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Comment by seanmcdirmid | Hacker News Reader

I think their strategy was always to dominate EV exports, it’s just that until now their supply was mostly eaten up by internal demand. They do need to pay attention to their margins though, if they aren’t high enough this won’t be sustainable (and ya, tariffs).

China is hitting that demographic cliff much quickly than Japan did, so I wonder what that will mean in a decade or two. Maybe they will turn more attention to robots next.

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I disagree with the notion that Chinese EV makers, including BYD, have always aimed to dominate EV exports. Their focus has primarily been on satisfying domestic demand rather than targeting overseas markets like Tesla or VW.

Given that they've only 1 year something ago emerged from COVID-related restrictions, a shift to an export-focused strategy would require substantial time and effort in research, planning, and marketing to become competitive internationally. While BYD, as one of the earliest players in the EV market and with existing facilities in Mexico and the U.S., may be a step ahead, I believe they're just at the initial stages of exploring overseas opportunities. The EV market competition is likely to intensify in the coming years, but it's still early days for Chinese EV makers in the global arena.

Excess capacity argument is more and more dog whistle for PRC exports that eats away at historically western/incumbant market share. It's just exports. Right now PRC exports ~15% of domestic production. Germany, Japan, South Korea exports >50%, I think US ~20% due to RoW not caring much for SUVs. But light vehicles like Tesla has >50% of Tesla export markets. PRC has a lot of absolute excess capacity, but not really relative to total production vs other exporters. The aggregate export of non PRC players is probably equivalent to another 15-20% of PRC production, a big chunk of which is the PRC market itself. It's still early days, no reason PRC not to aim for 50% exports (15m cars), and if there's tariffs in west, ban domestic western cars and chip away at RoW share. EV also ties into energy charging/infra exports, indigenous semi, RoRo ships etc. There's a lot of strategic synergies.

10% of China’s capacity being exported is more than N% of any of those countries listed, absolute numbers do matter in this case. At much smaller Germany’s 50% there will be really huge push back from other countries, I don’t see it unless Chinese companies build factories abroad, which is what China essentially forced the western players to do in China anyways.

The USA exports $50b of cars but imports $150b of cars, you can’t call it a net exporter.

It matters to other auto producers countries to protect their industries, which is just a handful of countries. Hence the rhetoric from these countries that PRC auto having excess capacity is a problem, when it's just competition. As if PRC producers not entitled to grabbing as much share as they can. IMO PRC fine with building plants abroad, and is doing so. Also fine with PRC level of import tariffs, since they have no issue competing on price. But that's also what makes it none starter in said countries, since PRC producers are positioned to out compete domestic brands if allowed in comparable PRC JV or tariff arrangements. So I think ultimately foreign brands are out in PRC, and PRC brands out in foreign car producing countries, and the fight is over shares from RoW non producers. Which is just as well, because the big picture is exporting PRC charging standards, loading cars with PRC chips and all the knock on affects, stuff that makes unfettered PRC cars in nonfriendly PRC markets even less feasible.

I didn't say US net exporters, I said some US auto companies in segments RoW demands makes significant % of revenue from export market. Which will likely be same for PRC - most producers / models will stay domestic. The few that ventures abroad for export share has no reason not to aim high. In that context 10% is not excess capacity, it's just the beginning.

> China is hitting that demographic cliff much quickly than Japan did, so I wonder what that will mean in a decade or two. Maybe they will turn more attention to robots next.

I don't think it'll matter as much as people think. They still have high unemployment and a relatively high rural population. They still have lots of excess human capital to draw from.

If they can put 50-70 year olds to work sure.

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