Anybody willing to share facts about subsidies, state control or anything that would justify believing that BYD success here is not justified?
For me the whole story of vertical integration of a battery manufacturer company that decided to make EV cars makes a lot of sense.
This is more like "government intervention can give domestic companies an unfair advantage in global markets", which isn't actually a good thing, but also isn't something you can just ignore without a response.
In this case you might like it because what they're subsidizing helps with climate change, but this is mainly because we don't price carbon (pricing major externalities is one of the things governments actually have to do), not because having governments subsidize businesses is a net positive in general.
The only thing I can think of is it would be bad in the situation of a monopoly, but that’s not the current situation. Otherwise, it seems like an emergent market is being accelerated, and I, the consumer, can benefit from cheaper and better products and the attendant competition spurred by government finance of sorts. Historically it’s been seen as governments are uniformly terrible at allocating capital, but if subsidies really are the dominant factor here—still not sure that’s true—then BYD seems to be in contradiction to that theory.
TANSTAAFL. The money from the subsidy came from something else, which you had to pay for. Often it comes from some industry where that country already has a dominant position and therefore can charge you higher prices without you having a choice to switch to something else. Which is, moreover, the problem with this:
> I, the consumer, can benefit from cheaper and better products and the attendant competition spurred by government finance of sorts.
The country doing the subsidizing thereby destroys their competitors in other countries who don't receive it, and then once they have a large enough lead they can raise prices and you have no alternative.
Meh. The governments in this case become very powerful investors, and not just to a specific company, but to an entire industry, more like a sector fund. The US government is more than capable of matching China here—once again—if subsidies are what's propelling BYD, but judging by the top comment[0] it's probably just good old-fashioned capitalism favoring the best player
> and then once they have a large enough lead they can raise prices and you have no alternative.
I think the fears of a monopolized automotive industry are alarmist. China isn't the country with the most capital, and rather than being sore loser about it with sanctions, the US can invest in its own market just as hard. (Edit: Worth noting that this is nothing new. Countries around the world have been subsidizing automotive companies for a long time. There's some gestalt benefit here for governments in specialized training, advanced manufacturing, employment etc.)
If anything with so many directions to be taken in battery chemistry and the reduction in complexity of drive train (and supply chain), more companies can enter the fray. There's plenty of room for competition.
"Capable" only means something if they actually do it, and that hardly makes it good regardless. Why should BYD and Tesla have some artificial advantage over Volkswagen or Nissan or Hyundai?
What the US actually does is subsidize purchases of electric cars regardless of manufacturer, which creates a subsidy for the industry rather than a subsidy for that country's companies in that industry, which is the thing you want if your goal is actually to promote adoption of electric cars rather than to tilt the playing field.
> if subsidies are what's propelling BYD, but judging by the top comment[0] it's probably just good old-fashioned capitalism favoring the best player
It can be both. BYD having that founder explains why it's BYD and not some other company in China, while subsidies explain why it's BYD and not some equally fervent founder in Germany or Japan or Korea -- or Mexico or India or Brazil.
> I think the fears of a monopolized automotive industry are alarmist.
How is it alarmist when we've seen it happen in numerous other industries? There are many products that are now only made in China, or where China represents >90% of global volume in that industry.
From a cursory Google: Of the top 3 auto manufacturers in China, BYD is the only one that isn't a SOE. I keep trying to put emphasis on this, but I'll do it again for a third time: just how much, if it at all, subsidies are factoring into BYD's success is speculation. It's even further speculation to say that BYD is being subsidized exclusively, and certainly something I never imagined, or advocated.
> It can be both.
Goes without saying.
> There are many products that are now only made in China, or where China represents >90% of global volume in that industry.
China built up it's manufacturing capability over decades on the back of low labor costs. Now they have both mid-range labor costs, but exceptional advance manufacturing capabilities and human resources. This is not due to 'subsidies', but investment in, and a culture of, education. In the west people sit and laugh at smart people on sitcoms (looking at you Big Bang Theory), while in China intelligence isn't some social shortcoming. I'll defer to Tim Cook (as per the transcript):
"There's a confusion about China that ..uh.. and let me at least give you my opinion the the popular conception is that companies come to China because of low labor costs. I'm not sure uh what part of China they go to but the truth is China stopped being the low labor cost country many years ago, and that is not the reason to come to China from a supply point of view. The reason is because of the skill and the the quantity of skill in one location and the type of skill it is. Like ..um.. the products we do require really Advanced tooling and the the precision that you have to have in tooling and working with the materials that we do are state of the art, and the tooling skill is very deep here. You know, in in the US you could have a meeting of tooling engineers and I'm not sure we could fill the room in China you could fill multiple football fields it's that vocational expertise is very very deep here and I give the ..uh.. the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational. Now I think many countries in the world have woke up and said you know this is a key thing and we've got to correct that, but China called that right from the beginning"
https://www.youtube.com/watch?v=N6bR8BptIpw
India and Asia Pacific at large are lagging a decade behind China, but you'd see more and more goods coming from there too, and not without perfectly fair, appropriate, sensible, and necessary government investment/subsidies into their own human resources and into emerging industries.
