Alrik: China’s greatest advantage – Chronicles

Premium “China invested more heavily in the technology shift. The established had too much to lose and too little to gain from a changeover – it was thought. Now the world’s largest battery manufacturer is in China, which also controls the raw materials.”

This is the editor-in-chief’s editorial from Recharge Edition issue 3/2022.

It is no coincidence that there will soon be at least 14 Chinese car brands in Sweden. Yes, you read that right, next year around 25 percent of all major car brands in the country will be from China.

Talk about fireworks!

But this is not a cultural display but the effect of crude economic decisions made by the Chinese government more than ten years ago. Their big cities’ famous air quality more or less forced the electric car investment, and in the back of their minds was of course the idea that China saw a chance to become a major power in the car industry.

It was not the Ministry of Industry that supported the investment without research and technology ministers. Here giant technological steps would be taken and a large industry built with a view to export.

Around the same time – in 2010 – Geely bought Volvo at a sale price. At the time, we thought Chinese cars were bad jokes, poorly built copies of Western products, with crash safety like eighties cars. The only reasonably sensible thing that was produced in the country were so-called joint venture cars, in factories where Western manufacturers were allowed to own a maximum of 49 percent. The scheme brought large incomes to, for example, VW, GM and Citroën, while the Chinese learned to build cars and gained insight into more modern technology.

It was a utopia that China’s own industry could challenge the world. But the purchase of Volvo gave bloody teeth and it was a huge PR success. Now you suddenly got the knowledge and access to perhaps the world’s best crash safety. Maybe you could now build cars as good as everyone else?

But from there to the idea of ​​being able to seriously compete with a more than 100-year-old industry was almost preposterous. The domestic market was indeed large, but far from the purchasing power, and why would the rich choose a domestic Chinese car brand when there were high-quality products from prestigious brands such as Audi, BMW, Mercedes and …

But then the air problems came, at the same time as battery technology had developed, and an idea was born. Massive financial support for electric car buyers and cities that invested heavily in the expansion of charging infrastructure have led to today’s situation where new Chinese brands are almost flooding the market.

But why do they all come at the same time? How will they be able to compete with the established ones? What’s the matter? Who chooses an unknown Chinese brand if the cars are not either much cheaper or better?

And how could they be cheaper? After all, all car brands can – and almost do – build cars in China at reasonably the same costs. And how could the relatively young car nation China beat the old-timers on technology?

The answers can be found in the home market of China.

China invested more heavily in the technology shift. The established had too much to lose and too little to gain from a change – it was thought. Now the world’s largest battery manufacturer is in China, which also controls the raw materials.

In China, new electric car companies popped up like mushrooms in autumn, everywhere! They took in a lot of risk-averse capital and were not weighed down by old know-how and large investments in soon-to-be-obsolete technology.

But what they have done above all that both Europeans and Yankees have missed, which is fundamental, is investing in cheaper electric cars. In Sweden, the prices of electric cars are on average 78 percent higher for an electric car than for similar combustion engine cars.

In China, the average price for an electric car ten years ago was equivalent to SEK 420,000, now it is SEK 220,000…

The “old” manufacturers are stuck in a technology race for new exciting technology and longer range, the only way you can make money from electric cars. In China, they also run that race, while many manufacturers focus on low prices. So-called city cars for well under SEK 100,000 are the big sellers. But even larger-sized cars go down in price.

That is precisely what is decisive. Electric cars get a bad reputation because of high prices. “Nothing for the common people”, a bit like golf or tennis being considered snob sports.

If there are new electric cars at low prices, acceptance increases. All new car buyers should be able to afford it!

That is precisely where the greatness of China’s electric car investment lies. Plus they put all their resources into technology development and have a huge home market. With that volume, you can challenge everyone else on price or profitability.

Source: Senaste nytt från auto motor & sport by

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