (no doubt some are better than others) but can think of lots that are teetering on chaos or financial collapse. The only industrialized one is South Africa and most of the news there is bad.
Some years back my ex, still a close friend, taught in Nigeria, She is tough but wouldn’t advise a young person to go there now. Her town (sounds like My- doo-gree ) was the scene of a terrorist attack a year or so ago. And like all the other African places, Nigeria’s vast oil wealth was stolen by kleptocrats. And Nigeria is far from the worst.
The Chinese Communist Party controls China. All of it.
They own all land upon which the rails are built.
They “fund” all infrastructure projects as they fit with greater schemes and plans – moving materiel, for instance.
No Rule of Law, No EPA impact statement, No private property rights, No NIMBY city council rejection of line location, No labor laws, No redirection due to conflict with highways/utilities/pipelines/other right-of-way holders, No competitive bidding, No ROI in the classical sense, No cost over-runs, No bond defaults from Rail companies, etc, etc, etc, etc, etc, etc…
And, FWIW, the ICE:EV v-a-v China is imported Oil is settled in Dollars…US Dollars
Mr. Musk has taken the ponzi scheme abroad (and, yes, the intellectual property will be copied when deemed beneficial) and borrowed money from communists.
I’m taking a break from reading comments…
Going by this logic w.r.t trade war iPhone sell should come down drastically.
I went to Asia for the first in my life over the holidays. Taiwan and Thailand.
I noticed there are different models for Toyota of cars seen in the US. Instead of the Toyota 4Runner people in rural Thailand drive Toyota “Fortuner”…is Toyota doing well because they have a stripped down off brand cheaper model they sell for cheap or there?
I found it very interesting. These people didn’t have a lot of money so it seems paying $45k USD for a brand new 4Runner wasn’t a reality…are they buying similar looking “Fortuner” models for much cheaper?
The Toyota Fortuner is a passenger vehicle built on the basis of the Hilux, the standard Toyota pickup truck you see all over the world.
You can wreck a Hilux but you cannot wear it out, and that’s the reason they keep their used value so well. One of the best vehicles ever made and there’s a reason Toyota keeps on selling millions of them.
Don’t think that rugged reliability comes cheap though. I’ve just got a promotional email from Toyota (I bought our company cars from them so they feel entitled to spamming me ;-) ) and the cheapest 4×4 Hilux is €23,400 plus VAT. But you can spend a whole lot more, for example by fitting extra safety features, opting for a dual cab configuration etc.
That’s far more than all other pickup trucks sold here: Ford, Isuzu, Mitsubishi etc and let’s not bother with Indian and Chinese stuff.
As always quality doesn’t come cheap.
That’s a bit like chainsaws: most people seem to think people in emerging countries use cheap Chinese stuff, but go out of your way in Malaysia, Indonesia or The Philippines and every single chainsaw you see is either a Stihl or an Echo. People who have to feed their families by cutting wood cannot afford to waste money on cheap tools.
Cars are not cheap in SE Asia due to high government taxes on motor vehicles. A basic Fortuner in Thailand would cost around USD40k, slightly higher in Malaysia. Pick-ups get tax breaks, so a Hilux is around USD20k, hence twin cabs are quite popular. Car loans can extend to 9 years in Malaysia.
Big difference on prices of a pickup or SUV in Thailand.
Toyota Hilux (smaller Tacoma) Double Cab 4×4 Pick Up Truck => 930,000 bt => US$31,000
Toyota Fortuner (Foruner) 4×4 SUV (same chassis as Himus Pickup) => 1,500,000 bt => US$50,000
My wife is from Thailand, so I know how this works. Yes, the vehicles are slightly simpler and often built in Thailand. But the prices are still very high. Cars are very much a status symbol and everyone wants one to prove they are “not poor”. Prices are not as cheap as you might expect – the Fortuner you mentioned even selling as a used 2016 model sells for around $30,000 USD (about 1,000,000 Thai baht). New ones would be around $30,000 – $40,000 – slightly cheaper than the U.S. but possibly missing some of the “high tech” stuff (these vehicles don’t usually have the lane-follow or the complicated entertainment systems, etc.)
