To stay relevant in cars, you have to compete against China
BYD says it can win worldwide without America, while Detroit is barely showing up in Europe.
WSJ What's News · Have U.S. Cars Lost Their Edge?At the Paris Motor Show, amid the hubbub on the show floor, Wall Street Journal reporter Stephen Wilmot had just visited the BYD store, the showcase for the world's largest maker of electric vehicles. Quite a few Renault engineers were checking out the competition there, he said, and in conversations with buyers, the theme of amazing value for money came up again and again.
That scene led him to a line he borrows from the chief executive of Volkswagen.
"China is the fitness center of the automotive industry," the chief likes to say.
Wilmot takes the chief to mean that an automaker has to sweat against Chinese rivals to stay in shape, and he puts the point as a question. If a company is not competing against the Chinese in places like Europe, where consumers can compare its vehicles alongside theirs, he asks, can it really remain globally relevant?
In Paris, he said, that test was easy to see. Jaecoo, a brand made by Chery, China's largest car exporter, was Britain's top-selling car last month, winning buyers by channeling the looks of a Range Rover at about half the price. Chinese luxury brands were pitching a different idea of luxury as well, focused less on driving and handling in the German tradition and more on massage seats, big screens, and cooling boxes.
Because of that fitness test, Wilmot says the open question is "what does it mean to be a global automaker anymore?" High tariffs and software rules have essentially shut Chinese automakers out of the United States, with no sign of change, yet BYD was adamant that it does not need the American market to succeed worldwide. Only three American brands were represented at the show, Ford, Tesla, and Lucid, after General Motors sold its Opel and Vauxhall business in 2017. Wilmot asked, "Can the Chinese be global without the huge and lucrative U.S. market?" He asked the reverse about American companies, whether they can stay global without facing Chinese rivals at home. He said that is definitely a question for Detroit.
Questions people ask
Why are Chinese cars mostly shut out of the U.S.?
The U.S. applies high tariffs to Chinese-built vehicles and has moved to restrict Chinese software and connected-car components. Together, those policies make it commercially and legally impractical to sell Chinese cars in America for now.
What does “In Europe, for Europe” mean?
It is the localization pledge many Chinese automakers are making in response to European trade pressure. Instead of only shipping cars from China, they promise to build factories and supply chains in Europe, like Changan’s plan for 180,000 vehicles of local capacity by 2028.
Is Tesla still a big player in Europe?
Yes, but smaller than it was. Its Model Y remains one of Europe’s most popular vehicles, but Tesla has pulled back from earlier volume ambitions while it emphasizes robotaxis and humanoid robots.