Volvo landed a cheap Chinese EV on U.S. shores in a trade war | Hacker News Reader

Volvo landed a cheap Chinese EV on U.S. shores in a trade war

reuters.com

FTA:

    Now Volvo has found a different way around the tariffs for the EX30, through the U.S. duty drawback program, which dates to 1789. The program originally refunded companies the tariffs they paid on imported raw materials if they used them to build finished products for export. Today, it allows a much broader array of exports to offset taxes on similar imports.
    
    For Volvo, it means exports of its larger EX90 electric sport-utility vehicles built in South Carolina can be used to offset imports of the EX30 from China.

If this works out for Volvo, this has to be one of the smartest business moves in the auto industry in recent years by Geely.

If I recall, it wasn't clear at all that Geely knew what it was doing when it acquired Volvo; lots of industry doubters that a Chinese company could effectively manage a Western auto manufacturer. But from what I can tell, it has done pretty well with Volvo with a mostly hands off approach and now has a mechanism by which they can import Chinese made vehicles into the US.

No question that Volvo Cars is making more money now than under prior ownership. I think there's still some question if Geely has a brilliant overall plan or is just trying lots of stuff to see what works.

There's Polestar, which is headquartered essentially next to Volvo Cars HQ and sells fairly similar vehicles. Although, Volvo Cars recently announced they were going to stop funding (and actually sell a ton of shares in) Polestar: https://www.reuters.com/business/autos-transportation/volvo-...

Geely owns Lotus now and plans to make EVs that are completely different from previous Lotus cars, but investors don't seem confident about that play: https://www.carscoops.com/2024/03/lotus-shares-tumble-40-sin...

Then there's Zeekr and Lync & Co: https://electrek.co/2024/04/19/zeekr-unveils-deluxe-mpv-marb... https://www.autoevolution.com/news/lynk-co-07-emp-sedan-is-a...

Oh and there's Proton too, also owned by Geely: https://technode.global/2024/02/22/malaysias-national-car-pr...

And that's not even all of Geely's brands ... so the big question is does Geely have a coherent plan with all this? Or will these various brands eventually need to be consolidated? Maybe Volvo Cars absorbs all of the surviving Geely brands one day?

I don't see their sprawl as an issue. Zeekr/Lync & Co. -- so far -- are not shipping to Western markets. Proton also has relatively limited distribution outside of S/E Asia.

Zeekr and Lynk & Co are both available in some European markets.

https://www.zeekr.eu/test-drive?c=001 https://www.lynkco.com/en/market-selector

I've seen quite a few Lynk & Co on the streets of Stockholm, and Zeekr has a flagship store at Kugsträdsgården right across the Royal Palace and some 10 min walk from Centralstation.

Wow, you can take a 10-minute walk around the block in Stockholm and see the Zeekr, Lynk & Co, Polestar and Volvo stores: https://www.google.com/maps/dir/Zeekr+Center+Stockholm,+Hamn...

I really like the idea of businesses that try in parallel. Instead of creating a team to do something, create 3 teams or 5 teams. Then see how different efforts compare against each other.

As long as your teams are performing reasonably/not-dysfunctional, it feels like you can keep teams separate but try to share some lessons.

   > brilliant overall plan or is just trying lots of stuff to see what works.

trying lots of stuff can be a brilliant plan

With the economy slowing and a lot of families feeling the inflation crunch I think traditional US and German automakers are going to be in huge trouble when facing Chinese made EVs in the open market. How could BMW sell a 3 series for $30,000-50,000 when you can buy a BYD HAN for half the cost, while it's arguably more luxurious? At least Tesla can fall back on long term subscription revenue from FSD, the rest of the legacy manufacturers are going to be annihilated.

> I think traditional US and German automakers are going to be in huge trouble when facing Chinese made EVs in the open market

I think it's pretty clear that US automakers won't face Chinese carmakers in an open market.

Joe Biden, a few weeks ago: "China is determined to dominate the future of the auto market, including by using unfair practices. China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch." From https://www.whitehouse.gov/briefing-room/statements-releases...

Volvo is being clever here and avoiding import tariffs by offsetting them with exports on vehicles made in the US. BYD, Chery, etc won't be able to do that unless they set up production in the US. Even Volvo, who manufactures 2 or 3 models of cars at its single American plant wouldn't be able to import a massive amount of cheap Chinese imports tariff-free via this mechanism, unless they also scaled up their American manufacturing.

Couldn't BYD build their cars in Mexico to export to LATAM and the USA at the same time? When I lived in Brazil there were quite a few Mexican made cars from major manufacturers, with the benefit of USMCA (and previously NAFTA) I feel like Mexico is quite well positioned to have Chinese EV manufacturing in its shores.

Currently I believe so, although they likely wouldn’t qualify for the $7500 EV tax credit due to the origin of the batteries. Lawmakers have talked about this scenario with concern, to the extent that I’ve heard BYD is reluctant to actually try it because they suspect the US would pass some protectionist legislation that would suddenly ruin the investment.

Who owns Volvo?

From the article:

> The EX30 from Volvo Cars (VOLCARb.ST), opens new tab, the Swedish luxury brand owned by China's Geely (GEELY.UL)

From Wikipedia [0]:

> Owners: AB Industrivärden (9.1%; 27.9% votes) > (6.8%; 15.5% votes)*

[0] https://en.m.wikipedia.org/wiki/Volvo

Volvo Cars is a different entity than Volvo: https://en.wikipedia.org/wiki/Volvo_Cars

As you can read in the article, Volvo Cars [0] was spun out and bought by Ford in 1999, then by Geely in 2010.

Volvo AB (largest owner Industrivärden) still owns Volvo Trucks and the other parts of Volvo.

[0]: https://en.m.wikipedia.org/wiki/Volvo_Cars

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