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.
Anonymous
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