Why the Rest of the World Is Buying Chinese EVs

Summary

Shift Key with Robinson Meyer: "Why the Rest of the World Is Buying Chinese EVs"

Date: December 10, 2025
Host: Robinson Meyer (Heatmap News Executive Editor)
Guest: Ilaria Mazzocco (Deputy Director and Senior Fellow, Trustee Chair in Chinese Business and Economic Studies, CSIS)
Theme: Exploring the global rise of Chinese electric vehicles (EVs), their impact on developing and middle-income countries, and the resulting shifts in industrial policy, climate policy, and economic strategy.

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Episode Overview

This episode dives deep into the spread of Chinese EVs across developing and middle-income countries worldwide. Host Robinson Meyer speaks with Ilaria Mazzocco, a leading expert on Chinese industrial and climate policy, about how nations are responding to the surge of affordable, high-tech Chinese EVs. The discussion covers the motivations behind adopting (or resisting) these vehicles, the role of local vs. foreign production, the implications for climate goals and industrial policy, and the larger questions this moment raises for the global auto industry and decarbonization efforts.

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Key Discussion Points and Insights

1. Global Expansion of Chinese EVs

• Chinese EV makers like BYD, Goshen, and Great Wall are rapidly gaining footholds in markets across Latin America, Asia, and Africa—countries like Costa Rica, Brazil, India, South Africa, and Mexico (01:28).
• This surge is displacing vehicles from Western and local manufacturers, forcing a rethinking of economic and energy policies in recipient countries (01:28–02:30).
• Quote [03:40]: “The Chinese EV industry is huge...at the technological frontier...this is the first time in post-war history essentially that another country has leapt ahead of the U.S. in a high tech industry when that country was not in the Western security umbrella.”
  — Robinson Meyer

2. How Countries Are Responding

a. Small Importer Nations

• Many smaller economies (e.g., Costa Rica, Ethiopia, Nepal) have always imported cars and are now shifting their supply to Chinese EVs.
• For these nations, the shift is less about conflict over domestic jobs or industry and more about strategy: lowering oil imports, climate goals, or cost savings (08:10–09:12).

b. Large Emerging Markets: Brazil

• Brazil is a classic case of an emerging market with a significant car manufacturing base, mainly via foreign direct investment (FDI) from global automakers (Volkswagen, Stellantis, GM).
• Initially lowered tariffs on EV imports hoping to accelerate adoption, but the influx of Chinese EVs prompted domestic industry lobbying and led to a phased reimposition of tariffs (16:00–18:37).
• Notably, Chinese automakers are now setting up factories in Brazil to bypass higher tariffs—a "win-win" politically and environmentally (17:06–19:46).
• Quote [18:51]: “A 35% tariff is not going to keep out Chinese EVs.”
  — Ilaria Mazzocco

c. Industrial Policy Tactics: Indonesia

• Indonesia is actively shaping its auto sector, removing tariffs only for companies that commit to local production—forcing EV makers to build Indonesian factories (19:56–21:20).
• This model is also used in Thailand and is part of a broader push to integrate nickel mining and battery manufacturing, capturing more of the EV value chain (21:20–22:48).

d. India’s Unique Approach

• India boasts domestic conglomerates (e.g., Tata, Mahindra) already making cars and entering the EV space, seeking to limit dependency on China while nurturing local innovation (23:32–25:25).
• Indian firms remain reliant on Chinese batteries (LFPs), revealing the difficulty of fully separating from Chinese supply chains (26:07–27:38).

3. The Battery Supply Chain Issue

• Most emerging and developed markets depend on Chinese firms like BYD or CATL for affordable, high-quality batteries—critical to EV competitiveness and cost (29:51–31:16).

• This import dependency raises questions about how much domestic value is really being captured in local EV sectors, even as final assembly occurs locally.

• Quote [29:51]: "If you were to say, ‘we make our own internal combustion cars here, we simply import the engines from Detroit,’...That’s essentially what is happening when countries import batteries."
  — Robinson Meyer

4. Implications for Industrial Policy and Economic Growth

• Historically, building a domestic auto sector was a 'rite of passage' for industrializing nations—a source of jobs, innovation, technological advancement, and export revenue (33:17–34:09).
• The scale of the Chinese EV and battery sector now threatens to undermine this export-led industrialization model for countries outside China.
• For some, the path forward is to attract FDI—Chinese companies building factories locally.
• Quote [35:13]: “If you take away the battery industry—which is probably the more technologically advanced part...all the value-added is there. So [other countries] are just assembling the cars and competing with China that’s making them cheaper and at a larger scale. It’s just not clear if this is going to work out.”
  — Ilaria Mazzocco

5. Geopolitics, National Security, and Climate

• EVs are now at the intersection of climate policy and geopolitics: decarbonization is increasingly bound up with questions of economic dependence on China (46:49–47:23).
• Countries must decide if relying on cheap Chinese technology is politically and strategically sustainable, even when it offers rapid climate benefits.
• Local policies are being shaped as much by national security and industrial ambition as by environmental considerations.

6. The Evolving Role of China in Global Exports

• China is not only the dominant exporter of EVs but has become a leading exporter of internal combustion engine (ICE) vehicles, working with both domestic Chinese and foreign (Western) brands (38:23–41:24).
• Even countries with robust auto sectors, like Mexico, are seeing a major influx of Chinese-built traditional vehicles as well as EVs.

7. What Comes Next? The World’s Dilemma

• The possible futures: Will more countries raise trade barriers to China to protect their own industries, or will they accept ongoing Chinese leadership in EV technology and adapt their economies accordingly? (41:24–42:20)
• Many countries see attracting Chinese FDI as a pragmatic path: it's politically easier to host Chinese-owned plants than to compete head-to-head as exporters.
• Yet this raises thorny questions about technology transfer, employment, and long-term domestic innovation.