Rich people buy expensive luxury cars to show off. Middle-class people scrimp and save and finance to buy expensive SUVs to prove they’ve “made it” and aren’t poor. Poor people scrimp and borrow from friends, neighbors and family then get ripped off with outrageous interest rates and punitive loan terms so they can try to keep up with the middle class folks. But relative to incomes, cars in Thailand are outrageously expensive even when they are made there. There’s a whole set of industries that revolve around extracting money from people – middlemen of every kind – in order for people to get these cars.
A friend of my wife – her husband spent almost his whole paycheck every month for 8 years to pay off a new pickup truck. She had to get a job to support the family. And in Thailand, they’re considered to be “doing pretty well”.
So people are stupid and vain everywhere. Noted.
You see far more luxury cars on the road in SE Asia than Western Europe – showing face is very important; that’s despite most of the roads being either poorly constructed/maintained or choked with traffic.
The Fortuner models are sold in India as well and cost about $45k. Most of them have the 3 liter diesel.
If you drive in China (which I don’t), you will notice that the free parking on the street is all taken. Finding a spot is a huge deal every night. Some people have a small folding electric scooter to get them home after they finally find a spot for the night. There is paid parking, but it probably won’t be near your home. I bought my home here in Qingdao in 2009. The parking spaces in the underground parking garage came up for sale. They were $22,000 US in 2010. I passed on the deal. I could take a taxi every day for 15 years for that money. Now they are over $50,000 US and they are all sold.
I think the market got saturated, that’s why sales are down. A lot of people buy cars and seldom drive them. Status, I guess. The public transportation here is very good. I can take a bus, subway, or Didi (Uber) anywhere cheap. I don’t know of any maglev trains in China except for the short line that connects the airport in Shanghai with the city. The high speed trains that run between cities are a very extensive network.
The big upcoming trend in cars are the rental plazas where you rent an EV with a phone app like ZipCar in NYC. One hour, one day, when you are done, return it to the plaza where you got it. The rental places are everywhere now, in residential areas, gas stations, hotels, train stations, etc. I don’t see any mention of them in the American media. The average car in China, America, or Europe is idle about 23 hours a day. This new approach is cheaper for the consumer and solves the problem of where to park or charge an EV.
Yes, I think China is far ahead here compared to the US in Europe.
In Europe the restrictions due to CO2 and NOx emissions and also parking space are starting to hurt and the best solution for the near future is improving public transport and discouraging unnecessary car traffic. Public transport used to be excellent in my country one generation ago but due to massive adoption of cars it no longer is an option outside the big cities; now the private car is the problem. I don’t drive a car but nowadays that means very limited options for where to live, similar to how e.g. American suburbs require(d) a private car.
I don’t see rental EV’s that you can book with your smartphone catching up over here, there was one near my home some years ago and it was parked 95% of the time just like normal cars. From what I understand the business model only works well in big cities with many potential users in the area and not in less dense areas; cost seemed attractive for short drives but pretty high for longer trips. But maybe the younger generation will start adapting to this out of necessity.
In Kensington – London, you are looking at a car parking space in an underground car park with a 30 year lease at about £100,000 => £77,000
Good news for the automobile insurance companiets. A lot less accidents.
That’s not good for them fyi
hydrogen-powered vehicles amounted to less than a rounding error.
Big Oil makes nothing on me and the Bentley, except that we did have to buy new tyres. Those we can’t make yet, and so far there seem to be no practical alternatives to the wheel for personal transportation.
Assuming civilisation survives, which isn’t at all likely, we’re perfectly willing to share our fusion reactor with you, once you figure it out. It’s good for making hydrogen, cheap, among other things, and you can run just about anything on that. Major wasted opportunity on your part, really, but that’s your lookout. We will continue to set a good example and hope that one day, in some finer future, however distant, humanity finally gets past its fossil fuel indoctrination and comes to its senses. I’m not holding my breath on that one.
