The Top Gear hosts weren't afraid to make fun of Chinese cars during a visit to the country just over a decade ago.
“It looks very tragic,” boomed Jeremy Clarkson, looking at one manufacturer’s attempt to imitate the iconic Mini Cooper.
“It’s like someone described the Mini to someone. over the phone or sent a very blurry fax.”
“It's terrible,” agreed James May. “But it's very cheap.”
“It's easy to see why they copied,” added Clarkson's voice-over. “Because when they tried to do it alone, the results weren't very good.”
But fast forward 11 years and now Chinese manufacturers are laughing.
Last year, China overtook Germany and Japan to become the world's largest car exporter, shipping 1.07 million vehicles overseas in the first quarter of 2023.
The boom is driven by the country's emergence as a leader in battery electric vehicles ( BEV), the culmination of years of planning and huge government subsidies.
Already, more than one in four vehicles exported by China are electric vehicles, and the total is expected to reach 1.3 million this year alone.
Number of vehicles exported, Q1 2023
At the same time, zero regulations have been set to ban the sale of conventional gasoline vehicles from 2030 in the UK and from 2035 in the rest of Europe, giving Chinese brands including SAIC, BYD and Geely, opportunity to capture market share. /p>
This shake-up has opened the door for a tsunami of Chinese electric vehicles to hit UK roads in the coming years – and at unprecedented low prices.
With competitors such as Volkswagen, Ford and Toyota. In an effort to catch up, Chinese manufacturers are poised to offer cars up to €10,000 cheaper than their European, Japanese and American competitors.
Experts, industry insiders and policy makers say this looming shift threatens the survival of the European auto industry, and also raises worrying security issues for governments.
They describe Europe's pattern of complacency as China raced ahead in BEV technology. , pumped money into the domestic industry and established a stranglehold on the supply chains that are critical to battery production. In the meantime, Europe has moved away from America, opting for few trade barriers to slow the influx of Chinese cars.
Now the debt is due.
“We are in a time of tremendous change and we have done the worst of both worlds in the UK,” says Andy Palmer, an automotive industry veteran known as the “Godfather of Electric Vehicles” for his work on the Nissan Leaf.
“What remains is there is not much time to change the direction we are going.”
Manufacturing offensive
Thousands of vehicles lined up like soldiers ready to be sent overseas at the port of Shanghai.
< p>The port jutting out into the East China Sea, the world's largest by container volume, exported more than 160,000 electric vehicles in the first three months of 2023 alone. It is a powerful symbol of China's newfound success in auto manufacturing both at home and abroad.
For years, the country's brands have struggled to compete with Western competitors abroad, plagued by quality issues in the eyes of many consumers.
In an attempt to solve this problem, Beijing forced foreign firms to enter into joint ventures with Chinese counterparts when they set up factories in the country, in the hope that students would eventually become craftsmen.
Beijing has sought to dominate the global electric vehicle market as part of its Made in China 2025 strategy. Photo: NurPhoto
But in the background, the communist government has also set in motion another plan to capitalize on the coming transition to electric vehicles. With technical breakthroughs and a strong domestic market, they saw an opportunity to get ahead of the competition and become a global leader.
Under the “Made in China 2025” strategy, the electric vehicle sector was one of several industries that Beijing intended to dominate.
Since 2009, China's central and local government has subsidized domestic BEV companies worth $100 billion, calculated Washington Center for Strategic and International Studies (CSIS). This investment seems to have paid off well.
According to the International Energy Agency, more than half of the electric vehicles on the world's roads are now located in China, and in 2022, this country accounted for about 60% of all electric vehicles sold.
“This has been a particularly successful area of industrial policy in China,” says Ilaria Mazzocco, Senior Fellow and Business Expert for China at CSIS.
“And I think one thing should be noted: these cleantech industries are seen by China as an export industry, not only as a problem of climate change.
“There is an economic logic to promoting these industries. . For more than a decade, government planners have been really focused on upgrading China's industry, moving from lower value-added manufacturing to higher value-added manufacturing, high-tech manufacturing – and electric vehicles are a perfect example.”