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Notable Quotes & Memorable Moments

• “China just has a comparative advantage clearly in electric vehicles—which is of course funny because there’s been all this industrial policy, it’s been like all this industrial strategy behind it, but, you know, whatever.”
  — Ilaria Mazzocco, laughing ([42:06])

• “If you want to make a cheap car, you need LFP. That’s why Ford sought out that licensing deal with CATL.”
  — Ilaria Mazzocco ([28:14])

• “The automotive sector is just so important and so, so emotionally politically important to so many countries that I just don’t see other countries giving up without a fight.”
  — Ilaria Mazzocco ([42:36])

• “Now, if you want to make rapid progress in sectors like power with renewables or electrification of cars...what you need to do is just import very cheap technology from China. But of course, that comes with a whole slew of issues.”
  — Ilaria Mazzocco ([47:23])

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Timestamps for Key Segments

• 01:28: Overview of Chinese EVs’ global impact
• 04:35 – 06:56: Hyper-competition & involution in China; expansion into developing world
• 08:10 – 09:12: Countries that are simple importers (Costa Rica, Ethiopia, Nepal)
• 16:00 – 19:46: Brazil’s EV policy shift from tariff reductions to reimposed barriers; arrival of Chinese factories
• 19:56 – 22:48: Indonesia’s conditional tariff removals; localizing EV production and battery supply chains
• 23:32 – 26:07: India’s domestic industrial strategy and persistent dependency on Chinese batteries
• 29:51 – 31:16: The centrality of battery supply chains to domestic value add
• 33:17 – 35:13: Challenges to the export-led growth model for developing countries
• 38:23 – 41:24: Chinese ICE vehicle exports—beyond Russia, expanding into all of Asia and Latin America
• 46:49 – 47:23: Climate policy now entangled with industrial and trade policy concerning China
• 54:45 – 56:50: Lessons for the U.S.: need for policy stability, investment across the full value chain, a focus on batteries

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Final Reflections

Industrial Policy Lessons:
To develop a competitive EV sector, a mix of industrial policy, consistent long-term government support, talent development, full value chain investment (especially in batteries), and clarity around national objectives (industrial, climate, security) is needed.

For the U.S. and Others:
Catching up to China in EVs will not be quick or easy. It requires more than just “throwing money at the problem”—it’s about building ecosystems, technical know-how, and securing supply chains, perhaps in partnership with allies.

Big-Picture Takeaway:
The world is at a crossroads: it must decide how to balance its climate ambitions, industrial self-interest, and economic ties with China. Given the pace of change, these strategic decisions cannot be postponed.

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Guest Acknowledgement:
“Thank you so much for joining us on Shift Key. This was great.”
— Robinson Meyer ([58:51])

End of Content Section

Transcript

[A]

You are listening to Shifts Key Heat Maps weekly podcast about decarbonization and the shift away from fossil fuels. On this week's show we're talking about the rise of the global Chinese auto industry. How should developing and middle income countries deal with the sudden arrival of cheap, affordable, fun EVs that are made in China? Should they welcome it? Should they put tariffs on it? What does it mean for their economic growth in the 2000s and the 2000s? Big questions about the future of the auto industry, climate change and the global economy. We're talking about all of them. It's all coming up after this on ShiftKey. This episode of Shift Key is brought to you by heatmap Pro. Heatmap Pro is the premier platform designed to help users build community supported clean energy and data center projects. Heatmap Pro brings all of heatmap's research, reporting and insights down to the local level in a data and intelligence platform that gives you the information you need to navigate political and permitting risk. It's heatmap software platform that tracks all local opposition to clean energy and data centers, forecast community sentiment and guides data driven engagement campaigns. Go to heatmap News Pro to book a demo and see the premier intelligence platform for project permitting and community engagement. That's heatmap News Pro or check it out in the show notes now.

Hi, I'm Robinson Meyer, the founding executive editor of Heat Map News and you are listening to Shift Key Heat Maps weekly podcast about decarbonization and the shift away from fossil fuels. My co host Jesse Jenkins is off this week. On this week's show we are talking about how the rest of the world is dealing with the rise of Chinese electric vehicles. Over the past year, affordable, mass produced, innovative and frankly, very cool Chinese electric vehicles have flooded markets around the world. In Costa Rica, in Brazil, in India, in South Africa and in Mexico, tens or hundreds of thousands of these cars are selling, they are on the road right now and they are displacing other cars. Cars from foreign manufacturers, from domestic manufacturers are not getting bought in these countries and instead people are buying BYD or Goshen or Great Wall cars. That is changing energy policy in these countries. It is changing how they approach their economic policy and it is for our purposes here on Shift Key Reframing. I think one of the biggest questions in climate policy, you know, for decades when countries went to UN climate talks, they were asking and they were talking about questions around energy efficiency, around mass consumption, and about how reliant they wanted to be on foreign fossil fuel Imports. Now, the biggest question in climate policy for middle income countries is how closely do you want your economy to be linked to China's? Luckily, we have a great guest to talk about these issues. She was on here last year to discuss the rise of the EV industry in China. Now we're here to talk about the rise of that industry all over the world. She's the Deputy Director and Senior Fellow with the Trustee Chair in Chinese Business and Economic Studies at the center for the Strategic and International Studies of think tank in Washington D.C. she has over a decade of experience researching industrial policy, Chinese climate policy and the intersection between the energy transition and national security security. She formally led Chinese climate and energy policy for Macropolo, the Paulson Institute's think tank. She did her PhD work on Chinese industrial policy and how it focused electric vehicle promotion efforts. She speaks Chinese and Italian we're so excited to have her back on shift. Key Hilaria Mazoko, welcome to the show.

