I’ve talked about it before, but no first-mover advantage in the automotive industry lasts forever. Whether it’s fuel-injection or lithium-ion batteries, the competition catches on quickly. The one moat that’s harder to clear is scale. When automakers get to a certain size, they’re able to squeeze the competition on price.
Even that is only a mid-term solution. Both Tesla and BYD have engaged in a massive price war as they’ve tried to undercut would-be rivals. It hasn’t entirely worked. Sure, some companies, like Fisker and Byton, have failed, but many traditional automakers have faltered, and even they are slowly coming back.
This issue is most acute in China, where BYD slashed prices again as it tries to keep/gain market share. While exports are up, this feels to me like the last gasp of this current era of Chinese EV companies. Some will die. Many will merge. Everyone left is going to catch up. The same is already happening in Europe, as the big story continues to be the rise of competitors to Tesla, especially those with diverse powertrains.
The other big story in Europe is tariffs, which were set to maybe go up to 50%, and now, I guess, are not. That might be good for Volvo, or maybe not? Trade is complicated. The one winner in all of this might be the United Kingdom, which is getting even more production, while places like South Carolina could lose out in the near term.
BYD Accelerates The Death Of China’s Regional Car Industry
I highly recommend listening to the Odd Lots podcast episode “Why the World Keeps Getting Shocked by China’s Technological Progress.” What the guest helpfully gets into is this idea of how China is able to move itself in one direction so quickly. The short version is that, more than just pure authoritarianism, promotion within the one-party state is highly dependent on getting with the program.
If you’re some mid-level bureaucrat in Guangzhou, and the Premier gives a speech saying that electric cars are the big thing, then you’re going to start making electric cars in your city/province. You’ll start greenlighting those projects, clearing regulatory hurdles, and sending money that way. If you want to move up in your career as a chemist, you’re suddenly interested in battery chemistry.
America does this, too, or at least it does in a crisis. In WWII, the United States transformed most of its automotive industry into the Arsenal of Democracy. Outside of an urgent situation, it’s a little harder to get everyone to do the same thing, merely by the nature of our government.
The Chinese approach is successful and, at the same time, highly inefficient. Imagine if every state in the US had its own car company! Actually, imagine ten automakers for every state, because at its peak, China had around 500 different brands selling/planning to sell electric cars. That number is probably under 100 now, but it’s still a lot of brands.
One upside of a scattershot approach is that eventually you find a winner. The United States invested in a bunch of EV automakers with loans around the turn of the century, and we got Tesla. It took China way more attempts, but it got BYD and CATL.
Barring any surprising upset, BYD will be the biggest EV automaker in the world this year. A lot of this is because of its technology, smart planning, and first-mover advantage. Some of it is that BYD is willing to be leveraged to the hilt and will happily cut prices to the bone.
As mentioned last week, Geely managed to outsell BYD in China with its own cheap take on BYD’s Seagull. The response? BYD cut the price of the already sub-$10,000 Seagull to under $8,000. This echoes when BYD saw a threat from driving tech put forward by Tesla and Xiaomi and decided to make its advanced driving system free.
You can look at these cheap Chinese cars as a sign that China is way more advanced than the West when it comes to EV production, but the other way to look at it is that companies like BYD have massive overcapacity issues that they can only overcome through increased exports or decreased prices. Exports are coming, slowly, so that just leaves price cuts.
Even in China, no company is making a lot of money on an $8,000 car, and so it’s getting nasty on Chinese social media as reported by Nikkei Asia:
But the low prices have renewed concerns over a race to the bottom in the industry, sending the stock prices of BYD and other Chinese EV makers plunging. BYD shares dropped over 8% on Monday, and continued to decline on Tuesday, sliding as much as 4.2% in morning trading.
Wei Jianjun, chairman of Great Wall Motor, told Chinese media recently that “the Evergrande of the automotive industry already exists; it just hasn’t collapsed yet,” referring to the Chinese property developer that imploded under heavy debt. He did not name any carmaker, but social media users speculated that Wei was talking about BYD, whose asset-liability ratio stood at about 70.7% at the end of March.
