Armen Hareyan's picture

Is Detroit More Afraid of Tesla or China?

Tesla is moving fast in announcing new products and proves to be very mobile in this regard. Most of its cars or all-new products are built-from-scratch-to-be-electric design. Is this a serious threat to Detroit's major auto manufacturers? If you think yes, look at China.

Doug Martoccia comments under our discussion in Electric Cars Facebok group about what China may "offer" to Detroit and even Tesla in the near future when it comes to electric cars and batteries. Here is Martoccia in his own words.

Detroit may not be worried much about Tesla, but they sure as heck better worry about China. The major reason that China cannot compete in the US auto market is the immaturity of their automobile engine technology - they have a difficult time designing and manufacturing quality automobile engines that meet strict US emissions requirements.

However, EVs don't need advanced engine technology - so all China needs is advanced battery technology - a much, much easier problem.

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Image source: Wikipedia Detroit

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Well, for GM, Tesla, BMW, Mercedes, and maybe few others, China represents a sales opportunity. GM's Buick is wildly popular in China.
Even if EV's made in China have no issues with U.S. emissions regulations, China may still have challenges with safety and roadworthiness in the USA. It is really hard to build a "cheap" car for the U.S. market, unless it is classified as a motorcycle variant due to needing airbags, crumple zones and crash test data that meets minimum standards.
Another thing that has been proven is that a fair amount of manufacture needs to occur in the market the car will be sold in. Toyota, Honda, Nissan, Mazda, Mercedes, BMW, Volkswagen, Hyundai/Kia, Subaru/Isuzu all have assembly plants and significant portions of their supply chain for at least some of their models in North America, for logistical reasons, time to market reasons and for a natural currency hedge against the U.S. Dollar.