[B]

Thank you so much for having me.

[A]

Rob, thank you for joining us. It's so excited to have you back. So when we last had you on the show, we, we talked about the size and scale of the Chinese EV industry. One of the big takeaways was the Chinese EV industry is huge. It is at the technological frontier and that this is the first time in kind of post war history essentially that another country has leapt ahead of the U.S. i would say, in a high tech industry when that country was not in the Western security umbrella. At least that is the takeaway I remember from the episode. Whether it's true or not, I feel like the broader discourse has caught up with that realization and has kind of come to a broader realization about the scale and innovative capacity of Chinese firms. What has changed since then that we should be aware of and what have you been tracking?

[B]

Yeah, thanks. I mean, wow, you went big in the framing of that. But no, I think you're right. Like, look, EVs are a good example of something. Right. Bigger. But then EVs are also like a big deal in itself because it's part of the automotive sector, which is, it's like when you think about manufacturing, half of the time you're thinking about cars. Right. That's what most countries sort of consider the pillar of their manufacturing sector. And not just like developed countries, but also developing countries. Right. I think something that I've realized over the past year, looking at this sector more globally is just how important this is as a source of employment, innovation, just sort of resilience for a lot of countries. Economies So I think there's those two elements. And then I think what has changed is when we talked China was already sort of going global, the Chinese companies were already having an impact globally with their exports, but I think that's just accelerated. And now it's like much more visible across the world, increasingly in developing countries. And then I think at the same time, what's happened in China is that you've had sort of degeneration of some of the trends. Again, I think we'd already talked about the hyper competition. Right. The issues with price wars. Right. All the trends that now have been sort of called involution by the Chinese government, which is obviously, of course, the time term that anybody would come up with. But those trends have made it, you know, made the market in China even more difficult and complicated. So you've had these sort of different factors both within and without China, within and outside of China.

[A]

Let's talk about the changing scale globally, because I think when we last talked, it was. You were. It was the beginning of the Chinese expansion. And it was. All of that discussion happened through byd. And so the idea that BYD was opening. Opening factories abroad, the idea that BYD was like building its own car carriers was a huge deal. You've put out a report, that's why we're talking to you now about kind of the role of Chinese EVs in six different countries. What is driving how developing countries, like, approach Chinese EVs? Is this a story of China mostly exporting finished products to the rest of the world? Or is this a story of China kind of setting up factories in other countries and then building its cars abroad in a kind of gradual expansion of the Chinese manufacturing state?

[B]

Yes. So, yeah, those are big questions.

[A]

Let's.

[B]

Yeah, let's. So first of all, yeah, I keep asking big questions.

[A]

I'm so sorry.

[B]

Yeah, yeah, yeah, yeah. No, no, no. They're great questions. Right. So, yeah, first of all, thank you for mentioning the report. My colleague Ryan Fedderson and I published this in October. So it's available online on our CSA on the CSIS website, and it has a lot of pretty colorful charts for those who are interested. I think what we tried to do in the report was exactly trying to figure out what the motivations were at the country level for the countries that are importing or becoming recipients of investment from China. All right. Because we tend to talk a lot about this, like, flood of Chinese exports. Right. The overcapacity story. But I felt what was interesting to see was how is the rest of the world sort of welcoming or rejecting this. Right. How they're responding to this, to these trends in China. So that was what, that was the impulse behind the report. And what we found is really a mix of all the above. Right. So there are some countries that are more, I would say, simple buyers. They have always been importers of cars. Right. So this is not necessarily a change in status for them. And in some cases they are very much embracing the shift to EVs for whatever strategic reason they might have. Right.

[A]

And what's a good example of a country like that?

[B]

Well, the country we focused on was Costa Rica, but there's like a few other countries out there where the data is not as good. Ethiopia, Nepal, you know, these are countries more on sort on the extreme side of things. I think there's also some examples where those changes have been a little less rapid. But you know, these are tend to be smaller countries that don't have an automotive manufacturing industry. Right. So there's no conflict there. Right. It's as I said, they're just shifting like instead of importing from Germany or the United States or Japan, they're shifting to importing from China for the most part. And with that they're in many cases hoping to reduce their oil imports. Right. So there is a strategic reason in many cases it's not just pure climate. I think actually Costa Rica climate plays a big role. Not not only. So I think there's a lot of countries in that category. But there tend to be smaller countries. It's not usually the country, it's not the G20 countries, so to speak. But a lot of countries in the world are smaller countries that don't make cars.

[A]

So there are some countries that like buy EVs just because they're buying EVs now. They've always bought their cars abroad. They, their economy is not based on kind of these high end manufacturers. They're not trying to move up the value chain like maybe larger developing countries are. There are also larger countries in the report like Indonesia and Brazil. What characterizes how those countries approach Chinese.

[B]

EVs yeah, and I look, I should say one thing also before. Sorry, we jump to that. Like what, what's also emerged is that a lot of countries have been trying to import more EVs for a very long time and did it, they had these policies, they've removed tariffs and actually a lot of big countries did this too. Right. Brazil, even Mexico. Right. There was sort of an environmental policy and it didn't really make much of an effect until Like a couple of years ago when all of a sudden like BYD decided to go global and like started like entering these new markets. So I would just put that out there as well.

[A]

Well, can I ask, actually, I want to touch on that before we move on. Why did countries want to import EVs even before the arrival of cheap Chinese EVs on the market happened?

