Katrina Hamlin

Electric-vehicle makers in the People's Republic want to go back to the future. Efforts to block car exports from China are inspiring the world’s largest battery-powered car maker BYD , and peers to set up factories overseas. The journey is reminiscent of Toyota Motor and Nissan Motor's long drive into the U.S. and Europe nearly half a century ago. But Washington's worries over security and new te

Art of war. BYD is driving China's electric-car battle from a position of strength. The world's largest EV maker is winning market share in the People's Republic, partly by undercutting rivals on prices: it is discounting over 100 model versions in 2024. The record annual earnings it reported on Tuesday suggest it is well-positioned to escalate the fight.The fierce competition started around a year ago and $86 billion BYD is now selling some cars at as much as a fifth below their original price. Newer designs such as a recent update to the aptly named 'Destroyer' are cheaper too. The depth and breadth of cuts are bigger than those offered by other automakers, research from Nomura shows.Yet the top and bottom lines at the company run by Wang Chuanfu is holding up well. Revenue grew to 602 billion yuan ($83 billion) in 2023, up more than 40% from the previous year. Annual net profit margin grew one percentage point to 5%, though BYD did record its slowest quarterly profit growth in two years for the three months to December, reflecting the industry slowdown.Local rivals are less well off. None boast the economies of scale or vertical integration that help BYD. Smaller electric-car upstarts such as Nio, Leapmotor and Xpeng are still in the red, though they have managed to narrow their net losses in recent quarters.BYD is pulling away from its domestic competitors and the company's performance is steadily catching up global peers. Its operating profit margin clocks in at around 6%, compared with more than 10% at Tesla and Toyota, the world's largest carmaker by sales, per Visible Alpha.Yet China's demanding consumers are also developing a taste for new technology such as autonomous driving, where BYD doesn't boast such a strong lead. Meanwhile, policymakers in the European Union are scrutinising whether Chinese vehicle exports are benefiting unfairly from state subsidies. Sales outside of the People's Republic made up more than a quarter of the total at BYD last year and it wants to expand further overseas.There are challenges ahead but China's top carmaker is in surprisingly good healt

Art of war. BYD is driving China's electric-car battle from a position of strength. The world's largest EV maker is winning market share in the

China’s factories will keep chugging along, regardless of what overseas officials like Janet Yellen say. On Monday the U.S.

HONG KONG, April 12 (Reuters Breakingviews) - Hong Kong's hectic Spring break offers some clues about which direction the Asian financial hub is heading.

Germany may help sharpen the debate about Chinese automakers. Chancellor Olaf Scholz used a trip to the People's Republic this week to warn against production overcapacity in sectors like electric vehicles, picking up themes from U.S. Treasury Secretary Janet Yellen's visit just days earlier. But he also cautioned against responding with protectionism when questioned about the European Union's pro

The Beijing Auto Show, the first since the pandemic, will be a battleground. Foreign automakers from Tesla to Toyota Motor will flaunt an arsenal of new ideas as they try to fend off their fast-growing Chinese rivals in the People's Republic and beyond.

