September 27, 2023 at 9:00 PM GMT+10
It’s only been two weeks since the European Union announced a subsidy investigation into Chinese-made electric vehicles, and already it’s clear how entrenched China is in the world’s automotive supply chain.
Industry data and estimates by BloombergNEF show just how difficult building self-sufficiency or, more realistically, becoming just a little less reliant on China, is likely to be.
That’s because China dominates four key parts that are essential for a battery to work:
- It has about 70% of the world’s production capacity ofcathodes(the part of the cell that receives electrons) and more than 80% ofanodes(the part that releases electrons on discharge), and well over half ofelectrolyteandseparatoroutput.
Those components come together to make a lithium-ion battery, more than three quarters of which are made in China and mostly by just two firms — Contemporary Amperex Technology and BYD. (Read the full story on China’s EV productionhere.)
“Is it feasible to completely cut off the Chinese supply chains? Certainly not at the moment,” said Ilaria Mazzocco, a senior fellow at the Center for Strategic and International Studies.
Meanwhile, governments in the west are sounding more united in their tougher stances toward Beijing’s trade and industrial policies.
“We can choose a path towards mutually beneficial relations, one which is based on open fair trade and investment, and working hand in hand on the great challenges of our time,”Valdis Dombrovskis, an executive vice president at the European Commission, said during a weekend ofofficial talksin China. “Or we can choose a path that slowly moves us apart, where the shared benefits we enjoyed in recent decades weaken and fade.”
President Joe Biden’s trade chieftold a conferencein Berlin that she’s “quite sympathetic” to the EU’s concerns.
“Global trade today is not happening on a level playing field,” US Trade RepresentativeKatherine Taisaid on Friday. “There are things that we market-based democratic economies need to do in order to defend our interests and to defend this space to have fair and free trade.”
China asked the EU to exercise caution,expressingconcern and dissatisfaction at a joint briefing with Dombrovskis. But Vice Premier He Lifeng also agreed to set up several working groups including on financial services and trade curbs —easing fearsabout an immediate retaliation as the EV investigation gets underway in Brussels.
Here’s What Else We Know:
- One automaker islooming largerthan any other in the investigation of electric vehicles flowing into the EU from China: Tesla.
- Brussels’ new,tougher approachto China is being shaped by French concerns. French Finance Minister Bruno Le Maire said he will campaign for the EU to ditch itsstate-aid dogmato ensure funds go to supporting factories on the continent instead of China and the US.
- Volkswagen iscurbing the productionof electric vehicle models at two German plants due to declining European demand and shrinking government subsidies.
- If it leads to tit-for-tat tariffs, Mercedes-Benz and BMW’s biggest moneymakers will bemost exposed.
- British and EU officials were supposed to meet Wednesday to discuss post-Brexit plans toslap a tariffon electric vehicles from the UK, as a deadline on whether to delay the move nears.
—Brendan Murrayin Washington
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