China has half of the world's electric vehicles < p>At the same time, China has used its dominance in critical minerals, including half of the world's refining capacity for lithium, a key metal for batteries, to create a top-down supply chain and encourage foreign firms to open stores there.Modern Amperex Technology Limited (CATL), based in Ningde City in Fujian Province, is now the world's largest manufacturer of lithium batteries. Among her clients are Ford, Volkswagen, BMW and Tesla.
This attracts significant investment in factories, and even Western companies such as Tesla are opening stores there, ensuring that the lion's share of value, including jobs and taxes, remains in China.
Together with huge size In Chinese In the market, these factors have helped to significantly reduce the cost of producing electric vehicles.
“By focusing on what they spend engineering money on, they can bring cars to market quickly, but are also not burdened by the fixed costs that a traditional manufacturer would have. ”, says Andrew Bergbaum from the consulting company AlixPartners.
However, an excess of government subsidies has allowed the emergence of many automakers, which has provoked a violent price war at home.
This is what is now causing many Chinese companies to aggressively promote their products abroad, in pursuit of greater profits.
p> China's largest automakers
The country plans to export 1.3 million electric vehicles in 2023, up from 679,000 last year when draconian coronavirus restrictions were still in place, analysts at market research firm Canalys said. predicted.
Not only are these cars considered high quality, boasting a long range, attractive design and elegant interior, they are also extremely cheap.
British motorists should expect British motorists to see more than BYD, which recently unveiled an electric hatchback that the company plans to sell for under £8,000 – much cheaper than many gas models.
Seagull compact four-door smaller than a Ford Fiesta and be able to drive. according to the company, up to 400 km on a single charge.
Theoretically, this is enough to drive the full five hours from central London to the constituency of Rishi Sunak in Richmond in north Yorkshire.
Other Chinese auto giants have bought up older brands already familiar to consumers. SAIC Motor, a state-owned company, bought MG in 2007 and markets its European electric vehicles under this brand.
Geely, a private Chinese group, has also owned Volvo since 2010.
At the same time, The UK and Europe have willingly left the door open to competition from Chinese automakers.
Chinese car maker SAIC imports electric vehicles into Europe under MG brand. Photo: Zhe Ji/Getty Images AsiaPac
Under World Trade Organization rules, the UK and the EU levy 10 percent duties on imported Chinese cars but allow consumers to claim subsidies to buy them.
This is a stark contrast to the US approach, where Joe Biden showers firms building electric car factories with subsidies and imposes a 27.5% tariff on Chinese car imports.
In addition, deals with Chinese companies, with some Republicans calling for a review of Ford's plan to build a $3.5 billion plant in Michigan using CATL-licensed technology.
“The European electric vehicle market is relatively more open than the China and the United States, where national or regional assembly is a prerequisite for receiving a purchase subsidy, and import duties on foreign vehicles are higher,” Allianz said in a May report. /p>
Allianz researchers urged Europe to seek “reciprocity” in trade terms.
However, they ominously warned that China's lead in electric vehicle technology is now so great that it is “impossible to overcome.” ” by 2030, when the UK and Europe impose restrictions on the sale of new gasoline cars, and that Europe should cut its losses by encouraging Chinese automakers to set up factories here.
“Allowing Chinese investment in car assembly in Europe should not be a taboo, despite the symbolism of such a decision and the likely opposition of some European automakers,” they argued.
it would be more profitable to have Chinese-made cars on the roads if they were locally assembled rather than imported.”
The British automotive industry currently employs 182,000 people and contributes £14bn a year to the economy, according to the Society of Motor Manufacturers and Traders (SMMT). The automotive industry in Germany, Europe's largest car manufacturer, employs almost 800,000 people.
But with less than seven years left before a complete ban on gasoline cars, the coming Chinese car invasion puts national governments in a difficult position. offensive stance, warns CSIS's Mazzocco.
Wild trade
“On the one hand, you have very cheap, affordable electric vehicles from China, which we know are good for decarbonizing our transportation sector,” she says, “and from that perspective, that’s actually a positive thing. it's about increased competition.
“On the other hand, there is a real risk for countries with large automotive industries. If your decarbonization policy leads to deindustrialization and job losses, you will end up with a backlash.
“If production is moved to China, you could get the equivalent of a Chinese shock in the heart of Europe, which could have very negative consequences.
