Gas Prices Are Going Through the Roof. Automakers Aren’t Bothered.
U.S. automakers may not feel pressured to embrace electrification, but they could see diminishing returns from their strategy of selling very particular kinds of cars to very particular kinds of people. (read: the rich). Other countries have not limited themselves to this. In China, for example, drivers have adopted a wide range of truly affordable, high-tech electric vehicles, manufactured by brands like BYD, Geely and Chery, which has racked up some 57,000 orders for its sporty new $8,500 QQ3. Even before the start of the war, battery-only vehicles represented 50 percent of the automobile markets in Thailand and Singapore, and about a third in China, Indonesia, South Korea and Vietnam. With many of these countries facing severe energy shortages, these trends appear poised to accelerate. Two weeks after the start of the war in Iran, a BYD dealership in Manila reported receiving two months of orders in just two weeks. As Bloomberg reports, the showrooms in Bangkok and Auckland are also very busy.
In a sign of changing times, BYD sold more cars than Ford globally for the first time last year. Detroit’s Big Three domestic automakers (Ford, GM and Stellantis) now have less than 10 percent of the global market share, down from nearly 50 percent in 1973. Over the past decade, they have retreated from growing markets where they have struggled to turn a profit, such as China, which had been an important lifeline to their balance sheets following the Great Recession. Certainly, the United States remains the largest consumer market in the world. Automakers here have made a lot of money selling high-margin trucks and SUVs to wealthier buyers, and they probably will for years to come. But experts say it’s only a matter of time before Chinese brands, now banned from sale in the United States, can compete here too. This could reduce Detroit’s domestic profits.
“Electric vehicles seem to be gaining traction outside of the United States, and the Chinese are coming into many of those markets in a big way,” Levenson said. “I think that’s the very big threat to all three nations: not only will China eventually find a way into the United States, but, even if that doesn’t happen, [the domestic three] will become much more dependent on the US market as China takes a greater share of sales in the rest of the world. Similar problems are already hitting European and Japanese automakers, who are rapidly losing customers to Chinese automakers, domestically and internationally.