[B]

I think those were actually primarily climate sort of targets. And I think in part it wasn't so controversial because I don't think established automotive companies felt that threatened. Right. It was like, well, yeah, maybe somebody's going to import a few tes. You know, maybe we, the established automakers will make some EVs and then we'll sell them to this country. I would say it's pretty clear no one was really expecting this like wave of exports from China to hit developing countries, including many of the developing countries. Right. Chinese automakers have been looking for markets desperately. They can't necessarily expand their presence in markets like Europe as quickly as they would like to. They can't access North America. Japan is also not a market that's particularly available to them. And so they're just looking for where, wherever else they can go. And so as a result, they're going to all these emerging markets that nobody really thought even had demand for EVs. And it turns out there's a lot of latent demand, but it's not necessarily ideal for the Chinese companies. Right. It's much better to sell like one market where you can sell like 2 million cars in one year, rather than these little markets where you're selling like 20,000 cars every year. Right. Because they're just so much smaller. But that's what they're doing in effect.

[A]

Can I ask an even more basic question before we get to the next, before we kind of talk about how different countries are approaching this, which is why are people buying EVs and where do they charge them?

[B]

Yeah, no, that's an excellent question. I'm not like a market expert and I'm certainly not a market expert for countries like Indonesia or Brazil. But my sense from talking to experts in this, in these countries is it's a combination of, you know, in some cases the cars are actually quite attractive. They have all these connectivity, connected features. In many cases, look, we, we're talking about these cars going to emerging markets. So they're going to countries with that have lower national income, but the people buying them are not necessarily low income. Right. So these are middle income, middle, upper middle income people, often that are Living in urban settings. So I think that's worth keeping in mind because in some cases I think it repeats the same patterns we've seen in other countries is often the second car they buy. Right. These are people who live in cities. They probably have more access to the public. Our charging infrastructure is being built. It's probably being built primarily in those big, large cities initially. Or in some cases they may have access to charging at home or their offices. Right. So that's definitely sort of the trend. This is not necessarily a rural Indonesian trend that we're talking about, right?

[A]

Yeah, totally, yes. Well, in your research, what role have the development of these charging networks played in EV adoption? Like, are there some countries that are building out domestic EV charging networks partially as a play to get more EVs and have more people driving EVs around?

[B]

Absolutely no. And so I think in every single country, the same story you hear is like the constraint and further growth is building out the charging infrastructure. But in many countries the government is already thinking about that because they want to promote it. Right. So the countries that I think have been caught by surprise are the ones where it'll be interesting to see if charging infrastructure keeps up because the government might not be quite as committed. Right. I mean, I think like in general, and I don't have the exact data on charging in Brazil, but like, you know, I think Brazil has been a country where there's been like very mixed feelings about EVs. Right. Biofuels play a very important role in the country. The government has been certainly very open to electric vehicles and I think they have been very welcoming of Chinese investment in factories. But this is not like a strategy strategy where it's like we're going fully electric. Right. I don't think anybody in Brazil expects that to happen anytime soon. So I think there's been some support, but it's not been like full on complete support. But if you look at Costa Rica, for example, they have excellent charging infrastructure because the government is fully behind it. Even in India, the government is building out charging infrastructure quite rapidly because they do have these goals for electric mobility and they're hoping that they will actually be successful Indian manufacturers that might even have export potential. So you're seeing a lot of support there. Now, of course, there's the same issues with charging infrastructure in every country. Like, just because you build the thing doesn't mean it's going to work. Like you have the whole system in place. Right. You probably need some like private investment. Right. So it's complicated, but I think You've seen a variety of different approaches. I think ultimately that's going to be like a really interesting area to watch, especially to see who, you know, do you see more domestic players involved in this? Is it, you know, Chinese companies? I think it's a very diverse and varied environment and I think there's also lots of national security issues around, you know, what, whatever hooks up to the grid. Right. So I think there's like a lot of interesting questions there, but I think it'll be interesting to watch. But I think ultimately what we're seeing now is that in a lot of developing countries, not all developing countries, but a lot these large emerging markets, we've seen like a bump in sales of EVs and then once that happens, typically that's when you started getting like, oh, well, maybe we're missing charging infrastructure. Are we going to build the charging infrastructure? Maybe there's some investors who started pouring in. So this is the moment when I think there's going to be that demand has become clear and so there's a case, a business case or you know, an infrastructure case for the government to step in. So I think this is the next five years will be interesting to watch from the charging perspective, especially because in some cases the grid is not always perfectly ready for this in some of these countries.

[A]

I think you mentioned that Brazil was maybe a little taken by surprise by the arrival of Chinese EVs. And actually I think their story basically starts with them lowering tariffs on EV imports and then being like, oh wow, there's a lot of EVs that are suddenly showing up, but they also have this history of building cars domestically and a kind of history of like internal combustion vehicle focused industrial policy. So what's been the story of Chinese EVs in Brazil and how have they dealt with the sudden arrival of affordable, abundant Chinese EVs on the global marketplace?

[B]

Yeah, so Brazil is like classic example of a big emerging market that has an automotive sector.

[A]

Are these OEM, are there Brazilian OEMs that we just don't see in North America or are these kind of global car brands that are building in, mostly building in Brazil, maybe a few local models, a lot of parts. And it's going to be largely the companies that we've heard of in other contexts, whether it's Stellantis or Volkswagen or Toyota.

