When there is money to be earned, people will jump on it. As the amount gets higher, more competition will come and along with it, its fair share of politics. Any low level political decision will minimally include multiple objectives, and it is especially so for big countries with the elites and the resources behind them playing a high stake game of chess. But for today, we will focus on a more narrow aspect of their objectives, specifically pertaining to electric vehicles (EVs). So please bear this in mind, that the political decisions mentioned below may only affect EVs as part of their side quests, not as the main objective.
Capturing Of Market Share
Few years back, when people talk about cars, they broadly categorised the cars into Japanese and continental cars. Continental cars are cars manufactured in continental Europe, also understood as European cars. Although South Korea and US also has their share of popular cars such as Hyundai and Ford, but the Japanese and Europeans dominated much of the traditional car market.
From the top 10, if we remove Tesla and BYD, which are now known for their EVs, we can see that the majority of the top companies are from Japan and Europe. Over the years, Japanese cars has built a reputation for its cheaper cars while Europe has built a reputation for its higher quality cars.
However, the rise of EVs has upset the balance. Currently the biggest EV manufacturers are from the US and China. Tesla is in a faraway number 1, and only 1 European company made it into the top 10.
It is no co-incidence that the biggest supporter of EV is the US and China, both with the money and technology to research the new frontiers in this industry. To capture the car market, US and China cannot compete in the traditional automobile industry. They have to create a new industry where everybody starts from a level playing ground and kick out the old gas-powered car industry.
Do not fight where the enemy is strong. Drag him down and fight in a place advantageous to you. This logic applies everywhere. We are not in a television show where the main character fights in a field where the enemy is best in, just to prove that he beat him fair and square.
The Cooperation And Competition Between US and China
Of course China does its usual shortcut of inviting Tesla to set up shop in China, giving much concessions for some of its technology, such as tax exemption, cheap land to build its factory, strong financial support from Chinese banks to build its Gigafactory 3 and of course, access to China’s market. With such strong support, any profit-driven capitalist company will naturally be attracted. US on the other hand, allows Tesla to sack its US factory workers without following labour laws despite gearing up for China’s opening. Tesla’s benefits as a company ultimately will roll back to the US.
In politics, countries compete and cooperate at the same time. Just because they are enemies in certain fronts does not mean they cannot cooperate on others. This is something that as an individual, I still need to learn.
US and China operates very differently, because they are built differently. From ideology (democracy vs socialism) to culture (individualistic vs communal), from the means of diplomacy (military force vs economic pressure) to even the length of their history (500 years vs 5000 years), their differences have seen very opposite means to reach the very same objective. They cooperate and compete at the same time as they understood that neither can swallow the market whole.
In the EV and the wider sector, US is willing to let go control of much of the supply chain for the sake of more profits, very evident from the way US outsource their production to everywhere around the world. Apple can manufacture phones in China and Tesla can set up a factory there. But US will always hold the most critical piece of the supply chain, and in the case of EV, it is the chips. However China does it completely the other way round. To prevent others from throttling its throat, China always attempts to control the whole supply chain, aiming to have the whole supply chain settled within China itself, creating a whole load of unhappiness from neighbouring countries such as Japan and South Korea.
This is also one of the reason why US is clamping down on the semiconductor industry in China. Chips are an essential part in any EV. By coming up with the Chip 4 alliance which includes US, Japan, Taiwan and South Korea but deliberately excluded China, Chip 4 will be the OPEC of the semiconductor sector. Of course, to say that Chip 4 exist solely to disrupt China’s EV industry is going too far. Chip 4 alliance in the wider view, aims to dominate part of the wider supply chain and restrain China at the same time.
Just to digress a little, Asia is the best when it comes to semiconductor. TSMC’s setting up shop in the US is much like Tesla setting up factory in China. First, US will be able to benefit from the transfer of technology, which it lags behind by 15 years. Second, US aims to divide China and Taiwan in a classic divide and conquer strategy, creating a thorn at the side of China. Thirdly, by creating Chip 4 with US at the head, US will have overwhelming power when it comes to this important sector. There are of course many other benefits too many to state here.