“You could get a populist wave of anti-climate activists. for example, if you are facing mass unemployment.”
A new spy frontline
About 150 miles east of Beijing, on the shores of the Bohai Sea, is the beach resort of Beidaihe.
Known as the “summer capital” where government departments once moved here every year to escape the heat, today the area is where China's communist elite love to vacation.
If you drive a Tesla, then better find another place to stay.
Last year, the district authorities denied Teslas for at least two months, starting on July 1, citing reasons related to “state affairs”.
And this is not the only example of restrictions placed on US company vehicles in China.
Tesla has also been banned from driving through parts in the past. the city of Chengdu, where Chinese President Xi Jinping was supposed to come.
The restrictions highlight fears that the modern car — a computer on wheels that uses a battery of sensors, microphones, cameras and software — risks becoming the new frontier of global espionage, as smartphones have already done.
And while automakers have traditionally focused on locking individual cars, they have also been forced to address a number of other vulnerabilities in recent years as criminals and hackers have come up with increasingly sophisticated ways to copy the radio signals of car keys or even take over remote control.
In the course of In one famous experiment, hackers remotely disabled the gearbox of a Jeep Cherokee while a journalist was driving it on a US highway. This resulted in a recall of 1.4 million vehicles.
Most recently, a cyber security exercise in the UK resulted in cars being remotely hacked and the driver taken out of control by an intruder hiding behind a laptop. keyboard.
Sources, who spoke on condition of anonymity, said the tests, which revealed “gaping holes” in the security system, were carried out at the request of skeptical car manufacturers who refused to believe such hacks were possible until they were demonstrated to them.
p >
However, the security threat that China may pose does not necessarily come from external actors.
Modern cars are increasingly dependent on “over the air” software updates, which they receive via a mobile phone-style SIM card built into the car.
If an attacker gains access to these update systems through servers known as “backend”, he will be able to distribute software that allows him to remotely monitor vehicles and their driver.
The concern is that not only are these vulnerable to hackers, but potentially the manufacturers themselves, and those based in China, are subject to national security laws that force them to comply with government requirements.
“If someone can attack the backend, then maybe that can also affect the security of the car… you can update the software,” says Martin Emele of the Automotive Information Sharing and Analysis Center.
This applies to all new vehicles, whether they are produced in China, Europe or the USA. The SIM card allows the car to receive updates, new features and security fixes just like a smartphone. In the event of an accident, the car will call the emergency services. To do this, he needs a microphone and communication with the outside world. Cameras inside make sure you don't doze off while driving.
All of these can be used to spy on you if security is not maintained, says Ken Munro, a security expert and ethical hacker at Pen Test Partners, a company that tests security holes.
< p>“We have done a lot of work on aftermarket car alarms. And we found that in many of them you can remotely turn on microphones and listen to people in cars.”
He believes that poor-quality code poses a greater risk than hacking the state. But last week, scientist Jim Sucker warned The Telegraph that, in the worst case scenario, cars could be remotely paralyzed, posing a safety hazard for the British.
This risk is exacerbated by the fact that Chinese technology is spreading rapidly. in Western supply chains.
Chinese tech company Huawei may have been kicked out of Britain's 5G network, but the company reportedly sold its smart car technology to Mercedes Benz, Audi, BMW and Porsche in December, installing products Huawei for 15 million vehicles per year.
The automakers have been contacted for comments.
As a mitigation, it should be noted that “the Chinese market is very, very competitive,” AlixPartners' Bergbaum says, offering some protection as the automaker, which if a buyer doesn't protect buyer data, will quickly run out of customers and its market will be taken over by a competitor.
“Obviously this is something the government should be watching.”
And with cheap Chinese cars expected to flood the UK and European markets soon, the issue could soon become much more relevant to politicians. only flickers on the radar.
Government insiders say they are aware of potential security issues after spies reportedly found a Chinese-made “geolocation device” in a car used for official purposes.
According to i, SIM – A card placed in an imported sealed part could transmit location data and was discovered during vehicle inspections. China dismissed the allegations as “groundless and empty rumors.”
However, Conservative MPs are lobbying to take the threat more seriously.