[B]

Yeah, it's the latter. Right. And that's the thing about most, in many cases, not all. Right. But in many cases a lot of emerging markets tend to have are be recipients of fdi, which again Changes a little bit the political economy and the political calculus. So Brazil is a big manufacturer and it's got, you know, a lot of manufacturing investment from all the big players. Right. So the Stellantis. Exactly. Volkswagen and et cetera, by GM even. Well, Ford, famously, one of their factories shut down and BYD has taken it over. So that's, that's the part of that story. But they have the expertise in Brazil. This is definitely a country that has sort of industrial ambitions. And so they, I mean, they removed tariffs quite a while ago and it didn't really make much of an effect on EV sales until really two or three years ago when all of a sudden they started getting more and more cars, predominantly BYDs, which have done, they've performed really well on the market. And that's what we're seeing now. And it sort of triggered a response where now tariffs have been reintroduced. The tariffs will go up to ramp up to 35% in 2026. And they've been reintroduced on a like, gradual scale. But that's been the result of domestic producers sort of freaking out a little bit and saying, well, wait a second, and lobbying the government and. But what's been interesting is that at least two Chinese car makers, EV makers, have now opened factories in Brazil.

[A]

I guess I'm curious, like, as Brazil has like raised tariff rates to kind of keep out Chinese EVs, this would be a decision with kind of a lot of environmental significance if it were made in the United States. Has there been an environmental pushback to that?

[B]

I would say there's a couple of things to keep in mind here. Like, first of all, 35% tariff is not going to keep out Chinese EVs. And then secondly, I think a lot of people, including our environmental, or rather climate people in Brazil, think that localization of production is probably a good idea from a political economy standpoint. Right. It's more sustainable from a political standpoint. So if BYD starts making, as you know, it is making, it's assembling now vehicles in Brazil and plans to make more of the vehicle parts as well in Brazil, that's probably sort of seen as like a win win sort of outcome, I would say. To be frank, I think the more of the concerns of the activists in Brazil may be that there may not be enough commitment to electrifying the sector or I would say that probably like the broader concern.

[A]

Right, so that's Brazil. Let's talk about. So Indonesia has taken a very different route. How have they approached the sudden arrival.

[B]

Of Chinese EVs so Brazil is sort of, in what I say, sort of accidental in the sense that they removed the tariffs, then they got this inflow of cars and then they introduced the tariffs. And meanwhile Chinese automakers said, well, fine, we'll make them in Brazil. Right? But it wasn't necessarily like a fully fleshed out strategy. Indonesia instead took this like very intentional strategy of saying we will remove tariffs only for those carmakers that then commit to building a factory in Indonesia. Which is what Thailand did a couple years prior to Indonesia and has resulted in several factories, predominantly by Chinese automakers, opening up in Thailand for EV factories. EV assembly predominantly in Thailand. And so Indonesia has adopted the similar model and 2020, the 2026, this is the end right this month, by next year, these carmakers need to have their factories up and running or they need to pay back all the tariffs that they were exempted. But it looks like they're going to get quite a bit of investment. Predominantly again by Chinese automakers, but not just Chinese automakers. There's Vietnamese company VinFast. Hyundai already had a presence in Indonesia. So that's, as I said, really evolving situation. So in a couple of years I think we'll have a better sense of how, just how successful it's been.

[A]

This is also of a piece with Indonesia's like approach to decarbonization, which has been to try to localize key industries. Right. We're talking about EVs, but they've also tried to move up the value chain and nickel refining because the large, the largest nickel mines, which are key input to batteries are in Indonesia. And they've tried to like move up that value chain, right?

[B]

Yeah, absolutely. I think there's like a broader story about how for the past few years we've been talking about industrial policy in the United States or Europe, but it turns out a lot of countries are interested in doing industrial policy and clean tech, industrial policy specifically. And so certainly Indonesia has been one that's been thinking a lot about this. They wanted to connect the upstream to the downstream through more battery manufacturing in Indonesia. So before, before they even introduced a tariff removal strategy, they'd actually tried doing a different strategy by removing VAT value added tax for buyers of cars that have very high local content. But the problem there was that only a couple of automakers really qualified. And so sales were just not really moving very quickly. And so when they removed tariffs, all of a sudden they got all these exports from China and suddenly sales went up like 12% or something, which is, it's pretty crazy in such A short period of time. Of course, again, I should emphasize small markets. We're talking about very small markets, so you can make a big impact.

[A]

What's the number of cars we're talking about here? Just to get.

[B]

It's less than a million passenger vehicles sold in a.

[A]

Every year across all of Indonesia.

[B]

Across all Indonesia. I mean, when we talk about emerging markets in Asia, two wheelers and three wheelers are often way more important than passenger vehicles. Right.

[A]

So, yeah, let's just quickly go through a couple other countries and then I want to get your big picture sense. India, a very different. Finds itself in a very different geostrategic position with regard to China than say, Brazil or Costa Rica does. How is. But India also has these huge development needs, huge need for energy. How are they approaching the rise of EVs?

[B]

Well, India, unlike Brazil and Indonesia, has its own domestic players. So India obviously is a big recipient of fdi. Right. There's a lot of, for example, Japanese.

[A]

Automakers in that, like Tata and other Indian conglomerates make EVs already.

[B]

Well, yeah. And they made cars before that. Right. Which wasn't the case in any significant way for Indonesia or Brazil, but is a big deal for India. And then in addition to that, you.

[A]

Mean just in that, like, how is India's car. We were just talking about how Brazil has its own auto market. So what do you mean? How is India different from Brazil? Is it because India has homegrown conglomerates that are making these. They're making cars.

