New energy vehicles: “car guy” Biden’s a big dream

The day before South Korean President Moon Jae-in left for Washington, D.C., U.S. President Joe Biden came to Michigan, the birthplace of the U.S. auto industry, to take a test drive in a newly developed Ford electric car at Ford Motor Company’s Rouge Electric Vehicle Research and Development Center to show his importance and support for accelerating the development and production of new energy vehicles in the United States.

New energy vehicles: "car guy" Biden's a big dream

Biden is a “car guy”

Sitting in the driver’s seat of this new car, Biden introduced himself to the press and said, “My name is Joe Biden, I’m a car guy, and you see, the future of the auto industry is electric, and there’s no turning back. The only question is, are we ahead or are we behind?” Immediately afterwards, Biden said three things about China, “I don’t care that China is leading this race right now. They can’t win this race, and we can’t let them. We are at a great turning point in American history. How we respond to the next four to 10 years will determine where we are 30, 40, 50 years from now.”

Three days later, Biden met with Moon at the White House, and one of the elements was for the U.S. to strengthen close cooperation with South Korea in areas including new energy vehicles, new energy vehicle batteries and semiconductor chips. From the Korean media reports, Moon was happy to see it happen. While Biden and Moon were meeting at the White House, the Korea-US business roundtable was held simultaneously at the US Department of Commerce. The heads of the four Korean giants, Samsung Electronics, LG Energy, SK Innovation and SK Hynix, had a close talk with the U.S. companies, and the four Korean conglomerates announced their plans to invest in the U.S. with a total size of $39.4 billion, a generous offer. The huge potential for new energy vehicles and batteries in the U.S. has also attracted Korean companies.

Moon Jae-in stands up for Biden

On the last day of his visit to the US, Moon flew to Atlanta, Georgia, in the southern part of the country, to visit an electric vehicle battery factory opened by SK Innovation in South Korea, which plans to invest 3 trillion won (about 17.18 billion yuan) to develop new energy vehicle batteries mainly for the US. The plant, which went into production in March this year, is expected to supply batteries for 430,000 electric vehicles annually. The South Korean media reported that “Moon’s visit aims to highlight the South Korean government’s will to strengthen cooperation with the U.S. in high-tech industries such as batteries and semiconductors.”

During the visit, Moon said the plant is “a symbol of friendship and technological cooperation between South Korea and the United States. South Korea is the best partner of the U.S. in the field of batteries, and South Korea and the U.S. can achieve a win-win situation through this cooperation. Moon said that the previous day he met with President Biden to discuss the promotion of bilateral investment and cooperation in technology research and development, and that more investment will be made if the U.S. side can provide more incentives for investment. The company’s products and services will be available for purchase in the future. The speech, which Biden was naturally excited to hear, will further tighten the US-South Korea alliance.

The big investment from the South Korean side, especially from President Moon Jae-in himself, has made Washington not only excited. Since taking office, Biden has been working hard on domestic and foreign affairs, as well as on his much-anticipated “reconstruction plan” for the United States. To this end, Biden proposed a $2 trillion “jobs plan” that essentially strengthens U.S. infrastructure and technology and innovation development, but congressional Republicans are very skeptical and resistant. At present, the bill has not been approved by Congress, but Biden can not wait, he has been urging U.S. high-tech enterprises to withdraw their R & D centers and production plants back to the United States, while actively soliciting Japan and South Korea’s high-tech enterprises to invest in the United States to set up factories, the Biden administration to the financial strength and high-tech R & D production capacity of Japanese and Korean enterprises, as the United States “gold master The Biden administration has made Japanese and Korean companies, which have strong financial resources and high technology research and development production capacity, the “backers” of its “Rebuild America” plan.

Three reasons for Biden’s enthusiasm for new energy vehicles

There are three main reasons why Biden cares so much about new energy vehicles and new energy batteries.