Until then, you guys can keep your ICE vehicles, and your coal, and your gas, and your fission reactors, for all the good it will do you in the end. I won’t gloat. I’ve delegated that to my chauffeuse, and no, she does not want to go out with you, so stop panting already. I do wish you’d stop mucking up my atmosphere though. It’s the only one I’ve got, and you’re making it hazy. Obstructs my view of Messier objects.
I have often felt that the decline in US manufacturing was do to its all to easy rise.
What I mean is that post World war 2, the US was one of the only countries left standing and anything we built was golden as there was no competition.
As countries and economies have recovered they simply out competed the US. The culture of just build anything and they will come ended decades ago.
To me China looks at the US as the spoiled child, crying all day long waiting for it’s welfare check.
What’s worse is the the public sector has never been forced to adjust to this reality..
To me the public sector still operates as if the US was the strongest force in the universe and they are entitled to all that that entails…
Guaranteed wages and increases, guaranteed health care guaranteed retirement pensions, etc…
The Public sector is living as if it is still 1950 when it is 2020. All the public sector guarantees are based on a reality that died decades ago…
I can assure you it’s even worse in Europe, and especially in France ;(
The Public sector is living as if it is still 1950 when it is 2020. All the public sector guarantees are based on a reality that died decades ago…
It didn’t die. It was confiscated by global corporations. The billionaire class is going great guns because they’ve corrupted the system to ensure it benefits them, and only them.
What’s worse is the the public sector has never been forced to adjust to this reality..
You don’t mind if the public sector resists getting robbed, do you?
You might like living in a dystopian plutocracy, but most people don’t like being lied to about how great they’re doing while having the life squeezed out of them.
George, thanks for another round of ‘race to the bottom’ logic. We crabs in the barrel certainly need to keep others from escaping! All hail the 1%!
Home building has slithered in as the last bastian of capitalism in the US.
Previously, homes were built around industries, now, building homes is the one and only industry in the US. When it comes to its inevitable demise, most will not be able to simply migrate to Walmart and survive.
Hollar for the dollar as it is soon to unravel….
Amazon shipping unprofitable products for free, reminds me of the .dot com error in 2000… I remember the good old days, working in San Fran when corporations were handing out Porches’s as xmas bonuses.
This did not last…
Where, the bottom?
A Lot further down than most can imagine…
The minimum wage is still 7.25. How many two income earning familes can survive a week on that?
The destruction of the dollar will be take everyone else out as it did in Venezualia…
22 Trillion will morph into 30… 40 trillion overnight….
There is no trade war, it is simply a waiting game for China and the rest of the world
The US fantasy that it can simply bully it’s way back to economic supremicy is cryable… Everyone in the world gets it but the US baby boomers.
Say it ain’t so.. Yup, the baby boomers were not special, worked harder or did anything else special, they were just economically lucky…
Who cares what the US manufacters, all that matters is that I live in a Mc Mansion that I can refinance for millions.
Bye bye!
This is a sign that China will no longer be there for us. Trade and Debt progress will be highly questionable.
This is a sign that China will no longer be there for us.
Which is to say, China will no longer be so easily exploitable, at least not by the US.
The problem with global corporatism is that eventually you run out of low-hanging fruit and globalisation hits a wall:
http://charleshughsmith.blogspot.com/2020/01/the-fed-cant-reverse-decline-of.html
The herds figure out they’re getting screwed and start resisting, and when that happens it’s time to bring in the military and start inventing proschemic casus belli. As any honest review will inform you, that constitutes nearly the entire history of the US, subtext included, so expect more forever wars and don’t worry about never being able to pay for them out of the spoils of conquest you’re not going to get.
This is a sign that China will no longer be there for us.
Which is to say, they’ll no longer be so easily exploitable.