[B]

Yeah, absolutely. Absolutely. So I think if you're looking at it from the Brazilian or the Indonesian government perspective, you may have obviously ties to the existing companies that are producing in the country. But. But if you're receiving new fdi, that's just more competition. It's. You're not thinking about it as like, this is displacing my domestic players that are really important for me from a geostrategic standpoint. Right. And while I think for India, that is definitely part of how they're thinking about this. And I think when you look at the EV market in India, the big players are Indian, with the exception of mg, but the big players are Indian, which actually means in some ways you're seeing sort of government pursuing softly the sort of leapfrogging strategy that China pursued as well. Right. Where you can see that they're like, thinking through or there may be this sort of like, hope that in the future you get sort of Indian EVs that become more and more important in the Indian market and potentially even on the Export market leveraging what is not as big as it could be, but certainly much bigger than any other emerging market. A market that's bigger than any other emerging market.

[A]

One thing that makes the Chinese market so special is that there's incredible, at least speaking kind of domestically, incredible vertical integration within China. Right. There are very innovative and skilled EV makers, final assembly EV makers in China. But also BYD has this mastery of the entire battery supply chain. CATL was a battery company before it was making EV batteries. It was making electronic batteries. Do Indian companies, are Indian companies as vertically integrated or are they dependent on China for the raw material of their EV assemblies and battery imports, kind of the battery midstream, like many, frankly, American companies are on Chinese companies as well?

[B]

No, abs, they are absolutely dependent on Chinese batteries. So I think if you look at one of the models by, you know, Mahindra Mahindra has been doing quite well. They have these new snazzy models that are going for $25,000. Mahindra Mahindra. It's like an Indian company and they. The battery is a byd. It's the BYD blade, I think, which ultimately, if you want to make a $25,000 or a $20,000 car, it's really hard to make it without LFP batteries. Which, to be honest, is the challenge with Indonesia, where the government has this whole, like plan, grand strategy to reconnect the value chain through from nickel to cars sold on the streets of Indonesia. But the cars that Indonesian consumers buy have LFP batteries in them which don't contain nickel. So that's a different story there.

[A]

But where you really end up away from nickel as a battery input anyway. Because LFP is overperforming. Right.

[B]

Well, but I think that's certainly the trend for more affordable vehicles, right? I think there's. Yeah, that seems to be currently the trend. And so I think it's really hard to do it without some reliance on Chinese companies, Chinese ip, et cetera. And that's something I think that's a challenge for India because I think the Indian government would really, really like to reduce reliance on China. But for that segment, there just aren't a lot of alternatives that are easily available at this moment in time.

[A]

I guess I'm thinking of earlier this year. I realize this is a bit of a marketing stunt, but earlier this year the BYD, BYD is kind of hypercar supercar. The Yangwang U9 extreme set the current land speed record at the Nurburing in Germany. And it did it. The land speed record. Was 308.33 miles per hour, 496 kilometers per hour. I feel like I should get that in. But it did it with an LFP battery.

[B]

I mean, LFP batteries are definitely performing.

[A]

Partially to demonstrate the LFP batteries. And, and can you just also say what's the difference between LFP and other battery chemistries?

[B]

It's lithium iron phosphate, that's what LFP stands for. So it contains fewer hard to get minerals, let's put it that way. Right. There's no cobalt, there's no nickel. It's a little simpler. Right. And for a long time it was thought to be not ideal for EVs because the density of the battery isn't as high. Right. So it was just not necessarily as high performing. But Chinese car makers have sort or not car makers, but Chinese battery makers have sort of persisted in focusing on LFP batteries with some spectacular results I would say. And partly, I think that's been thanks to just being able to deploy them at really large scale and just testing and getting them out there. But I think BYD has really been the great example of that. And like, you know, they just, they invest so much in R and D that it's really hard to compete with them on some of these things. But I think that's the big challenge where if you want to make a cheap car, you need lfp. That's why Ford sought out that licensing deal with Catl was to acquire LFP battery technology. And LFP batteries are really sort of something that Chinese car maker is. Chinese battery makers have really excelled at. Now there could be breakthroughs in other chemistries, there could be a catch up game with non Chinese battery makers that actually become good at making lfp, that all that's entirely possible. But right now, if you're an Indian car maker and you want to make a cheap car, your best bet is probably to get it from BYD or Catl or maybe Goshen or something like that. Right. That's really sort of what you're looking at.

[A]

It also though really changes how we talk about a lot of the development of auto industries abroad. Because I mean, I realize this is how cars were made for a long time, but I think basically like if you were to say, oh yeah, we make our own internal combustion cars here, we simply import the engines from Detroit and then we place them in our otherwise finished vehicles that we've made domestically and then we put it under a domestic label, we're very proud of that. That's essentially what kind of is happening When I think countries import batteries, like the batteries are so central to the operation of the EVs and what the EVs are capable of, that like when you import your batteries, you're really relying on your trade partner for a lot of the core physical capacity of that vehicle and a lot of the core underlying chemical engineering capability that that vehicle affords you. It suggests to me that in terms of, when you think about the global EV industry, there are companies that are dependent on some kind of Chinese battery export, there are companies that are dependent on some kind of Korean battery export. There's a few American entrants, mostly Tesla, there's a few European entrants, and that's kind of it. Everyone else is like piggybacking on the back of one of those core technologies. Maybe that's wrong though.

[B]

No, I think, I mean, look, I think that's the question. The battery, even for the us it's largely been a story of FDI under the Inflation Reduction Act, Right. Trying to get more investment from Korean Japanese companies predominantly, and then having big debates over whether or not Chinese battery makers should be welcome as well. Right. And that was like big, big debates under the Biden administration. And so I think this has been like a pretty geographically concentrated industry in East Asia up until very recently. And so for the most part, if you want a battery industry, you're going to have at least some leveraging of companies already know how to do it if you want to do it quickly. At least, least. I mean, startups may have like fantastic technology and a lot of them do. The question is, can they build out an entire factory, make it at scale, get it to the market? Right. So it's still usual old story and.