In an apparent, cryptic response without naming names, Li Yunfei, general manager of BYD’s brand and public relations division, posted on social media on Sunday: “A dog can bite a person! But a person cannot bite a dog!” Many interpreted this as him likening the rival to a dog — a common putdown in China — while BYD is a more sophisticated human that need not fuss with animals.
Both GWM and BYD are likely to survive as they are big enough. Other companies? It’s a little dicier. Like, is Neta really going to make it? Dongfeng and Changan, for instance, are reportedly merging to make it through the price war. Even Geely is talking about de-listing its Zeekr brand in the United States as it tries to focus on its core brands.
The Brands Doing Well In Europe Have Hybrids And EVs
Last week we got a preview of Europe’s April car sales, and the likely outcome was that Tesla was going to have another crap month. The official numbers are in and, yeah, Tesla had a crap April, down more than 50% year-over-year in a market that’s been mostly flat (though EV, hybrid, and PHEV sales are all up this year).
Which brands aren’t suffering? From January to April, one of the biggest winners is Volkswagen’s Cupra brand, which offers attractive and somewhat affordable hybrids, PHEVs, and electric cars. Over the same time period, its sales have grown by about as much as Tesla’s sales have shrunk. SAIC Motor’s brands also grew by more than half in the last year, with MG offering a lot of affordable hybrids and EVs.
The EV-only brand Smart? Down by 67.6% in the first four months of 2025. There are some quirks, of course. Alfa Romeo was up by more than 35% this year, although a lot of that is due to the introduction of the Alfa Romeo Junior, which is available as both a hybrid and EV.
Europe’s biggest winner over this period was actually Alpine, more than doubling to 2,769 cars thanks to the introduction of the EV A290 to join the pure-gas Alpine A110 sports car.
Europe Avoids Worse Tariffs For Now As Volvo Plans Layoffs
The threat of a shock 50% tariff on European Union products has been delayed, at least, as the two sides come back to the table after President Trump claimed the EU wasn’t moving quickly enough to make concessions.
“I received a call today from Ursula von der Leyen, President of the European Commission, requesting an extension on the June 1st deadline on the 50% Tariff with respect to Trade and the European Union,” Trump wrote on Truth Social.
“I agreed to the extension — July 9, 2025 — It was my privilege to do so,” he added.
Trump’s post came after Von der Leyen said that she had a “good call” with Trump, but needed until July 9 to “reach a good deal.”
What’s interesting to me here is that the EU may have the ultimate trump card in GLP-1 drugs. Those are largely made in Europe right now, and raising the price on those would make Americans quite unhappy.
All of this reprieve may not be enough for Volvo right now, as the Geely-owned automaker considers big cuts. The Associated Press is reporting that the company may need to slash as many as 3,000 jobs to remain competitive.
The company said Monday that around 1,200 of the job reductions would come among workers in Sweden, with another 1,000 positions currently filled by consultants, mostly in Sweden, also slated for elimination.
The rest of the job losses would be in other global markets. Most of the jobs being cut are office positions.
“The actions announced today have been difficult decisions, but they are important steps as we build a stronger and even more resilient Volvo Cars,” said Håkan Samuelsson, Volvo Cars president and CEO.
Volvo is in a unique position when it comes to tariffs. Many of its cars are produced in China, but many are also made in South Carolina. Volvo had planned to join BMW in producing cars in South Carolina for sale in China, which is harder to do if the country is in the middle of a trade war with China.
Toyota Will Build The Corolla GR In The UK For Export To The United States
I continue to stand by my belief that the biggest winner in the current trade war talks is the United Kingdom, whose car industry seemed in trouble recently. This is a bit of a reversal from what I said two years ago, when Brexit threatened the existence of local manufacturing.