I'm done here. Feel free to have the last word.
That isn't surprising. In a country where all domestic companies receive subsidies/advantages, a private company with that kind of leadership is the most successful one.
> just how much, if it at all, subsidies are factoring into BYD's success is speculation.
Everything is speculation. But what are you even disputing, that China subsidizes domestic companies or that receiving subsidies that competitors in other countries don't get is a competitive advantage?
> It's even further speculation to say that BYD is being subsidized exclusively, and certainly something I never imagined, or advocated.
The claim is not that BYD gets subsidies other companies from China don't get, it's that BYD gets subsidies that companies from other countries don't get.
> China built up it's manufacturing capability over decades on the back of low labor costs.
That was the hook, but then in order to get that they had technology transfer requirements and the operation in China had to have majority ownership by China. That puts companies in a bind: Move to China now and lose to a company from China later when they learn how to make your product, or refuse and then lose immediately to a competitor willing to sacrifice their future for cheap labor they can use to under cut you on price today.
> This is not due to 'subsidies', but investment in, and a culture of, education.
It was effectively subsidies for educating domestic industries on how to capture existing markets.
Then it became general subsidies, as they accumulated enough resources to do that. Use surplus in industries that have already been captured to provide support for new entrants in industries that haven't yet etc.
> In the west people sit and laugh at smart people on sitcoms (looking at you Big Bang Theory), while in China intelligence isn't some social shortcoming.
In the west sitcoms make fun of everything. That's what sitcoms are. Meanwhile American kids grow up to design rockets and build the internet and invent medical devices and sequence the human genome.
> I'll defer to Tim Cook
This is describing the consequences of the subsidies. Government tilts the playing field in favor of their own companies and that industry moves to that country. Several decades later, the people who know about that industry are in the country where the industry is.
> necessary government investment/subsidies
It seems like you're trying to argue that the subsidies aren't the reason industries moved there while also arguing that they're necessary in order to get them to move there.
And how are the subsidies supposed to do any good if everyone accepted that they're reasonable and then everybody did it? They would no longer confer any competitive advantage, they would just create inefficiency by over-producing in whatever industry is receiving the subsidies.
Maybe not for competitors but seems like a pretty good thing for the country doing the subsidizing?
[0] https://ourworldindata.org/grapher/share-electricity-solar?t...
[1] https://ourworldindata.org/grapher/nuclear-energy-generation...
[2] https://ourworldindata.org/grapher/share-elec-by-source?coun...
https://www.sciencedirect.com/science/article/abs/pii/S03014...
> How carbon emission prices accelerate net zero: Evidence from China's coal-fired power plants
"China is building more coal plants but might burn less coal"
You can come up with some hypothetical like that article does where they're using coal as peaker plants (even though it's not very good at that because they take more time than natural gas to get up to temperature), but both the economics and the CO2 of that are pretty bad. You build and maintain all of these coal power plants and then only use them half the time, doubling their cost per unit electricity, and yet you do use them half the time and emit all of that CO2.
But the alternative where you build them all for some rare emergency load is crazy. That's the one where they wouldn't be producing a catastrophic amount of CO2, but the economics of that are so bad that assuming that's their intent is assuming they're incompetent. They'd have to recover the cost of building and maintaining all of those power plants while only running them 2% of the time. That makes no sense compared to spending not all that much more to build nuclear plants instead which then generate power all of the time and avoid the need to also build something else (presumably intermittent renewables) to generate that power the other 98% of the time.
So either they're incompetent or that theory is wrong and they're building a lot more coal power plants because they intend to burn a lot more coal.
> the real metric is carbon
https://www.macrotrends.net/countries/CHN/china/carbon-co2-e...
More than triple the CO2 emissions as they had in 2000 and the number continues to go up over time rather than down.
Yeah they shot up for a decade after 2000, while the US/Canada reduced theirs and yet they're still 2x higher per capita. The area under the graph is the real contribution to the problem. China is very far from the obvious target for any objective evalution:
https://ourworldindata.org/grapher/co-emissions-per-capita?t...
US CO2 emissions per capita were higher in 1950 than they are in China today -- and in the US today -- because in 1950 there were no nuclear power plants and renewables weren't a viable technology yet.
