There is a famous expression that more or less reads: "If you want to lose money, invest in the car industry". There is a real threshold before manufacturers start to make money from cars and this has for a long time kept start-ups away from the industry.
But that is no longer the case and the number of newcomers is many. Most of the vehicle manufacturers that are now trying to establish themselves come from China.
However, some Western manufacturers believe that some of these new additions do not play with the same conditions as others.
- We cannot have certain players who receive money and backing from states - and that these must compete with the rest of us, said Silke Bagschik, VW's electric car manager, to Ny Teknik earlier this fall.
The EU has also flagged the need to review how China sponsors its domestic manufacturers. Ursula von der Leyen, the head of the European Commission, has said that the Union is reviewing how the EU can act to support its own industry. The review is called by China's commerce minister "naked protectionist behavior that will seriously disrupt and distort the supply chain in the global automotive industry".
What the review will conclude remains to be seen, but pending it, reporting by the New York Times has received a lot of attention.
The American newspaper highlights that Chinese electric car exports have increased by 851 percent in the last three years, mainly to Europe. But it is not the impressive increase that is the most interesting, according to the newspaper. Instead, it's that some of the Chinese car companies are still around at all - despite years of huge losses.
The newspaper takes the Nio brand as an example.
Nio has 11,000 employees, but has sold just under 8,000 cars a month on average during the second quarter of this year. Given the company's loss of $835 million in the same quarter, that means a loss of $35,000 per car sold. This therefore corresponds to an incredible 385,000 kroner back per car sold.
The loss in the second quarter of 2023 is not an isolated event either. Nio has been going back several billion a year for a long time. The New York Times article points out that Nio and other companies in the Chinese electric car range have support from the state, either through direct ownership, or through other players.
The New York Times writes that when Nio was close to going bankrupt in 2020, a regional management directly stepped in with the equivalent of eleven billion kroner and a state-controlled bank led a consortium that raised another 17.6 billion dollars.
Even Xpeng, which invests heavily in Europe, has long been drawn with red numbers.
But not all Chinese car brands are making losses. The giant BYD is steaming like a train and tripled its profit in the first half of the year. The profit can be attributed to the fact that they own their own battery development and production and have set their sights on manufacturing that is efficient and cheap.
BYD's progress in combination with the less successful brands receiving state support is what worries Europe and is seen as market disrupting.
In China, a nationalism is growing within the car industry. One example is BYD founder Wang Chuanfo's statement this summer.
- I think the time has come for the Chinese brands. There is an emotional need among 1.4 billion Chinese people to see Chinese brands go global, he said during an appearance at an event in China.