President Trump’s trade war is helping in multiple ways. Most obviously, it sounds like the UK is going to get a relatively low tariff on exports to cover most of the country’s current exports. While prices might go up in total for exported cars, they’ll be a lot lower than in other countries.
Additionally, Britain has cozied up to both China and the United States and gets to benefit from cheaper Chinese cars as well as relatively cheaper exports to the United States. Toyota seems ready to take advantage of this, according to Reuters:
By shifting some production from Japan, Toyota aims to use excess capacity in Britain to help it cut delivery wait times for the car, said the people, who spoke on condition of anonymity. The move was not in reaction to U.S. President Donald Trump’s tariffs on automobile imports, they said.
The Trump administration agreed this month to a framework deal to reduce tariffs on auto imports from Britain to 10 percent on up to 100,000 vehicles a year. Japan is seeking to have repealed the 25 percent tariffs that the U.S. has imposed on all auto imports.
For global automakers, the tariffs mean an additional challenge on top of differing emissions standards, and customer demands, across major markets
It’s possible the person who spoke on the condition of anonymity is correct, and this has nothing to do with tariffs. The reality is, every car built going forward is built in this new trade paradigm. There is no vacuum. It might not be the main reason, but if Britain were facing 50% tariffs, it wouldn’t make sense for Toyota to shift production.
The Corolla GR rules, so whatever has to be done to get them here faster and cheaper, I highly support.
What I’m Listening To While Writing TMD
I’m digging Blondshell’s new album, and “What’s Fair” is a great song, but damn. Hug your kids so they don’t turn into indie music stars who write songs about you.
The Big Question
If your state or province had its own car company, what would that car company make? What would the homegrown automaker from, like, Delaware be like?
Lead Photo: Neta
My state already manufacturers a car – it’s called the Corvette. Lol
By 1908 about 2000 automobile companies had been started in the USA, of which about 450 were still in business when Ford introduced the model T. Notably there still weren’t many paved roads, and there were no dedicated gas stations.
The automobile industry had been going in earnest for about 20 years by then, and the next ten years it really took off.
What’s happening in China seems fairly tame, although they figured out the roads thing pretty quickly.
Germany, England and France all hard lots of cars companies,
I have a three volume set of books on the history of the Czechoslovakian automobile industry, and there were hundreds there too.
Actually I think the EV industry is more like the computer industry in the 1980s, thousands of companies, and steadily dropping prices.
The automobile industry isn’t really used to a market where prices go down.
I remember reading computer magazines back in the early 80’s. There were tons of PC makers in the US! At the time the big thing was ‘IBM PC compatible’, so they all advertised their PC’s as 99.5% (or whatever) IBM PC compatible, because somehow legally they could not be 100% compatible. Leaving you to wonder when that 0.5% incompatibility would show up and crash your program! Of course there were also non IBM PC compatible models too, like Radio Shack had their own Tandy Radio Shack PC. Atari had their own line. Apple II of course. And the Commodore 64 was huge with home users. It was a wild scene.
Québec would have no choice but to manufacture a modern Manic GT!
https://www.hagerty.com/media/car-profiles/the-brief-and-tumultuous-tale-of-canadas-manic-gt/
Now, the original was based on a Renault chassis, so I’d personally be really down with an A110 clone..
However, considering Manic refers to the Manicouagan River on which there are major power dams, I feel it would kind of have to be electric..
In OhiO, they’d make a MINI, with the wheels pushed all the way out on the corners, but without fenders, to emphasize the OhiO nature of the vehicle.
I feel like the Chinese car industry is like the US car industry at the turn of the century. There are a lot of parrallels. Numerous companies that will merge or cease to exist, price competition, scaling of mass production, etc. Just everything is happening faster now, cuase modern life wants kill us.
Trying to imagine a car manufacturer by Arizonans for Arizonans balancing the mountains and the desert. Probably have the best A/C system in the world. I can see it being similar to what Subaru USA is offering, with the standard AWD and lifestyle branding, but it would need a 1500 and 2500+ truck in there. You’d likely need it to have a Lexus type brand above for the retirees.
