China keeps electric vehicle wheels
Not surprising. China has become the launching pad and the savior of the Japanese automaker. Initially lagging behind with its electric program, the company botched the release of its first bZ4X electric sport utility vehicle which came months after competitors released their models. The wheels were in danger of coming off. He recalled vehicles destined for different regions and then pledged to find a solution. Early last month, Toyota said it was preparing parts to fix the problem and restart production. At the end of October, it launched the bZ4x in China in five variants. It is now launching a second EV – the bZ3 sedan. This time, however, it’s with BYD batteries. It will be produced in Tianjin and distributed in China by joint venture Tianjin FAW Toyota Motor Co. It’s a sea change for a company that has traditionally relied on in-house design and parts.
The fact that China has brought Toyota’s electrical plans to fruition shows how deep and efficient its supply chains are and how capable it is of rapidly ramping up industrial production. It’s an underestimated factor, often lost in the constant geopolitical wrangling.
Beijing has also helped Tesla Inc., laying down the red carpet (on its own terms) and allowing Elon Musk’s company to produce thousands of electric vehicles, launch various models and even export them to Europe. . It delivered a record 83,135 cars to China in September. The company is reaping advantages of scale, which few other countries can match. Musk is now sending engineers and production staff from the Shanghai factory to help expand its factory in Fremont, California. BYD, the national battery and electric vehicle giant, was also able to increase production.
The supportive policy has undoubtedly been helpful. But China’s industrial prowess is key. As Beijing strengthens its auto industry, especially electric vehicles and batteries, it is striving to stay ahead. This means making sure the components are available and up to date. For example, he has now set his sights on a type of semiconductor that will go into almost any electric car – silicon carbide or SiC. These are used in high-end electric vehicles that are increasingly available in China. It does not currently have a large-scale production – at the moment this is dominated by the American company Wolfspeed Inc.
There are also other Japanese companies and emerging Chinese players. These SiC chips have been listed as a key area in the current five-year plan. Research institutes and state universities are backing manufacturing patents, while 30 projects have been targeted to boost chip production to about 4 million wafers a year by 2026, according to research firm MacroPolo. This is important for Toyota, an early adopter of SiC: who wants to continue to face chip supply shortages for the next five years? It’s already starting to feel the pinch of production delays and all the other adjustment costs that come with it.
Even so, the Japanese company was able to handle this. Many others cannot, especially with soaring energy and labor costs. The reality is that business is business and China’s supply chain is indispensable for now.
More from Bloomberg Opinion:
• US simply cannot match China’s industrial clout: Anjani Trivedi
• If the factories don’t come back now, they never will: Thomas Black
• Welcome to the Scary New Inflationary World: Trow and Ashworth
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. Previously, she was a reporter for the Wall Street Journal.
More stories like this are available at bloomberg.com/opinion