That isn't true anymore. Which is why the US is replacing coal with renewables and gets three times as high a percentage than China from nuclear and its emissions per capita are trending lower. But that's harder to do than building them to begin with, because to do that you have to be competitive with a fossil fuel power plant that already exists rather than one that needs new capital in order to be built. And yet it's still happening.
There is no excuse for building new coal in the 21st century. They can't say that nuclear and renewables don't exist or aren't viable yet. They can't say that they're existing plants and they need time to transition. They shouldn't be doing it.
That's because they're increasing their overall energy use more than the US, which would be fine if it was entirely solar and nuclear, but the point is rather that it isn't.
> Coal as a percentage of their energy mix has been markedly decreasing since 2014
Again only because the denominator changed -- the absolute amount of coal went up, and it's still at 60% compared to <20% in the US:
https://www.eia.gov/tools/faqs/faq.php?id=427
Meanwhile the solar you're touting for China is still at <5% and so is the nuclear, compared to 18% for the latter in the US.
China generates about the same percentage from solar and wind as the US but significantly less from nuclear and dramatically more from coal. Meanwhile the largest generation source in the US is natural gas, which even combined with US generation from coal, only reaches the same percentage as China generates from coal by itself, and natural gas emits less CO2 per unit electricity than coal.
Coal is a disaster and there is no excuse for building more of it rather than replacing what already exists.
> Meanwhile the solar you're touting for China is still at <5% and so is the nuclear, compared to 18% for the latter in the US.
I'm not sure if it is ignorance here, or deliberate straw-manning, but clearly you're comparing a developed nation with a developing nation with a massive population. To be fair, it's on it's last phase of catch up with developed nations, with some provinces 'medium' on the HDI vs some that are 'very high'[0], but in comparison the US[1] the HDI is uniformly 'very high'[1].
> Coal is a disaster and there is no excuse for building more of it rather than replacing what already exists.
Given my assertion above, this translates into: 'China's people must have a lower quality of life (with the attendant health/educational outcomes etc.), until renewable energy catches up'. If the situation was reversed, how might you feel to be on the receiving end of that argument? Anyway, to counter China could do an Elon Musk and say they is doing more for the environment than any other country by manufacturing so much cheap solar panels (which go to sunny places like North Africa, Australia, US)[2], batteries, and EVs... in spite of burning hydrocarbons en-masse in other endeavors, e.g., "There's no excuse in starting a whole space industry that's increasing emissions via inarguably carbon-positive fuel in this warming climate, even though they kickstarted EV industry" vs "There's no excuse for China making coal fired plants, even though they supply solar panels that generate 100s of GWs (soon TWs) of power in other countries"). And maybe one day, Musk will use carbon capture to make his fuel carbon-neutral, and with China switching to renewables and nuclear at a rapid clip in spite of their large and developing population they will catch up too.
Once again, I'm done here, feel free to have the last word.
[0] https://en.wikipedia.org/wiki/List_of_administrative_divisio... [1] https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ... [2] https://www.reddit.com/r/MapPorn/comments/44y90h/annual_suns...
This makes it easier for them, not harder. Renewable generation is more competitive against an unbuilt coal-fired power plant than an existing one that has already paid off its construction costs and only has to pay for operating expenses.
> China's people must have a lower quality of life (with the attendant health/educational outcomes etc.), until renewable energy catches up
You have two premises here which are both incorrect. The first is that renewable technology has to "catch up", but it's already cost-competitive with coal. The second is that renewable technology is the only alternative to coal, but nuclear is a mature technology when you need to supply base load. It's not like you have to wait for fusion, just don't use coal.
> Anyway, to counter China could do an Elon Musk and say they is doing more for the environment than any other country by manufacturing so much cheap solar panels (which go to sunny places like North Africa, Australia, US)
Which they're subsidizing to assist their domestic industry in controlling the market. Otherwise why are they exporting them rather than using them in place of coal, in a country closer to the equator than the continental US?
> There's no excuse in starting a whole space industry that's increasing emissions via inarguably carbon-positive fuel in this warming climate
The Falcon 9 produces 300 tons of CO2 per launch and there were 60 launches in 2022, totaling 18,000 tons. In the same year China emitted 11.4 billion metric tons of CO2. One of these doesn't even rise to the level of a rounding error, the other is a huge problem.
Given the repeated bail-outs of US carmakers, and the way Tesla have leveraged government carbon trading schemes over the years, plus the 20 year rule on importing cars, the chicken tax and so on, it would certainly be extremely rich for anyone based in the US to cast aspersions on government support for car manufacturers.