Drive a few hours north from Phoenix to the mountains and you go from blazing heat to being able to ski in the snow.
Yep, sounds like it should be Subaru country.
The Volkswagen Phaeton is the car you are thinking of. W12 4Motion. What more do you want?
What’s going on in China teally echos the early days of cars in the US. BYD seems to be Ford in all this.
I’ve mainly lived in 3 US states and I think all 3 of those states would probably build a pickup and 2 of those would probably be Bev or at least hybrid. Maybe a small pickup. Each state has some production of ag equipment and tractors and small amounts of cars / trucks not from the big guys. I’m thinking like a modern IH pickup
Arguably, Karl Benz did gain a little from first mover advantage.
The closest plant to me is Belvidere Assembly, which is currently idle. But in the past, it’s built full-sized Chryslers, The Omnirizon twins and their sporty offshoots, the immortal Dodge Dynasty, and the final, most-awesome-ever K-car-based Imperial.
In more recent years, it was Neon, Caliber, Dart, and a bunch of crummy Jeeps.
WI – bring back the Nash Rambler!
Solid life advice.
I’m in Minnesota, so I’m going to say: Snow Cats
I was going to go with a “3/4 of full size” four door pickup made by Subaru that has a bed that isn’t three feet off the ground, but I definitely see where you’re going there.
I used to live in South Dakota – that would also be a pickup, but in the more traditional American full size and shape, but powered by ethanol to make the farmers and Poet Energy happy.
I never even heard of the Alpha Romeo Junior before: it’s kind of nice! I wonder why they didn’t bring it to the states as a lower-priced option to the Guila/Stelvio and Tonale? Does it have some of the quality issues that the other Alphas have? I wish they’d clear up those problems, so as to shirk off that part of their reputation in the American market. Their current cars are decent-looking and more driving-fun focused than most of their rivals… if they could somehow manage to add reliable/cost effective to their list of attributes I think they’d be much more successful here.
The Junior is built on an older French platform not really designed to meet US requirements for safety.
It also just came out last year, so if they wanted to bring it here, they’d probably wait for its current platform to be replaced, which should be happening in a few years.
As I grew up in Michigan that says about all I need to. But let’s look at Ohio as it was closest. You would have airplane influenced design due to the wright brothers. And then on the engine it would run either bio diesel(corn) or ethanol.
Lastly it would be great in a straight line and up and down hills but not turn worth a crap.
that’s it, I’m moving your suspension & chassis engineering offices to Athens Ohio
Let’s get the old King Midget team back together while you’re at it.
“Some of it is that BYD is willing to be leveraged to the hilt”
When the interest rate is subsidized, higher levels of leverage mean higher levels of government support.
Something something “owe the bank $10 million, that’s your problem, owe the bank $10 billion and that’s the bank’s problem.”
Good strategy if you are basically the state-owned automaker.
The loans are for domestic sales. Lowering prices in the domestic market will allow for new loans to replace the old loans so BYD can continue to grow. The problem with this is that losses will be higher for the other companies that also owe the bank money but now will not be able to get enough sales to pay it back. Which company has to go bankrupt is a tricky question when local governments have also invested their money in order to secure jobs.
Virginia’s car would be a tall and proud grey pickup truck. It would fly the battle flag of northern Virginia, but would break down every time it crossed the Potomac.
There’s a large subset in SW Virginia that seems to want to build angry Jeeps —replete with unused recovery equipment & Punisher stickers
I have far less line-of-sight into Roanoke and beyond, but I doubt you not.
The Punisher stickers….. I am torn on that. Either they are excited about the reference to the pain that Frank carries and the dichotomous nature of his dealing with it relative to the kind of pain it is, and, in the process making beauty out of chaos.
