us media: how do chinese companies make electric cars for less than $20,000?
2024-09-12
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an article published on the us marketplace website on september 9, originally titled: how can china manufacture electric cars that cost less than $20,000?zhang fenglian, a ride-sharing driver in chongqing, doubles as a local tour guide, taking tourists on tours along the yangtze river. like many such cars in china's big cities, zhang's car is an electric car - a chinese-made byd. zhang's car is not perfect but it is functional. zhang paid 130,000 yuan (about $18,000) for it. in the united states, the cheapest electric car costs about $29,000. a combination of factors has enabled china to produce electric cars more cheaply, including fierce domestic competition, subsidies, low wages and a comprehensive supply chain.
there are about 100 electric car brands in china. the ongoing price war has lowered the price of electric cars and also prompted some local brands to expand overseas. the european union, the united states and canada believe that electric cars produced in china gain unfair advantages through subsidies. china denies the accusation and has fought back through anti-dumping investigations. the latest move is to initiate an anti-dumping investigation on imported rapeseed from canada. a spokesperson for china's ministry of commerce said that chinese companies have stood out through long-term efforts. since more than 20 years ago, chinese companies have continued to invest in research and development and industrial layout in the field of new energy. through fierce market competition, they have formed their own unique advantages, including technological innovation advantages, production and supply chain advantages, and market ecological advantages.
it's not just domestic automakers that benefited. the chinese government also offered tesla favorable terms to build a factory in shanghai. tesla made a breakthrough and showed that it could make money in china.
china's hardworking and relatively low-paid workforce is another reason tesla and chinese brands are able to produce increasingly affordable electric cars. in changsha, people flock to byd's recruitment center, many of them carrying suitcases from other places. if hired, they can live in the company's dormitory and start work the next day. "i can make about 7,000 yuan a month," said an auto assembly worker named wu. this salary is not low, especially in a city like changsha with a low cost of living. but fewer and fewer young chinese want to work in factories. in response, manufacturers have raised wages and gradually automated factories, which is slowly eroding china's labor advantage.
perhaps china's biggest advantage is that it has formed a comprehensive supply chain or achieved "vertical integration" (upstream and downstream supply chains). industry insiders say that vertical integration means that car companies themselves are suppliers of key components for electric vehicles. if you can control the most expensive parts of electric vehicles, you can significantly increase your pricing power. (chinese companies) are attracting more technology-oriented buyers. the next wave of chinese electric vehicles will be equipped with more smart devices and will be cheaper than foreign electric vehicles. (author jennifer parker, translated by cui xiaodong)