To Clamp Down On Other Countries
Europe started the international slave trade, and with it Europe (along with its then colony the US) grew rich with their first big pot of gold, with which they started their industrial revolution. To prevent other countries from doing the same, they championed for the abolition of slavery under the cause of human rights. As long as they cut off this path of blood money to other countries, they would have difficulty amassing the first pot of gold to start off their industrialisation. Europe went on to dominate the world.
During the industrial revolution, pollution in those industrialised countries were rampant. Till the George Bush era, talks about global warming were still clamped down hard as the environment had to give way to money and development. Now, the talks about green energy also uses the same logic. Just as slavery at the cost of human lives was a good way to earn money, industrialisation at the cost of the environment is a very quick way to develop a country. That was why in the early 2000s till middle 2010s, China insisted on focusing on its industries despite being heavily polluted, facing off disapproval globally. Now, having developed its industry, it joined the ranks of the West in campaigning for green energy.
This is much like nuclear weapons. Those who do not have it try their way to squeeze in the circle, with those inside attempting to block them. Once they have managed to squeeze in, they immediately turn to block others. Under the political correctness of saving the Earth, green energy has to be adopted, and EV is one of the ways to reach it. Just as a side note, India says it will only reach net zero emissions by 2070. Those who can industrialise fast enough to squeeze in the green energy circle will be able to stand one level above the rest as they condemned all who pollute the Earth, while the others will be doomed to stay on low level productions much like how North Korea is suffering today.
In this case, EV is simply a tool to move towards green energy, just like how human rights is a tool to end slavery. Countries have never been interested in the life and death of humans nor of Earth, but will stand on the side of whichever will allow them to stand above the rest.
Europe’s Pretentious Support For EV
Europe naturally will not stand let things go easily down the path of EV. Its previous campaigns on green energy were meant to clamp down on other countries, not drag itself down. When it comes down to survival, they will just as easily start up their coal power plants and pollute the air, then claim that it does not damage long term climate goals. Although well-known European cars come from that few countries, but its supply chain stretches across the whole of Europe. In this 36-page research paper by The European Commission’s science and knowledge Joint Research Centre, we know that from the manufacture of parts, high value adding, assembly and even labour, the whole of Europe is in it and benefits together from the automobile industry.
Some companies such as Stellantis, the second biggest collection of auto brands in Europe behind Volkswagen, has openly rejected the decision to move completely into EVs. The ICE vehicles mentioned in the picture below meant internal combustion engine, which is the gas-powered type of engine we are using now.
At the political level, they continued to stand with greener climate and push for EV only on the surface. Currently Germany, France and the Netherlands account for 69% of all EV charging points in the European Union (EU), while the rest of the countries have so little that it is simply not feasible to drive an EV. Adopters of EV in the EU will be like a normal computer user using the Linux system. Whether you are using Ubuntu or Fedora, it is simply fanciful but not as convenient as using the Windows system. EV users will find it difficult to travel to other EU countries on their EVs. The EU as a whole will not reach their proposed target of 1 million EV charging points by 2025.
Europe’s Easy Path Or The Difficult Alternative
Despite Germany’s on-the-surface support for EVs by building many charging points, just yesterday it blocked Tesla’s Gigafactory expansion. I can allow you to set up shop in my country so that I can appear to be environmental-friendly, collect taxes, resolve some employment issues, earn some export money etc, but all these have to stop if you grow big enough to threaten my core.
To force people to adopt your existing or new idea, make your idea very convenient to follow and the alternative extremely difficult for them.
How do we make it easier for people to continue using the gas-powered cars? Make things cheaper. Gas-powered cars are already cheaper than EVs, so the next thing to bring down is the oil prices. Granted that these few months during the Russian-Ukraine war, European sanctions on Russia do not make sense at all. Europe had suffered from higher oil prices which it bought from other middlemen such as India, its money flowed out to US and China, but Europe is now at a stage where it is insisting on a price cap on Russian gas.
But for all the smart play and everything, history tells us that when things go south, there is always one option to exercise – violence. Just like people who lost a gamble may flip the table, countries can also do that. Sometimes we will realise that in the face of overwhelming power and violence, all strategies and chess plays are useless and meaningless.
In the next series we will talk about how US dominate the world with its 3 tools of control, starting with their tool of violence – the US military.