[A]

There'S, there's no domestic contract manufacturing environment. The only place that exists is basically in, in Shenzhen or a few other nodes in East Asia.

[B]

Yeah, I mean it's. Yeah. Again, look, just the scale of the Chinese EV market is just bonkers. I was recently looking at the numbers of EV sales in China this year and they were almost catching up with all EVs ever sold in the European Union up through this year.

[A]

So basically every EV sold in the EU ever is equal to the number of, roughly equal to the number of EVs sold in China this year.

[B]

Basically, yeah, like we're talking, we're off by a few hundred thousand vehicles, but it's nothing in the trades market because we're talking about like millions of vehicles. And so I think if you're a battery maker, you have access to that Huge market in China. It's very challenging in, in India we're talking about which is the biggest other emerging market out there. We're talking about tens of thousands of vehicles being sold for each brand.

[A]

One story that emerges from different case studies that you've brought together here is that historically building cars has been an apex industry and a goal of middle income or developing countries. When they industrialize, what they want to have is a car manufacturing sector. And that's because it feeds into and absorbs a lot of other industries. It absorbs the rubber industry, it absorbs the chemical industry, it absorbs electronics, absorbs steel making. But also because like that signals your arrival on the global economic stage, it allows you to maybe export cars to your neighbors.

And cars have been at the center of the export led growth model that we've seen in East Asia or honestly also kind of in Western Europe for the past 60 years.

China has now taken global leadership in the car industry. What does the size and scale of the Chinese EV manufacturing sector mean for the ability of other countries to catch up with China? Number one, but number two, just for the export led growth model, period?

[B]

Yeah, that is a key question, right? I mean especially if you say, as we said before, you take out the battery industry, which is probably the more like technologically advanced part, if you take away the software. Right, which is obviously really important as well. But like that's where all the value added is. So you're not doing that, you're assembling the cars and you're trying to export them, which a lot many of these countries hope to do because they have up until now. But you're competing with China, that's making them cheaper and at a larger scale. It's just not clear if this is going to work out. Now the pathway where this does work out is that China gets cut off from certain markets and some of these countries have sort of privileged access to some other markets. So that could be potentially the way this works out.

[A]

What like sketch out what that would mean would look like in practice. That's basically India cuts off its, cuts off its market to Chinese companies and then other countries can vie over Indian, the Indian market potentially.

[B]

But I was actually thinking more of like China can't export as much to Europe anymore. So BYD exports through Thailand where it's making cars and actually we are seeing Thailand now first. Exports of EVs made by Chinese brands in Thailand toward Europe are happening. They're very few at the moment, but that will be an interesting sort of trend to watch But India has effectively closed like India has really high tariffs on Chinese EVs. So the market is very protective, which is why Indian automakers have been able to flourish.

[A]

When you did interviews for your report, what did Brazilian or Indonesian or South African or Mexican officials. Because there's other case studies we haven't gone into. Like to the extent they talk to you or to the extent experts in those countries talk to you, how are they processing the arrival of this large number of cheap, cheap EVs in their national markets and how are they kind of weighing the trade offs between cheap, affordable, electrified mobility and watching to some degree what has been the defining economic growth model of the past 60 years become much harder?

[B]

I think it depends who you talk to. Right. You're talking to like climate electrification experts and they think this is fantastic. It turns out you don't need to subsidize domestically the sales of electric vehicles. You just need to reduce tariffs or even in some cases keep tariffs at like a manageable level. Right. And I think, but I think actually what, where you see convergence of a lot of different groups is interest in fdi, because that seems sort of an economic growth, has a lot of product investment. Yeah. So seeing like Chinese factories being opened up in their country is seen as generally like a net positive. Right. Because local employment. And then there's the debate is how much they localize, how much is the local workforce use, do they like use local components, the batteries are going to be made locally, etc. Which is interesting because it's actually very similar debates to what you hear in Europe. So it's not really a developing country versus developed country, just sort of like more of a what's your perspective on Chinese investment kind of approach?

[A]

Well, it's almost. Yeah. It's like the key distinction now is, is are you China or are you any other country? And any other country that wants to preserve domestic production capacity basically has to decide how to navigate the fact that China probably is doing.

China at least has a competitive industry, like a peer competitive industry, if not is ahead of their domestic companies and also.

Has a larger internal market than they could ever fathom as a pure competitor.

[B]

Yeah, absolutely. And like, one thing we haven't even talked about is that China's become a huge exporter of internal combustion engine vehicles as well over the past five years. So it's not like if you don't transition to EVs, you're safe. Right. Like your companies are their product. Your domestic production is coming under pressure regardless. So it's interesting for Example, Mexico now imports a lot of cars from China, so a lot of internal combustion engine, and just this year started importing more EVs from China, even though Mexico itself is a major car manufacturer. But a lot of that manufacturing is now serving the United States. No longer. It's no longer serving Mexico itself. So you see a lot of weird things happening in the global markets because China has just become this massive exporter, which has really been like. It's really just been like the past few years.

[A]

How much of the China internal combustion vehicle story is a story that's just about Russia? Because I feel like in 2023, 2024, the Chinese internal combustion vehicle export market was exploding. But when you looked, it was like, mostly selling to Russia because it was replacing basically the cars that Russia could no longer, the European and American cars that Russia was no longer able to buy from the West. Is that still the case? Or has China just. Chinese firms just exhibited the same incredible innovative capacity that we've seen basically everywhere else across the Chinese economy? And they also now, it turns out, make internal combustion engines, like, at a very competitive level beyond just markets that are shut out from the west, too.