First, the global call for new energy vehicles is growing, and is generally considered to be the main development and competitive direction of the future global manufacturing industry, especially the automotive industry, but now the United States in addition to Tesla is more colorful, other car companies have lagged behind greatly, and the concept of consumer change is also relatively slow, the boom of new energy vehicles is far less than China, Europe and Japan and South Korea difficult to soar, Biden has a sense of urgency and reluctance.

Second, Biden has been playing the card of dealing with global warming, and he is trying to accelerate the United States to promote new energy vehicles as a big card to promote its “gas change agenda.

Third, Biden is trying to promote industrial innovation in the U.S. through the accelerated development of new energy vehicles, to compete for the top spot in the global advanced industry, and to try to regain the global competitive advantage of the U.S. auto industry, boost U.S. employment, and enhance U.S. industrial capacity through efforts in the next four to ten years. The hollowing out of U.S. industries has become more serious in the last decade or so, but the auto industry is still one of the few manufacturing priorities and bright spots in the U.S. There are many people employed in the industry, and this is the ballot box that Biden is trying to hold on to.

The global competition for new energy vehicles is becoming increasingly fierce. Statistics for 2020 collected from various sources by the US Encyclopedia website show that of the global inventory (cumulative sales) of electric vehicles, 4.6 million are in China, 3.3 million in Europe and only 1.7 million in the U.S. The difference in global electric vehicle sales in 2020 is even greater: 1.25 million in China, 1.36 million in Europe and only 298,000 in the U.S. In terms of the global market share of electric vehicles, China is 43%, Europe is 31%, and the U.S. is only 16%.

The United States is lagging behind in new energy vehicles

The U.S. has always considered itself a world automotive power, but from the U.S. statistics, the U.S. has been at a significant disadvantage in the global competition for new energy vehicles. This not only makes Biden resigned, but also makes many Americans feel anxious. Scott Foster, an automotive industry analyst at Lightstream Research in Tokyo, commented that in terms of new energy vehicles, “the U.S. has fallen far behind China and Europe. in 2020, Germany will sell one-third more electric vehicles than the U.S., whose population is only 27% of the U.S. population.”

The international auto industry estimates that by 2030, China will account for 40 percent of each automaker’s sales of electric vehicles, eight times the 2020 average. Nancy Stauffer of the Massachusetts Institute of Technology’s Energy Institute predicts that China will sell 12 million electric vehicles in 2030 and that the country’s cumulative electric vehicle sales will reach 70 million, which could leave the U.S. far behind, based on statistics and measurements from its “China’s Transition to Electric Vehicles,” released last Nov. 25. Another expert estimates that there will be more than 40 million electric cars on the road in Europe by 2030, and electric cars will account for half of all new cars sold in Europe by then. But according to the current development rate of new energy vehicles in the United States, the United States will certainly not reach this level by then.

These data and experts’ analysis and predictions have caused a lot of pressure on the United States, and several major car giants in the United States are increasing the research and development of electric vehicles and adjusting their car production plans, and have prepared to change from traditional fuel cars to the production of electric vehicles.

Easy production of electric vehicles

Electric cars are not only the direction of development, but also in the production of traditional fuel cars are not as complex, the United States is worried that once the new energy vehicles become mainstream, the United States of traditional car production and design, technology, technology and other advantages are lost. Electric vehicles have far fewer parts and are easier to assemble than traditional fuel vehicles, as they do not have multi-speed transmissions, fuel injectors, radiators, fuel tanks and exhaust systems. The number of powertrain components in an electric vehicle is only 40% of the amount of powertrain in a conventional fuel vehicle, and the labor time required to assemble the entire electric vehicle can be reduced by 40%. This shows that the allure of electric vehicles is very strong.

However, the accelerated development of electric vehicles cannot be achieved without the development and production of new energy batteries. At present, the world’s major automobile production countries are competing around the development and production of batteries for new energy vehicles. Although the solid battery or fuel cells have not yet formed a consensus and mainstream evaluation, but in the existing technical conditions how to meet the battery production of electric vehicles is already a major problem.

