Tesla’s death knell for domestic and joint venture car companies

The 32-year-old ratio policy for China’s auto joint ventures is being ripped apart.

"Wall Street Journal" exposed fierce material, Tesla has reached an agreement with the Shanghai Municipal Government, will be built in Shanghai's free trade zone in the history of New China's first foreign-owned car manufacturing plant.

An era is slowly coming to an end, and another, more ambitious scroll is on.

The ratio of joint venture shares

On December 12th, 2010, Car Jujun organized the first “China Auto 50 People Forum” to be held in a crowded place. A fierce topic was to discuss whether the 50:50 stock restriction of China Auto could be liberalized. At that time, he was severely criticized by the industry as a great contender for Yu Wu, Academician Guo Konghui, and Zuo Yan'an. In July 2016, China Automobile Association organized a closed-door meeting for a number of car companies, and wrote a letter to the relevant responsible ministries and commissions, requesting that they not release the 50:50 quota limit, and was criticized by public opinion. Adou, long-term adherence to the joint venture blood transfusion, lost the fighting spirit and ability to do their own brand.

This is the moment.

China’s total GDP now ranks second in the world, 2.5 times that of the third. In the past eight years, six years have been the champion of global trade, and only two years have been stolen by the United States.

Despite the dramatic increase in labor costs, China remains the most competitive manufacturing country in the world and continues to export high-quality Chinese manufacturing to the global market. The expansion of globalization and the scale of trade are in line with China's interests. Especially after Trump’s entry into the White House, the United States said no to free trade, and China has in fact become the standard of global free trade.

Not long ago, the National Development and Reform Commission and the Ministry of Commerce announced that they would consider liberalizing the 50:50 ratio limit in the electric vehicle field, which could be regarded as China’s insight into the global political and economic structure changes and the eve of active policy adjustments.

Given that the penetration rate of the electric vehicle market is less than 3%, opening up the ratio limit in this segment of the market will have little impact on the auto industry's inherent pattern. At the same time, it can attract the global auto giants to actively invest in electric vehicle manufacturing business in China, and thus lead the global auto industry from fuel vehicles to electric vehicles. In the process of this migration, China will become the center of the de facto global electric vehicle manufacturing industry chain. Local companies are expected to gain a more favorable market position in such a switch.

It is obvious that the disadvantages of continuing to maintain foreign investment shares in vehicles are more obvious than the restrictions.

On the macro level, it has become a “stumbling block” for China to try to advance the globalization process and expand the scale of trade. The relevant foreign departments have been criticized and criticized at all times. On the micro level, those industries and companies that have grown up and are competitive globally are inevitably subject to discrimination when developing overseas markets. Just for the “fighting” people can continue to lie in the cradle of the protection policy, foraging food from the joint venture “baby bottle”. At the same time, it also slackened its self-reliance, self-reliance, and self-reliance.

How hard is it to be an independent brand? How many nights Li Shufu went to survive, and when he woke up, he found that his pillow was soaked in his tears, and he was discriminated, ridiculed, and encumbered all the way. However, it is precisely in the nine-death and life-long struggles that we practiced. However, if you can earn money by lying down, who is willing to struggle? The eldest sons of the Republic have found that 20 years have passed and the construction of self-owned brands is still a "ruin."

The liberalization of the limited number of joint venture stocks is an inevitable result of the rise of the Chinese economy and the move toward a global market, and is in line with the overall interests of China. Tesla's sole investment in domestic production is just a beginning, and electric vehicles are just a start. The final result is the liberalization of the ratio of joint ventures for fuel vehicle companies. The rest of the time will not be too much.

The death knell of the joint venture car enterprise

Tesla's domestic production does not have to worry about Chinese domestic self-owned brands or electric car companies, because they have undergone fierce market competition and have very strong survivability.

What is even more worrying is the Chinese joint venture car companies. These behemoths have passed through the sky and passed their most prosperous moments. The market share of China's auto brands has been steadily increasing. From January to September, the sales volume of China's branded passenger cars is 7.355 million, accounting for 42.9% of the market. The self-owned brand car companies such as Geely, Great Wall, and BYD performed brilliantly.

In 2017, the growth of the auto market slowed down, and some of the weaker joint-venture car companies have initially run into trouble. For example, one of China’s earliest joint-venture car companies, Shenlong Motors, had to formulate early- The annual sales target of 10,000 vehicles was lowered to 402,000 units; at the same time, it was revealed that PSA's global benchmarking plant with a capacity of 150,000 units had 1,000 workers attached to the second plant of Shenlong, which was already "transferred" to another company in the Dongfeng Department. In the state of the joint venture Dongfeng Honda, the two major brands under the company, Dongfeng Peugeot and Dongfeng Citroen, have resigned.

Another joint venture carmaker is Beijing Hyundai. The star car company that created "Beijing Modern Speed" suffered market punishment in 2017. From January to July, only 415,000 vehicles were sold, and their annual sales target was 1.25 million. In order to ease the pressure on stocks, the normal production of Beijing Hyundai's five manufacturing plants in China has been difficult to sustain.

Even more embarrassing is that at the time of Beijing’s most difficult modern times, the Sino-foreign joint venture’s infighting is still fierce. China blames suppliers that have a relationship with modernity, and at the most difficult time, cannot reduce supply prices and share difficulties with companies. This move is equivalent to disguising the blood of the Chinese shareholders for their own life.

In 2003, when the car was judged as a graduate, FAW-Volkswagen was the employer we dreamed of. Earlier this year, a graduating child held two offers. One was FAW-Volkswagen's quality control post and the other was GAC R&D. When asked for my opinions, the vehicle reviewer did not hesitate to recommend it to GAC R&D. center.

