China’s revival of the Ford car factory in impoverished northeastern Brazil symbolizes China’s global progress and the West’s decline, as the Chinese BYD group acquired the factory in Kamasari, which the American company abandoned nearly a century after Henry Ford first began production. In the South American country.
in Brazil
BYD, under an investment plan worth more than one billion dollars, intends to begin production of electric and hybrid cars this year at the new site in the Brazilian state of Bahia, where it is scheduled to manufacture bus and truck bodies and process battery materials, according to what the Financial Times reported.
The Chinese company’s new factory in Brazil is one of the Chinese companies’ investments in electric car manufacturing supply chains in the most important developing economies in the world, according to the British newspaper.
US protectionism against Chinese products may unintentionally push many emerging markets into China’s hands, according to the report.
Last month, US President Joe Biden criticized the large financial support provided by Beijing to Chinese industry, announcing comprehensive new tariffs on a range of clean technology products, most notably a 100% tariff on electric cars.
“It’s not a competition. It’s cheating,” Biden said. “We’ve seen the damage here in America.”
Protectionism
These measures are partly aimed at enhancing Biden’s chances in his electoral battle against former President Donald Trump. But the tariffs, coupled with increasing restrictions on Chinese investment in the United States, will have a massive impact on the global auto market, in effect depriving large electric car makers of the world’s largest economy, according to the newspaper.
An EU anti-subsidy investigation into Chinese electric cars is expected to end next week, as Brussels tries to protect European carmakers by stemming the flow of low-cost Chinese electric cars into the bloc.
Government officials, executives and experts say a series of new clean technology tariffs issued by Washington and Brussels are forcing major players in China to sharpen their focus on markets in the rest of the world.
Other markets
They argue that this will lead to Chinese hegemony over the most important emerging markets in the world, including Southeast Asia, Latin America, the Middle East, and the remaining Western economies that are considered less protectionist than the United States and Europe.
The newspaper quoted Bill Russo, former president of Chrysler in Asia and founder of Auto Mobility, a consulting firm in Shanghai, as saying, “This is the part that seems to be missing in this whole discussion about ‘Can we raise some tariffs and slow down progress? The Chinese?)… This is only defending your homeland.. but it leaves other markets open.. Those markets are influential and China is aggressively pursuing those markets.”
New Chinese investments are often two-fold, whether in car manufacturing or in raw materials that are essential to the new economy.
The newspaper quoted a fellow at the Center for Strategic and International Studies, Ilaria Mazzocco, as saying that the West needs to understand that China’s global ambitions create an opportunity for many countries to expand their industrial base and obtain foreign direct investment in “future technologies.”
Mazzocco added that China’s investments in clean technology in the developing world “really complicate” the foreign policy of Western governments, which have already tried to warn of the danger of dependence on Beijing through President Xi Jinping’s so-called Belt and Road Initiative infrastructure program.
“It is difficult to say to a country in the developing world: It should not want to own more factories or refineries, because this is a Chinese investment,” she says. “With the Belt and Road Initiative, there was a credible argument that a lot of debt would not be sustainable.” But in this case, if they open factories, they employ local people, so the leaders of these countries accept it.”
Market forecast
The International Energy Agency expects 10.1 million electric cars to be sold this year in China, 3.4 million in Europe, 1.7 million in the United States, and fewer than 1.5 million electric cars everywhere else in the world.
However, the agency expects the global fleet of electric cars to grow eight-fold to reach about 240 million cars in 2030. This means that annual global electric car sales will reach 20 million cars in 2025 and 40 million cars in 2030, or 30%. Of total car sales.
Moreover, an increasingly large share of this expansion is likely to come from new markets.
In some important developing economies, Chinese companies are investing in raw material production and processing, which is even more striking than China’s participation in the electric car ecosystem in Indonesia, home to the world’s largest reserves of nickel, a key component in electric car batteries, the newspaper says.
Last year alone, companies based in China and Hong Kong invested $13.9 billion in Indonesia, most of which is believed to have been in the metals and mining industry, and Chinese companies account for more than 90% of the country’s nickel smelters.
Chinese banks were keen to provide financing to nickel plants when others were hesitant, according to what the newspaper quoted Alexander Barros, CEO of the Morowali Industrial Park in Indonesia, the largest nickel processing site in the country, which was built by Tsingshan Corporation, a Chinese nickel producer.
As for BYD, it is looking for lithium mining assets in Brazil, which is working to intensify the extraction of the main metal for electric car batteries, in parallel with its investment in car production in Camassari.
Broader strategy
In China, global expansion by electric vehicle makers is seen as part of a broader strategy under the current Chinese president to strengthen political and economic ties with developing countries through the Belt and Road Initiative.
Over recent years, the value of China’s exports to emerging markets has exceeded that of advanced economies, a historic change after decades of Chinese growth relying more heavily on the G7 economies.
However, the expansion of the Chinese auto industry into these new markets threatens to erode the market share held by many multinational automakers.
According to the newspaper, this matter is particularly concerning for Japanese companies that have managed to build a strong position in the Southeast Asian market.
It quoted a senior Japanese government official as saying, “China can make very compelling sales offers to Southeast Asian countries,” highlighting Beijing’s ability to sell not only electric cars, but also important raw materials for batteries. “This is the biggest risk for Japan.”
Another senior executive with a Japanese automaker was more blunt, saying, “We are terrified of the influx of Chinese cars into Southeast Asian markets.”