OR
They saw a dude whose M.O. is extra-judicial murder and thought, “Yeah, more of that”
I can’t really decide which is more likely.
Isn’t the Punisher sticker a gang symbol for bootlickers, just like the greyscale flag with the blue line?
Don’t forget the massive wheel spacers. Can’t have a Jeep or truck in SW VA if the inside of the tires don’t clear the fender.
There is the “salt life” group still looks like “slut life” to me group from maybe Stafford down to VA Beach too.
If your state or province had its own car company, what would that car company make? What would the homegrown automaker from, like, Delaware be like?
I’m not sure my current state would be a good candidate to manufacture an entire car but as an OEM supplier of a horn that broadcasts a loud expletive in place of a common honk is on brand.
China has very strict regulations governing where the average person can invest money and almost no social safety net like you see even in the US (social security, medicare, etc.) so they save something 40% of their income so they have their own safety net. As such Chinese citizens put much of their savings into real estate kind of like before the US mortage crisis, except even more. When the bubble burst many citizens lost 40%+ of their savings which is much worse than the US housing crisis. The Chinese government then decided that they needed to export manufactured goods to keep empolyment up so they encourged the building of many factories. Since Chinese save so much, they don’t have income to spend like the US. Thus, China has to export since they don’t consume. Folks in the US don’t save enough, but the Chinese probably too much. Now we are seeing cuthroat competition in the domestic Chinese market and a flood of exports due to their over capacity. China is putting the whole world of manufatured goods into dissarray.
I found it absolutely crazy that the real estate investment your average Chinese put their life savings in was an apartment. An apartment built on land with a 70 year lease from the government.
And that’s before you get into what those apartments were selling for compared to the average yearly income on the mainland there.
Don’t forget that many of those apartments have yet to be actually built. Chinese real estate is crazy.
This is simply not true when it comes to EV’s. China’s own market accounts for 65% of all EV sold around the world.
https://carboncredits.com/2025-ev-sales-surge-which-countries-are-winning-the-electric-race/
https://www.reuters.com/business/finance/chinese-savers-decry-falling-deposit-rates-still-wont-spend-more-2025-05-27/ “China has repeatedly pledged to make household consumption – which is about 20 percentage points of GDP below the global average – a more important driver of economic growth.
The world’s second-largest economy relied heavily on exports last year to hit its roughly 5% expansion target and analysts say higher U.S. tariffs call for greater urgency on measures that rebalance the economy towards domestic demand.”
As I said, this maybe true in general, but it is not true with EV’s.
China consumes the majority of EV in the world yet it still exports more EVs than any other country in the world. The reason there is a a price war for EVs in China is that they have a huge overcapacity in production of EVs. The only way they can solve the producton overcapacity is to export EVs and that is what they are doing. https://www.wto.org/english/blogs_e/data_blog_e/blog_dta_14may24_e.htm
The US exports more food than any other country on earth. So I guess by your definition, the US must be an evil dictatorship bent on overproducing food, right?
And a price war is what happens in a free market. It’s a wonderful thing for consumers. Would you rather have oligopoly and price fixing?
The export limit from the UK is very close to what was already being exported (mostly by JLR). So Toyota can certainly shift production of a low volume car like the GR Corolla there, but they couldn’t do anything of significance without getting slapped with a 25% duty post 100,000 cars.
The quota is up for re-negotiation at intervals if I remember correctly. So provided the UK starts bulk-buying F-150s Toyota will be fine.
“What would the homegrown automaker from, like, Delaware be like?”
They would be The Destroyers of course. with the flagship Josephine
“Ride on Josephine, child ya’ got a runnin’ machine”
Every time he backs off and delays a tariff, the stock market goes up. He thinks he’s found an infinite money glitch for him and his friends and he’s going to pull that lever constantly.
And it will work until it doesn’t. Then we’re going to be in serious trouble.
I have an “Adolf Hitler Theory of Trump” and it’s not what you might think.
