You probably remember the story of the Trojan horse in the Iliad: a beautiful song from antiquity, 3500 years old… told by Homer (and scientifically proven in the 19th century by Schliemann). Beyond the epic side, we conclude, rightly, a bit dreamy and mocking: “but how were the Trojans stupid enough to let themselves be fooled like this? and be the architects of their own destruction?” Well, this same “story” is currently unfolding, to our detriment, there, before our eyes, exactly in the same way at the level of automotive Europe. So what’s going on? A classic tragedy in 3 acts.
MG4: the Chinese electric car that breaks prices in France
Act I: the opposing forces and the appetite for conquest
The automotive market in the world is about 28 million vehicles produced each year in China (50 million in all of Asia, with Japan, Korea, etc.), 22 million in Europe and 18 million in North America. China today produces 65% of the electric batteries that equip electric vehicles in the world. All of them, whether produced in China and then exported, or produced outside China but fitted with “made in China” batteries. China is therefore in a position of quasi-monopoly on this market, independently of declarations, declamations and other European or Elysian gestures.
This is due to several fundamental factors which we have plenty described in the columns of Capital.fr. And in particular to the fact that the rare earths needed for batteries and others used in the production of electric vehicles are 98% located in China. Their extraction and transformation is an extremely polluting industry (radiation, etc.) which is conveniently located a thousand leagues from our (very) virtuous “green” European eyes, well out of sight (and from our very virtuous consciences ) in Inner Mongolia (Chinese region adjoining Mongolia, editor’s note).
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The natural expansion markets for China are therefore the United States… but it is an extremely protectionist market (an American constant from Reagan to… Joe Biden), a real fortress, and in addition, the diplomatic relationship is not at the strongest. Difficult access therefore. And then, of course, there is Europe. Europe which is not shy, not jealous and which lets just about anyone enter its market: it is total free trade, without barriers or protection. The Europe of the automobile – 8% of European GDP and 15 million jobs – therefore clearly stands out as the land of conquest of choice to satisfy Chinese appetites.
Act II the Green and Electric Trojan Horse
CO2 emissions are 37.8 billion tons per year worldwide. China contributes 10.7 billion, North America 6.5 billion, India 2.7 billion and Europe 2.9 billion, or 7.8% of the total. global. And, in Europe, only 12% of these CO2 emissions are attributable to thermal vehicles. So the total CO2 emitted by all ALL vehicles in the whole of Europe is only 0.94% of the CO2 emissions in the world. It’s of course too much… but, at the same time, it’s not even 1% of the problem, and therefore 99% of the solutions are found elsewhere.
But that is exactly the focal point of the European Parliament, of which we now know a little better, informed by the latest news from the Commission, its depth of judgment and above all, and above all, its high probity, its integrity total and independent of lobbyists and other external “influencers”.
On board the Ora Cat, the crisp Chinese electric that will soon arrive in France
The European Parliament therefore adopted on June 28, 2022 by a (relatively) narrow majority – by 339 votes in favor, against 244 against 24 abstentions – the end of the production of vehicles with internal combustion engines from 2035. that is, on a macro-economic scale expiring… tomorrow. Thus delivering us, bound hand and foot, to the Chinese automobile invasion.
And to be completely sure of bringing our European automobile industry to its knees and the millions of direct and indirect jobs that go with it, Europe (by the Commission this time, this body, although not elected by Europe, but which nevertheless has the destiny of 500 million citizens) decided (on November 10, 2022) to set up the Euro 7 standard by July 1, 2027!
And that is the coup de grace! Knowing that it takes about ten years to make the investments required for the development and production of a new engine profitable, it is arithmetically quite simply impossible for manufacturers to implement this new standard and amortize their colossal investments in the 8 years that will remain between 2027 and 2035, the year when the clap of the end of the thermal will sound. Just by way of example, the famous Cléon cast iron engine powered millions of Renaults for 30 years from 1962 until 1992. Closer to home, the 1.2 Turbo Pure Tech from PSA (Stellantis group, Ed) which powers the today thousands of Peugeot, Citroën etc. has its roots in the EB 3-cylinder atmo engines dating from 2011, the development of which began as early as 2006.
It is all the more the “kick of the ass” that the Euro 7 standard only leads to a very marginal reduction in the emission rate compared to the (already) very demanding Euro 6. And above all it aligns Diesel with… gasoline.
So, Europe has just opened the doors BIG to the Chinese! And, to top it off, Europe is the ONLY “region” in the world to make this gesture of self-anhelation (shortness of breath, editor’s note) programmed by law for a strategic part of its economy and therefore of its jobs, its wealth and prosperity. This same prosperity that serves us precisely to provide so much generosity and aid to other non-EU countries.
Indeed the Chinese, conversely, as early as 2015, prohibited electric vehicles are built in China without being equipped with batteries made in china, this for the sole purpose of protecting the industry and strengthening their battery industry! However, since the battery represents 60% to 65% of the value of an electric vehicle, we quickly understood the scope of the calculation… with or without an abacus.
As for North Americans, there is no federal or even national obligation ending the thermal engine, at most, at the “departmental” level, California has regulations in this direction.
Finally, the EU and France in particular are making a point of accelerating at a forced march this announced economic and social disaster by massively subsidizing (by the famous so-called ecological “bonus”) the instrument of its own industrial decline by massively favoring the import of batteries made in China, nestled inside our (expensive) electric vehicles.
Aiways: how this Chinese brand of electric cars wants to develop in France
Act III: The Fall
In a few years, few, in fact, because 2035 is tomorrow, we will (feign to) be surprised that our European automotive industry is if not dismantled almost entirely, at least greatly diminished, invalidated, unable to survive properly , on equal terms, in a world where technology and production will have escaped him. Millions of jobs will be gone and millions of homes left by the side of the… bound to be… green path. Mechanically, this will lead inexorably to widen even more the deficit of our trade balance, already abyssal… which we finance by always more… debt. Addictive spiral. (In France, we don’t have oil, but we have debt).
And exactly in the same way that we (pretend to) realize today, with horror, that France no longer knows how to produce paracetamol, nor a mask, no longer knows how to conceptualize or produce a vaccine, no longer knows how to manage its public hospital, has lost its food independence, no longer knows how to produce sufficient electricity, is at the tail end of American (and also Asian) technologies for big data and artificial intelligence, as well as for drones, and is totally dependent on Taiwan for its electronic components (and light years behind in terms of their design and development), we will pretend to realize that we have passed under the Chinese flag – in terms of the automobile. Of course we will make… Plans and Refoundations and Conventions. We will even order “strategic reports” from … American and why not … Chinese firms.
Once the Trojan horse was introduced by the Trojans themselves within their city-state, the Fate of Troy was irremediably fatal. However, some Trojans had been right and warned their fellow citizens in time. This is the case of Cassandre, whom no one wanted to hear because she did not have the “codes” of communication, nor the right “elements of language” and of the wise Laocoon (etymologically: the one who understands the people) at which is attributed in the Aeneid this famous prophetic phrase “beware of the Greeks, especially when they bring gifts” (Timeo Danaos and Dona Ferentis).
Which we can update today by taking inspiration from the edifying example provided to us by the highest authorities of the European Commission these days by: “Beware of the Greeks, especially when they receive gifts”…
Georges Nurdin, economist, international consultant, essayist and writer (Emerging multinationals, International Corporate Governance, Le temps des turbulences, Wanamatcha!, La prophétie des pétroglyphes)
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Electric car: “China’s Trojan horse threatens the European car!”
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