Showing off. Smart cars ruled at this year’s Beijing auto show. BYD, Geely and peers touted everything from self-driving software to massage chairs. But on the sidelines of the show, Tesla's plans to work with Baidu on data collection and introduce its 'Full Self Driving' system in China stole the limelight. Global peers from Toyota Motor to Volkswagen are also using local partnerships to drive faster and smarter.When Chinese drivers buy a middle-of-the-range model for $30,000 or more, a “stupid car” is no longer acceptable, says Maxwell Zhou, CEO of DeepRoute.ai, which makes software for intelligent vehicles. The price point at which customers expect advanced assisted driving is falling, too, he adds.Even cheap and cheerful rides are becoming more sophisticated. On Thursday Xpeng shared plans for its new sub-brand, Mona, short for Made of New AI. The aim is to disrupt the mass market by offering cars equipped with self-developed smart-driving tech, on which the $7.7 billion outfit run by He Xiaopeng has built its reputation, for less than 150,000 yuan (around $20,000).Many of the 700 exhibitors displayed digital flourishes. Geely's Zeekr 001 can call out warnings to pedestrians - and give them a flashing thumbs up. Premium Polestar showcased smartphones that share an operating system with its cars; at the other end of the market, Dongfeng's $9,600 Nammi flaunted phone-controlled locks. Around the hall, cockpits boasted double or triple screens as standard.The country's tech juggernauts and startups are turbo-charging the trend. On the eve of the show, Huawei launched a new intelligent driving software brand, hailing 2024 as the first year for 'mass commercialisation of smart driving'. The company, whose auto unit more than doubled its sales last year to 4.7 billion yuan, says some half a million cars will be using its systems by the end of this year.Chinese brands already hold nearly 80% of the domestic market for new energy vehicles, according to a presentation from state-backed automaker Changan Automobile on Wednesday. A rapid push into smart driving and other novelties gives them an edge that could extend this lead.However, overseas rivals are forging local partnerships to avoid being left behind a second time. News of its deal with Baidu sent Tesla's stock up 15% on Monday. Japan's Toyota Motor and Nissan Motor announced cooperation with China's Tencent and Baidu, respectively. Volkswagen also touted a new intelligent driving system developed together with Xpeng. The collaboration has already helped speed up the development of new models by as much as 30%, the German company says.Such new cross-border alliances will give domestic marques a run for their money - and drive China's car wars into an intense new battle.

Hard brake. Brussels' deliberations over whether Chinese electric-car makers BYD , Geely, SAIC Motor benefit from unfair subsidies are getting harder. The European Union probe into the matter is drawing to a close just as President Xi Jinping arrives for his first visit to the region in five years. If the EU does impose tariffs, they would have to clear a very high bar to be effective. And the leader of the People's Republic can muster compelling counterarguments in his meeting with European Commission chief Ursula von der Leyen on Monday.One aspect that attracts Chinese carmakers to the EU is that it's a far more profitable market for selling their vehicles. Reuters reports that in European showrooms BYD often charges double or more compared to its sticker prices back home, where a price war puts pressure on the top line.The bloc would need duties as high as 50% to erase that advantage, according to research released by The Rhodium Group last week. That would be hard to justify. It would be roughly double the rate set in comparable cases. Higher levels could be more readily explained in egregious cases such as dumping, which the EU defines as selling goods at less than their normal value, but the premium compared with prices at home doesn't support that.In any event, China's largest exporters are already on the road to localising manufacturing, making the EU's task of deterring imports less pressing. BYD and SAIC have plans to build factories in Europe; some Geely-owned brands already produce vehicles there. It's a logical move considering electric-vehicle sales growth in the EU is expected to outstrip China's between now and 2030, per the International Energy Agency.There may be severe consequences if the People's Republic were to retaliate in kind to an EU levy. The country is the world's largest auto market, with more than 20 million passenger vehicles sold there last year. Some European marques are especially exposed: around a third of BMW, Volkswagen and Mercedes-Benz's unit sales were in China in 2023.The probe is approaching its final destination. The EU can introduce provisional duties as early as July. While policymakers such as von der Leyen are probably already thinking about driving cautiously - Rhodium Group researchers think the final figure could fall in the 15%-30% range - the outcome is still far from certain. On Friday, the European Commission said Chinese electric vehicle makers involved in the investigation have not supplied sufficient information, suggesting they might use evidence from other sources to compute and potentially inflate tariffs. It's an opportunity for Xi to influence the direction of travel.

Down rounds are usually taken as a sign of problems. That may not be the case for Zeekr Intelligent Technology , which raised $441 million listing on the New York Stock Exchange last week. It seems more likely that Li Shufu, chair of parent Geely Automobile and founder of the Geely group, has learned from some poor dealmaking in the past.