The fundamental challenge for joint-venture car companies is not the rise of local car companies, but this enterprise form itself is a product of the times and is destined to be a transitional form.

In any industry, in order to harvest the market, competitors have to set up joint ventures because of administrative factors. Shareholders are in conflict with their fundamental interests. This is the ultimate scourge.

The foreign partner of the joint-venture vehicle company will guard against any obstruction in any aspect to ensure that the intellectual property rights will not be "stolen" by the Chinese side; at the same time, it will do its utmost to maximize the profits from the spare parts on the spare parts sales. The Chinese side will establish joint ventures with foreign companies to prevent loss of profits, and at the same time train talents in joint-venture car companies as much as possible and deliver them to independent brands. In each business decision, there are potential game and negotiation breakdown variables around profit and intellectual property. The apparent peace of mind is only due to the limitation of the joint venture ratio.

Such companies do not have a common vision, lack common values, and do not have R&D. Products rely on foreign blood transfusions, have no brand, and even have to pay for the use of foreign trademarks. What kind of extravagant hope is expected from its evergreen gene?

Once the joint venture exceeds the limit, the fight for control will break out. There is no doubt that despite the signing of a series of joint venture agreements. But believe me, there are 100 ways for foreign companies to make this company's operations run into trouble. Some effective damages include stopping the supply of new generation models, stopping technical support, and stopping the supply of core components...

More tricks are not playing with you. Another factory is built and the joint venture is left to fend for itself.

For GM or Ford, what is their need to share half of their profits with local competitors? Also risking the leakage of intellectual property rights, but also training talents for competitors?

All practitioners should have such a realization that the disappearance of joint ventures is only a matter of time. More importantly, plan ahead and plan early, whether it is practitioners, suppliers, or distributors. The advice is that if you stand with the trend, the road will go wider and wider; if you go against the trend, the road will inevitably go harder and harder.

Tesla’s sole proprietorship sang the tragedy of the metabolic screen at the joint venture.

Electric vehicle prosperity

Tesla's domestic news is that all people are waiting for boots. Why wait? Is there any change in Tesla's domestic production in China?

Any automobile manufacturing company, if it has a huge ambition and vision for the future, how can it miss the Chinese market? How could iron man Maske miss the Chinese market?

For global automotive practitioners, what should be more concerned about is the "butterfly effect" of Tesla's manufacturing plant in China. What kind of storms will this bring to the industry?

The "Construction Review" believes that this will be another historic moment: the world's best electric car manufacturer, shaking hands with the world's largest electric car market and the most powerful car supply chain, will jointly pull open the electric Car's grand curtain.

There are a lot of electric vehicles in the world. They seem to have sales around the world and Tesla is even bigger. For example, the Nissan Leaf sold 52,000 vehicles in 2016, 1,000 more than the Model S. However, the Leaf is still not a great product that can provide a driving force for the rapid development of the electric car era.

Even in its 30,000-dollar EV market segment, the Breeze can't open up with Bolt, BMW i3, Renault's Zeo. The great thing about Tesla is that not only is it able to dominate the electric car market, but it can also fight the same level of fuel vehicles such as the Mercedes-Benz S, the BMW 7 Series, and the Audi A8.

The only rival to an electric car is the fuel car. The prosperity of the electric car depends on the fact that the electric car can capture the city of the fuel car. At this stage of the world, for the time being only Tesla can do this, Model S can, Model X can, and Model 3 can.

Especially Tesla's Model 3, this is a moment similar to the Apple iPhone 4. That is, smart cars began to launch large-scale attacks on the front of traditional cars.

The place where Tesla has changed is only in China. More than 50% of the world's electric vehicles are sold here. The world’s best car supply chain is in the Yangtze River Delta in China. China’s spare parts are so cheap that Americans tremble, such as aluminum wheels, forums, and glass, causing Americans to have to They are subject to high tariffs; the world's most skilled car-making workers are in China. They do not have trade unions, do not complain about overtime, may not be happy without overtime, and their wages are relatively low. The world’s most complete charging facilities are located in China and globally. The most friendly policy for electric vehicles is in China.

Tesla's manufacturing plant will be located in China and will ensure that the Yangtze River Delta will replace Detroit as the center of global automobile manufacturing in the future: The leading electric vehicle supply chain will be formed here, and a large number of future vehicles such as autopilot, car networking, OTA and AutoSAR will be cultivated. The necessary talents are continuously delivered to Chinese domestic companies.

It will continue to defend China as the world's largest center for electric vehicle ecosystems, expand the use of electric vehicles in China, enrich the environment for the use of electric vehicles, and form a mature and complete ecosystem of R&D, manufacturing, supply, sales, service, charging, and finance.

In the era of smart phones, the rise of Apple eliminated Japan’s Toshiba, NEC, Panasonic, Sony, the United States’ Motorola, Europe’s Nokia, Ericsson, Siemens, and South Korea’s LG. China is the biggest beneficiary. It was born like Huawei, oppo, vivo, and millet. Although Chinese companies do not have the ability of Apple to develop and manufacture revolutionary smart phone products, relying on China's complete supply chain (manufacturing + Internet) can quickly follow up and create features similar to the iPhone, but with strong price competition. Power products, harvest the market.

Tesla's value lies in its ability to produce revolutionary electric vehicle products, with better experience and higher satisfaction than fuel vehicles, and to drive the entire electric vehicle industry to grab the market share of traditional fuel vehicles and continue to expand the electric vehicle industry. Chain and service chain. Form a positive cycle.

Compared with mobile phones, cars have more market segments. Just like Apple, Tesla can't cover all market segments. It is difficult to achieve productivity, model development, operation, and service.

In a continuously growing market, any electric car company can always find a way to survive as long as it is not too far off the mark.

The age of electric cars is coming soon.