Auto File: Mao's Motors in Europe

AutoNation

16/07/2024 16:00

July 16 - By Nick Carey
European Autos Correspondent
    
Greetings from London!  
    
On the autos beat, as for many of our fellow reporters here at
Reuters, this summer shows no sign of being a slow period for
news. Though to be honest, I'd rather we had more traditional
summer light-hearted stories about skateboarding dogs,
cheese-stealing cops, or escaped lions that turn out to be wild
boars.

    In the ongoing saga over provisional tariffs the European
Commission imposed on Chinese-made electric vehicles earlier
this month, EU member states had to register their stance in a
non-binding vote by Monday night. Of the votes known so far,
Italy and Spain voted for tariffs, while Sweden and Germany
abstained – which qualifies as consent with the tariffs.  
Without Germany, it is hard to see how tariff critics reach the
qualified majority of 15 EU members representing 65% of the EU’s
population needed to oppose them.
    
Meanwhile, Donald Trump came inches from assassination at the
weekend. Just forty minutes after the first shots were fired,
Elon Musk endorsed Trump’s bid for president. 
Aside from the obvious questions that an endorsement from the
owner of X, or Twitter as everyone else calls it, raises for the
U.S. presidential election, this is a remarkable moment.
Particularly as the world’s richest man and Trump were openly
feuding exactly two years ago.
Not since the days of Henry Ford has the CEO of a U.S. automaker
made his political opinions so publicly known. 
Wading into America’s fraught political arena could bring fresh
uncertainty and unwelcome attention for Tesla when Musk’s
polarizing persona has already apparently been turning off
would-be buyers.
    
Which brings us to today’s Auto File…
    *         Red Flag for Europe
    * U.S. union doubts on Biden
    * Thailand’s manufacturing rollercoaster

 
    Mao’s favourite car comes to Europe
  
    Chinese car band Hongqi will launch its electric EH7 and
EHS7 models in Europe later this year in at least half a dozen
countries where it has already established dealer relationships.
Hongqi, or Red Flag, which is known as the favoured car brand of
former state leader Chairman Mao Zedong – founder of the
People’s Republic of China  – is pretty much unheard of in
Europe. 
Back in the 1950s FAW, which owns Hongqi, developed a car for
leading figures in the Communist Party after Mao said he wanted
a Chinese brand to replace Soviet-made limousines.
In an increasingly crowded market with plenty of other newcomers
– BYD, NIO, Zeekr, Chery – it is hard to say how much headway
Hongqi can make in Europe.
But the announcement is noteworthy because it came a week after
the European Commission’s report on its investigation into
China’s subsidies for its EV makers and less than a week after
tariffs on Chinese EVs went into effect.
The arrival of Hongqi shows that tariffs will do little to slow
the onslaught of Chinese brands, who see Europe as a good market
to make margin while an EV price war rages at home.
 
Recommended reading:
    * Chile to weigh private lithium projects
    * China turns to WTO on U.S. EV tariffs
    *         Doubts grow over critical minerals 

 
    Growing union uncertainty over Biden 
  
United Auto Workers leader Shawn Fain had plenty of criticism
for Donald Trump in a speech on Friday, saying he would be a
“complete disaster for the working class.”  
But behind the scenes, the UAW’s leadership is harbouring doubts
that Joe Biden can beat Trump in this November’s presidential
election. Sources told Reuters reporters Nora Eckert and Nandita
Bose that Fain met with the union's executive board late on
Thursday to discuss his deep concerns over the race and discuss
next steps.
    In his Friday speech, Fain was scathing of Trump, but did
not mention Biden by name or its endorsement of his candidacy.
Fain and the UAW are important allies of Biden and are expected
to play a critical role in helping Biden win in key swing states
including the automotive heartland of Michigan.
Biden has relied on and actively courted union support for the
upcoming election. But in a further potential blow to his
candidacy, Reuters reporters Trevor Hunnicut and Jarrett Renshaw
report that the Teamsters union is considering not endorsing
anyone for president this year.
Trepidation at the top reflects divided opinions on the ground. 
Rank-and-file UAW members at a downsizing CNH tractor factory in
Wisconsin interviewed by Reuters reporter Timothy Aeppel are
divided over whether Trump or Biden will do more to save their
jobs.
 
 
    Thailand’s China conundrum 
  
Just two weeks ago, Chinese automaker BYD opened an EV factory
in Thailand, its first in Southeast Asia. 
That was a moment of glory for Thailand, earning the country
praise for its industrial vision. But as Reuters reporters
Orathai Sriring and Panarat Thepgumpanat point out, this came
just weeks after  Japan’s Suzuki announced it would close a
plant in Thailand.
Thailand is caught between being an attractive location for
Chinese EV makers and bearing the brunt of cheap imports from
China and sliding industrial competitiveness due to factors
including rising energy prices and an ageing workforce.
Thailand has seen nearly 2,000 factory closures in the last
year, upending its manufacturing sector that contributes nearly
a quarter of its gross domestic product.
Factory closures between July 2023 and June 2024 rose 40% from
the preceding 12 months.
As Thailand’s economy is set to grow below expectations this
year, the Federation of Thai Industries has asked the government
to look at measures to prevent tariff evasion in the growing
U.S.-China trade dispute and the high barriers levied for some
Chinese goods in other regions.
 
    Tesla’s Musk delays robotaxi event
  
Elon Musk has delayed Tesla’s robotaxi unveiling to an
unspecified date.
After a Reuters report in April that Tesla was canceling its
long-anticipated affordable EV, Elon Musk boosted shareholders’
confidence with a promise that the automaker would unveil a
robotaxi in August. 
Musk provided minimal details and skeptical experts argued that
Tesla appeared far from ready to unveil any meaningful advances
in autonomous driving. The company is also currently fighting a
lawsuit over misleading self-driving claims and is the subject
of a government probe into whether it committed securities or
wire fraud with those claims.
The move to postpone the unveiling, which Musk said was due to a
design change to the front of the vehicle and to "show off" some
other things, will unlikely surprise Tesla skeptics.
 
    Fast Laps
  
No. 1 U.S. auto retailer AutoNation expects a $1.50 per share
hit to its second-quarter profit due to disruptions caused by a
cyberattack at dealer technology provider CDK in June.
Vietnamese EV maker VinFast delayed the launch of a planned $4
billion factory in North Carolina to 2028 and cut its delivery
forecast for this year by 20,000 units citing uncertainty in the
global EV market.
According to Italian daily Il Sole 24 Ore, Italy's government is
considering taking over by decree the defunct Innocenti and
Autobianchi auto brands owned by Stellantis and offering them to
Chinese companies to encourage them to set up factories in
Italy.
    Stellantis will sell the fully electric version of its new
Fiat Panda model for less than 25,000 euros.
The Biden administration will award General Motors and
Stellantis nearly $1.1 billion in grants to convert existing
plants to build electric vehicles and components.
 
 

 (Editing by Alexandra Hudson)