There’s a well-regarded rumor that Hitler was secretly never planning to decimate Britain because he had so much respect for them, and for Churchill as well. So he made plenty of efforts to take over, but after the Battle of Britain he quietly backed off when he could have unleashed the full fury of the blitzkrieg on them (but instead focused on continental enemies until the Allies took the fight back to him). From that point on, it was mostly harassing attacks and V1/2 rockets and missiles from a long distance, just to remind them he was there, but without much strategic value. He might have been waiting until later, but we’ll never know. The Russians were so much a drain on his resources, it probably would never have happened.
Anyway, back to Trump — I think he’s going to ease up on Europe. The tariff delays are one step, the act of calling Putin crazy is another step. I think he wants to feel important, but doesn’t really want to do any long-term damage to European partners.
His views on Russia, China, Mexico, and Canada are all still TBD. I think Mexico and Canada will be resolved though USMCA renegotiations at some point soon.
So, we’re going to renegotiate USMCA, huh? And come up with some sort of a “North American free trade agreement” to replace it? Sounds familiar…
BETTER American Free Trade Agreement. BAFTA!
The idea that Hitler did not want to decimate Britain is beyond stupid, and conflicts with Hitlers own statements and writings. Its an idiotic lie pushed by pro-Nazi historical revisionists.
Trump is whiny vindictive baby who would love to do long term damage to our European allies. He clearly bonds with fellow authoritarians like Putin and Orban, and perceives western Europe as the antithesis of the sort of far right fascist state he wants to morph the United States into. Watching countries respond to his tariffs makes him feel important, but they are also a way to manipulate the stock market. If he backs off it is because some of his billionaire buddies have complained about damage to their businesses, not because he has some sort of long term vision. He is not playing chess, he is losing at connect four because he can’t count that high.
Hitler couldn’t establish air superiority over Britain, so he couldn’t launch an invasion, but he didn’t cancel those plans. V-weapons (as in, vengeance) make the case that he wanted to destroy Britain more than that he didn’t. The 3 V-weapons were otherwise valuable resources wasted on killing civilians and destroying population centers through random destruction over strategic targets. As Rapgomi mentioned, there’s revisionist fake historian stuff going around countering this that doesn’t stand up to scrutiny, much like the Confederate apologists’ “state’s rights” BS (unless they mean, states’ rights to own slaves). Soon after the BoB, Hitler had to help the Italians out of getting their asses kicked by Greece, drawing resources that would have helped in Operation Barbarossa soon after that, resources that perhaps could have prevented them from getting bogged down in Russia. From there, they were increasingly on their back feet and the US entry assured that there was no way to go back to Britain.
I’m still convinced he wants to annex Mexico. The Canada and Greenland things are just miss direction. He wants those beaches for hotels and a canal.
Annexing Mexico would instantly render white people in the US a minority. Trump and his underlings would never go for that.
The English tests some of these states are giving truck drivers could be what’s to come. I have a kid with dyslexia that works with me I showed him one he said he would fail it. They are written kind of strange I bet there are levels of complexity. Scary stuff.
Unless you import a bunch of white people, say from I don’t know, South Africa? Greenland? Canada??
More seriously though, Saddam showed you don’t need an ethnic majority if you rule with an iron fist.
I live in Nevada. We’ll build a car in which you pull a large handle, and the car will randomly decide if you have enough fuel to drive today.
You’re hoping for three Se7ens, but you end up with just three Cheries.
And they’re all lemons.
“three Cheries”
How bout 3 Che…Vettes?
“Yeah, I drive a Vette!”
(If I won 3 Chevettes, I would immediately drive them all off a cliff…)
“all lemons”
Yes, that is correct…all Chevettes are lemons
Sounds familiar…
https://www.theautopian.com/the-canadian-version-of-the-chevette-was-sold-with-some-very-mild-praise
In Quebec, we’d have a compact EV hatchback (well, CUV these days). AM radio, no passenger side mirror with 14″ steelies.