That’s the problem with global corporatism: eventually you run out of low-hanging fruit. Unfortunately the financial markets have infinite low-hanging fruit all priced in. I submit to you that it’s a bad idea to be betting on something that it’s not going to possible to get.
There’s always Africa.
Wolf, you got it right 6% growth but a major decline in the auto market. No, that’s not fake. It’s all about the numbers though. The foreign auto makers need a narrative to get the numbers back up, or claim they will go back up, forward numbers that is and therefore need a (fake) trade deal. Forget that total tariffs paid to date add up to one months US budget deficit, $100 billion. All will be solved with a trade deal, forget down sales, impaired assets, massive debts, aging populations….the numbers will go up big, if there is a trade deal ( now repeat over and over, and buy more Tesla, see it goes up)….
All will be solved with a trade deal
That’s Wall St.’s bet. You might like to think twice about it. You won’t be getting bailed out when it goes pear-shaped.
Ford was a disaster a long time ago and missed bailout back in 2008 by a gnat’s eyelash. They were lucky for a while, but if you look at them for about 20 years, Ford is a disaster.
Ford might yet get a bailout.
“(Chinese) auto sales don’t portray a growing consumer economy. Luxury (autos are) doing well …”
Is that a reflection of Chinese income inequality? Is it worldwide, the disappearance of a middle class?
As roddy6667 (an American who lives in China) has pointed out in this thread, parking is VERY expensive and free parking is scarce in China. But it costs the same to park a cheap car as it does to park a luxury car. So for people with money, parking is less of a disincentive to buy a car.
This makes sense to me. I’m not sure how this impacts overall car sales, and why they suddenly dropped starting in July 2018, but congestion and the expense of parking are disincentives. These two factors also kept us from owning a car while living in Manhattan 20 years ago, and why we own only one car here in San Francisco. In big congested cities, cars can be a huge hassle and expense (parking tickets included).
definitely works that way in manhattan. my bldg’s garage is filled with range rover’s and fancier. my vw van lives in jersey city. i will spend an hour plus to bring it across the hudson tonight and street park it for a few days. saves me about $500/mo for a covered secure space.
Wolf,
What do you mean you don’t know why car sales suddenly dropped starting July 2018? Let me remind you…
https://wolfstreet.com/2018/09/09/implosion-of-chinas-p2p-lending-boom-hits-consumer-spending/
OK :-]
I find it amusing how Westerners try to decode the forces that move Chinese car sales citing funny causes such as inflation, consumer choices, interest rate or economic growth.
Guys – it’s still a communist state – the party has a quota on the number of license plates issued. If the reds say no to more cars it will be a no. Especially if those are Murican brands.
knowing that the current us administration has the ‘feds so far up his ass he can taste brylcreem’ (ty jr) he still pushed the phase one (all about the financial element) trade deal, weather anyone gets to read it or not, it wont get him one additional vote. the next admin will propose gates/tariffs on us corps and huge tariffs on imports and care less about ws/banks/corps. if you think china is in a power position for trade you are Chinese or an investor. the us americans will get a new admin this fall and the Chinese will still need fresh air, water, food, jobs, parking?, veterinarians and a yak tour of nk for their rulers. help yourselves to any corp you can lure to your land of milk/honey. playing the ‘long game’ on a dying planet is a number one rated strategy.
History provides us with most of the answers to many of the good comments penned by you folks. Country rulers and leaders have an interest in protecting the important companies, the important technologies that the country must have and many atime the means of acquiring it, or blocking competitors, stealing it etc or not using it has no ethics or honesty in consideration. Why?
In the 60ies US and Japan battled to replace the electronic Vacuum tubes with transistors.
HuaWei in the early 1990ies till early 2000 spent years unraveling CISCO and other networking products. The respective government in those countries don’t know?
Inventing a better mouse trap includes studying how existing ones work,
Present social Media apps, ecommerce apps, internet apps, web apps, fintech apps, bitcoin apps all leverage on past inventions originating from html.