Sunday, March 2, 2014

Automotive Subsidies, Bailouts and Sweetheart Deals From the Government - Not Just in the US Anymore

Will the US hang on to the auto industry? What happens as the Euro Zone collapses and we can't sell cars there and China ramps up production for its growing middle class consumers domestically? It appears China is poised to take it all, and the European, Japanese, and US car makers will not have the ability to stop the onslaught - in ten years, China will own the global auto market, perhaps their biggest competitor will be Tata Motors in India. Okay so, let's talk about all this, and what I see on the horizon presently.

The Wall Street Journal posted an article in their online news on May 30, 2012 titled; "BYD Defends Electric Car; China Plans Broad Subsidy," by Joanne Chou. According to the article, and I have absolutely no reason to refute this news, the all-powerful communist Chinese Government will fund research and development for hybrid automobiles to the tune of between $160 to $315 million. These newly engineered state of the art vehicles will be sold around the world for export, yes, in the EU, Australia, and United States.

Further, since Chinese banks are now allowed to operate retail offices in the US, most likely they will loan money for these new cars, and guess who is leading the charge at BYD motors in China - our own Warren Buffet, who owns a massive number of shares and has a lot of clout here at home with friends in the White House, on Wall Street, and in nearly every major industry. Imagine Smart Car sized Chinese made hybrids running around town, with you in it, brand new from China, with a low-interest loan and easy payments.

This kind of puts the GM bailout all to shame, and the dismal sales of the Chevy Volt - so much for that government debacle. Okay so, why is China subsidizing research on batteries? Well, it turns out that the BYD batteries caught fire when discontorted by 50% in abuse crash tests, meaning they can't must the regulatory DOT rules here at home - yet. Of course, with a little research and seeing as A123 Battery Manufacturer, also US government subsidized and low interest DOE loans failed, the field is wide open again - and China wants that industry - she's going to take it.

Meanwhile, let me be a horse's rear-end here and make a statement. In my view the $160 to $315 million dollar battery research from the Chinese government won't actually be used to develop the technology, rather to borrow or collect the information from American R&D units via cyber and corporate espionage, then corner the market, and sell everyone in the US a hybrid Chinese pocket car which will meet the Obama Administration's new CAFÉ standards for fuel economy.

Looks like we are about to give away one of our mainstay industries - despite our government's attempt to appease unions, and bail it out. I do recall Steve Jobs getting upset in the media once, he said "we don't mind competing, but use your own technology, stop stealing ours," and I guess that too is my frustration as I see all of this unfold in the auto industry this time. Please consider all this and think on it.