Japan actually was well aware of the threat from EVs much earlier, with some smaller carmakers favoring moving into EVs but the move was being sabotaged by bigger carmakers betting on hydrogen fuel cell vehicles. Toyota, the kingpin of the Japanese automakers took the lead, with the blessing of the Japanese Government, and, as you know, other Japanese carmakers had to fall in line.
The main reason for Japanese automakers choosing hydrogen fuel cell development, as I understand, was because Japan knew that China had monopolistic control of the raw materials for batteries, which Japan did not have, and Japan was afraid of facing the Chinese leverage in that sector. Japan therefore betted on hydrogen fuel cell vehicle development. That was how Japan lost the edge in EVs.
The USA on the other hand was still arrogantly fighting the introduction of EVs as recently as Trump's first term presidency. Then he was even reported to have threatened to punish buyers of EVs. Trump is a fan of fossil fuel extraction and expanded fracking during his term. He even claimed that climate change is a hoax. Tesla was into building EVs, and it is turning into a tale of 'strange bedfellows' that Elon Musk had supported Trump's election campaign with his US$270 million contribution. Let us see how this is going to play out.
Today, Honda and Nissan are discussing merger to fight the EV battle. Both are now losing big money, and they assume that coming together will give them a better chance of survival. Mitsubishi is also figuring in the merger. Mergers seldom achieve much success as different ways and systems do not always fit well together but let us wait and see. Will two negatives make a positive? I am not too sure.
Stellantis is one example of mergers that can still run into problems and is not doing well at all. Volkswagen is another grouping of big mergers, having big problems and closing factories. Are these not lessons to be learnt? Got eyes no see says Virgo.
Anonymous
2 comments:
Merging and hoping to win the EV war is already a lost cause. Japanese carmakers are making cars using expensive imported energy, high labor costs and a dwindling Chinese market. This is made worse by the falling Japanese Yen, which means imported energy cost are also escalating.
Japanese cars are also not going to sell well in the Global South countries competing with China. They will have to sell their cars at huge losses. Does that make any difference with what they are going through today?
Merger may allow the cutting of some jobs, sharing of machinery and savings on wages to cut cost. If that is the intention, why not do it separately, which achieves the same objective. Or is the move just to make the Chinese EV makers shiver in their pants by creating another mega car maker? Just look at Volkswagen and learn its lesson first. The Germans are as innovative as the Japanese and yet find it extremely difficult to compete globally, having to close factories. It was a hard pill to swallow. Big and intimidating means nothing but being competitive is something. And who can compete with Chinese EV makers in terms of pricing? China has the cheap energy, the supply chain, the head-start and innovative ideas and above all the market to boast of.
I think China has the best of both worlds. The ability to leverage on its over-capacity and the advantage of having a ready big domestic market to compete in are what makes China unique. Where else and who has that kind of advantage to speak off. Those that have the capacity to produce lacks the domestic market to sell to and have to rely on exporting. And which is the biggest market for most of their products? China of course.
Inbreeding does not produce better offsprings.
Post a Comment