Dame Priti Patel, former home secretary, says the government should slow down the transition to electric vehicles if an influx of Chinese cars threatens to destroy the domestic auto industry and pose a security risk .
The government has previously intervened to prevent Chinese telecommunications giant Huawei from supplying technology used in the UK's 5G mobile network amid American concerns over the company's ties to Beijing authorities.
Dame Priti Patel: “A net zero should be our country – we can't be dependent on countries like China.” Photo: Danny Lawson/PA
“The essence of a clean zero is that it should not disproportionately affect our country, disadvantage it or discriminate it in any way,” says Patel.
“Under no circumstances can we go back and end up at the mercy of the nations. like China.
“We've just gone through a golden era where we've effectively sucked up to the Chinese state and that basically left our state institutions, our national security, key infrastructure assets at full risk due to espionage.” , interception, bribery and takeover, including companies holding British citizens' data.
“Our approach to net zero has to be right for our country and keep us safe when it comes to energy and technology… make sure we have our own options and that we don’t franchise or give them away to countries that frankly , pose a threat to us.”
She adds: “The exposure of our country and British citizens is very real and people need to look at it with wide eyes. we can no longer be naive about it.”
However, with China already inflating its electric car industry with decades of subsidies, most of the damage has already been done.
Shanker Singham, an international trade expert who advises the US and UK governments, says Western countries should not shy away from imposing tariffs on Chinese cars where necessary.
But instead of imposing blanket restrictions, he suggests only targeting companies that can be shown to have received government support, and that they should only be calibrated to mitigate those benefits.
This will help put Chinese and Western Singham argues that companies should be on a more even footing while allowing those Chinese firms that are truly competitive.
“You want to send a signal to efficient Chinese manufacturers who have not benefited from government distortions – to the extent that they exist – that we welcome their input because it leads to better prices, better consumer choices and all the benefits international trade.
“But at the same time, you have a strong defense mechanism to deal with their distortions.
“If you can give these two signals to the Chinese government, you are much more likely to give oxygen to the limited number of reformers that still exist there, and make it clear that if you want to succeed in global markets, you need to eliminate your anti-competitive distortion. It's the best way and it makes more economic sense.”
There is some hope that the UK wants to secure more of its domestic BEV industry. Nissan is currently planning to build two gigafactories of batteries around which, according to experts, all the rest of the supply chain will revolve, and in Somerset, owned by Jaguar Land Rover owner Tata.
Paul Etherley, chairman of Tees Valley Lithium, a company that hopes to open Europe's largest lithium refinery in Middlesbrough, says the UK's access to massive wind power and its expertise in the chemical industry could make it a key hub for critical minerals.
This would help attract more battery and electric vehicle manufacturers.
“Midstream is where China dominates [in lithium production],” Atherly explains. “That's where we should strive to build on our legacy of chemical engineering.”
Yet despite the UK's efforts to go it alone, China's influence remains. The Financial Times reported on Friday that Chinese battery maker AESC, part of energy giant Envision, is closely linked to Jaguar Land Rover's Somerset plans.
The Chinese company will provide the initial technology to start and run the Tata Gigafactory. Government ministers and Tata officials have so far declined to discuss the Chinese tech giant's involvement in the project.
Ultimately, it's the low cost of Chinese cars that could prove to be the Achilles' heel of Western countries, argues automotive industry veteran Palmer, who says the government should focus more on attracting domestic investment before it's too late.“We have pursued a net zero policy that is more ambitious than in Europe, but we have taken away all the advantages that the domestic industry provides,” he says.
“If you are going to position yourself aggressively, you have to back it up industrial strategy.
“The only place where there is access to low-cost electric vehicles is China. And therefore, this ambitious strategy opens you up to competition from Chinese manufacturers, especially in the lower end of the market, because they are the ones who have the means to match these prices.”
Unfortunately for Europe, consumers also can't convince for long. Even Jeremy Clarkson, who once snubbed Chinese cars, now seems to be a fan.
In a recent newspaper review, the former Top Gear presenter hailed the new Lotus Emira as “very good value for money”, adding, : “You can have three for the price of one nasty Ferrari.”
Lotus, as Clarkson noted, is another brand now owned by the Chinese.
Additional message from Gareth Corfield< /p>
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