Biden’s calculations

The Biden administration’s calculus is to accelerate the development and production of new energy vehicles while simultaneously laying out the development and production of batteries for new energy vehicles, and firmly grasp the supply chain of electric vehicle batteries in the United States, so as not to be subject to external factors in the industry chain and other risks such as similar epidemics. The Biden administration has managed to rope in Korean companies to invest and set up factories in the United States, mostly for this reason. U.S. authorities are trying to promote U.S. car companies with Japan’s Panasonic, South Korea’s LG Chemical and SK Innovation to manufacture batteries in the United States. Panasonic and Tesla, LG Chemical and General Motors, SK Innovation and Ford, and other car companies are already cooperating with U.S. car companies.

According to SNE Research estimates, the top 10 global EV battery manufacturers and market shares in 2020 are: LG Chem/Korea 24.6%, Carter/China 23.5%, Panasonic/Japan 20.4%, Samsung SDI/Korea 6.0%, BYD/China 6.0%, SK Innovations/Korea 3.9%, AESC/China/Japan 3.9%, PEVE/China 3.9%, and SK Innovations/China 3.9%. with 3.9%, PEVE/Japan with 2.1%, Kalb/China with 1.8%, and Guoxuan/China with 1.6%.

Companies in Korea, China and Japan are estimated to have 93.8% of the global EV battery market share, with Korea at 34.5%, China at about 32.9% and Japan at 26.4%. From this estimate, both the U.S. and Europe are lagging behind in the production of EV batteries, so the Biden administration is trying to accelerate the development of new energy vehicle batteries in the U.S. with the help of South Korea and Japan’s EV battery R&D and production power.

Where is the competitive advantage of U.S. new energy vehicles?

But Biden’s beautiful dream can be realized? At present, the U.S. media and industry are mostly skeptical. There are three main reasons.

First, Biden’s successive large investment plans in the U.S. Congress resistance, Republicans accused Biden for their own political achievements, despite the United States has appeared in the huge fiscal deficit, still spending money, but where the money comes from but can not say more can not be implemented.

The second is that Japan and South Korea can not withstand the U.S. pull and pressure will invest in the United States to set up factories and cooperate with U.S. car companies to produce new energy vehicle batteries, but the current investment environment in the United States lacks the competitive advantages they need, including taxation, labor and labor, etc. Therefore, Moon Jae-in called on the U.S. side to give more investment and industrial policy incentives during his visit to the United States, but this large-scale policy adjustment is not Biden’s words can be done, what he can do is mainly to fool Japanese and Korean companies to invest more in the United States and establish new plants.

Third, Biden to new energy vehicles and new energy vehicle battery competition target is also locked into China is considered a blind and stupid. Most of the U.S. media and industry believe that in the manufacturing industry, including new energy battery research and development production, the United States has lagged behind a lot, at least for the time being do not see what competitive advantage the United States, Tesla came all the way to China to set up a factory production, large-scale production of new energy vehicles and parts, it is enough to show that the United States does not have a competitive advantage in this area.

Biden face a pile of chaos

Biden vigorously promote the production of new energy vehicles and batteries, but also must deal with the relationship with the traditional U.S. auto industry and auto unions, if the speed or strength of the promotion is too fast, the U.S. traditional auto industry, enterprises, workers and new energy vehicle enterprises, industries and workers will certainly occur in direct conflict and conflict of interest, and this is not easy to mediate in the United States. Biden’s visit to Michigan was also aimed at gaining the continued support of the United Auto Workers and voters in the key “swing states”. But what about Tesla, which is currently the largest electric car manufacturer in the U.S. and the world without such a union, if the Biden administration gives government subsidies to Detroit car companies and unions?

A series of complex and thorny conflicts and issues are in front of the Biden administration. Biden, the self-proclaimed “car guy,” can boast about Ford’s new energy vehicles, but if he really wants to compete with China for new energy vehicles and batteries for new energy vehicles, I’m afraid it will be a different story. Biden’s mantra is “wait and see”, so let him wait and see, the future will give Biden an answer.

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