China takes aim at US drivers
Carmaker hopes vehicles will soon sell in America
On a bright spring day in Amsterdam, car buffs stepped inside a warehouse to nibble on lamb skewers and sip rhubarb cocktails courtesy of Lynk & Co, which was showing off its new hybrid SUV.
What seemed like just another new-vehicle launch was something more: the coming-out party for China’s globally ambitious car industry. For the first time, a Chinese-branded car will be made in Western Europe for sale there, with the ultimate goal of landing in US showrooms.
That’s the master plan of billionaire Li Shufu, who has catapulted from founding Geely Group as a refrigerator maker in the 1980s to owning Volvo Cars, Lotus, London Black Cabs and the largest stake in Daimler.
“Geely’s dream is to become a globalised company,” said Li. “To do that, we must get out of the country.”
He’s not alone: at least four Chinese carmakers and three Chinese-owned start-ups plan to sell cars in the US starting next year. At the same time, Warren Buffett-backed BYD is building electric buses in California; Baidu is partnering with Microsoft, TomTom and Nvidia on a self-driving platform; and Beijingbased TuSimple is testing self-driving big rigs in Arizona.
But how will Chinese carmakers convince Midwesterners to give up their Ford F-150 pickups or Tokyo residents to switch from their Toyotas?
Chinese cars would probably compete more directly with Japanese and Korean models, said Bob Lutz, the retired vice chairman of GM. “They would probably take share from other Asian brands because the vehicles will be more Asian in character. They’re not going to get much market share.”
That’s not to say the road is impassable. A few decades ago, South Korea’s Hyundai was knocked for fragile engines and rust-sensitive body panels. Now it’s one of the five biggest manufacturers in the world.
“Competitors emerging from China must be taken seriously,” said Matthias Mueller, former chief executive of Volkswagen, Europe’s biggest carmaker. “I visited China for the first time in 1989, and the development that has happened there since then is just impressive.”
Carmakers such as Geely, Chery and BYD started talking a decade ago about cracking the US market. Their efforts stalled, so the industry built a global presence through acquisitions.
Chinese companies have announced at least US$31 billion ($43.5b) in overseas deals during the past five years, buying stakes in carmakers and parts producers, according to data compiled by Bloomberg.
The most prolific buyer is Li, who spent almost US$13b on stakes in Daimler and Volvo.
Lynk plans to make its new SUV — called the 02 — in Belgium. The car will be available from the first half of 2020 in Europe, and then Li plans to hopscotch across the ocean.
Then there’s Contemporary Amperex Technology, the maker of electric-vehicle batteries that is planning a US$1.3b factory with enough capacity to surpass the output of Tesla and dwarf the suppliers for GM, Nissan and Audi.
To make those batteries, Chinese companies are leading the way in securing raw materials such as cobalt and lithium.
China, already the world’s biggest vehicle market, overtook the US as No 1 for electric vehicles in 2015.