[B]

So when we say ice, you know, internal bus engine vehicle exports from China, we're not seeing Chinese brands, right? So a lot of these are actually Western brands that used to sell in China and are having a harder time selling in China. So now they're looking for new markets as well. But also there's a lot of Chinese manufacturers as well. Just the Chinese market since 2020 has just moved so quickly towards EVs that I think even in China, Chinese automakers have been unprepared as well as Western automakers. So I think when. Even when you look at Mexico, you know, there's a lot of GMs that are sold in Mexico. They're made in China, for example. That's the story. So, yeah, Russia, absolutely big part of the story. But actually this year there's been like a dramatic dip in exports of ICE vehicles from China to Russia because Russia itself introduced taxes that serve basically a trade barrier. So despite the two governments being so close geopolitically, even Russia has issues with China's automotive exports at this point. But when you look at. When you look at the breakdown regionally, actually there's been just a dramatic rise in Chinese ICE vehicle exports to Asia. And that's like, all of Asia, right? From the Middle east all the way to Japan. Well, not Japan, but, you know, geographically it spans the whole sort of Asian continent. And there, that's been, there's. So there's been like a lot of other countries that are not Russia, that have also seen a lot of increased exports from China.

[A]

Do you think that going forward what happens next is that countries are going to have to shut off parts of their market or raise much higher trade barriers to China in order to preserve their domestic manufacturing capacity? Or do you think what happens next is just, it turns out China's going to make the best technology in the world for a little while at least the next few decades. And the export led growth model that has been such a big deal in so much of the world is kind of over, at least for the time being. And everyone's just going to sit back and develop a service industry maybe and rely on Chinese exports for their country's kind of high technological capacity.

[B]

I've heard this actually in China, right, where a lot of experts told me China just has a comparative advantage clearly in electric vehicles, which is of course funny because there's been all this industrial pause, it's been like all this industrial strategy behind it, but, you know, whatever.

[A]

Well, I actually think that's a very heartwarming lesson. It means that if you have sufficiently successful industrial strategy, everyone forgets about it, no matter who you are. People start looking around and going, actually we're naturally good at this industry. Yeah, it was meant to be.

[B]

And I'm like, that may well be true that like China right now has this comparative advantage, but the automotive sector is just so important and so, so emotionally politically important to so many countries that I just don't see other countries giving up without a fight. And I think that's what we're seeing a lot of tariff barriers being introduced in a lot of countries, including in a lot of emerging markets. Now the difference I would say with for example the United States, maybe arguably India, is that a lot of other countries are saying we just don't want to be flooded with X exports. But if you want to make them here, that's fine. You're actually enriching our like domestic manufacturing ecosystem. And we can debate over whether or not we'll have localization requirements or joint venture requirements, blah, blah, blah, but like it's fine if you make them here. Like we're fine with that with your technology because we recognize that it's strong technology. And at the same time what you're seeing is like quite a few sort of non American. Well, I would say maybe not quite a few, but there's definitely a few OEMs outside the United States that have Been quite interested in sort of seeing if they can acquire Chinese technology. Right. So if you look at Stellantis or Volkswagen, they have partnerships in China, they have some partnerships that I think spill over into Europe. And that's been sort of an interesting story I'm seeing like does this work where they can somehow sort of acquire some like nice little startup that, that spends a lot of money but maybe has some key technologies they don't have? But I do think, you know, I'll just say this like I do think that like in the long term there is this question for countries that do have their own automakers, where and I think this is a really big question for Europe where if you want your own automaker to be successful, what might make for more sense for them is to just make the cars of China. But that would be a complete disaster from a sort of domestic innovation strategy, national security, domestic employment, etc. And so from that perspective it might actually be better to get a Chinese automaker to be making the car in your country rather than your domestic automaker be making the EV in China and they're exporting it back. So I think there's these like, all these like trade offs and conflicts and tensions that we really don't have very good solutions for. And I think most countries are just going to muddle through. And so I think we'll just be seeing very hybrid models in a lot of the world.

[A]

And that are also the other thing about that is it's totally new. This isn't like the question of how do you do industrial policy? Which is to some degree still debated. It's not clear exactly how you do it perfectly. There's all these trade offs. You could do subsidies, you could kind of develop free enterprise zones, you could do education, you could do, you could raise trade barriers, these all these different tools you could use. And it's still not clear which set of are going to develop an industry that's globally innovative and competitive in a specific country at a specific time. But it's a very old debate. The question of how do you as a non Chinese country respond to the rise of the Chinese innovation and manufacturing ecosystem is like a very new problem that nobody has really figured out the answer to yet. It seems like. Is that right?

[B]

Yeah, I think that's probably right. And I think it's also challenging that these developments are just moving so quickly that you barely have time to think. And like the data is ahead of you. Again, the EVs in emerging markets is like very recent and yet we're here scrambling, trying to like sort of make sense of it and how should countries respond? And like, imagine being a policymaker in one of these countries being like, now what right is this going to work? We'll see. And it's also true that in a lot of cases there's all these questions that countries are going to have to evaluate of what is my industrial strategy, what is my goal, what is my relationship with China, what is my relationship with the United States, where am I seeking to place myself in the value chain? And those are not easy questions to answer. And I think that's going to continue to be a pretty big challenge.

[A]

And it makes it much harder for climate policy too, because climate policy is so linked to EVs and electrifying vehicle miles. You write in the report, climate policy is now at least in part linked to policy toward China and more specifically trade with China. Like suddenly these what had previously been abstract environmental and industrial development questions. If you want to lean more into gasoline, do you want to lean into natural gas? Do you want to build cars? What kind of cars do you want to build? Is now just basically a question of how closely are you linked to China and how closely do you want to be linked to China?

[B]

Yeah, I think that's right. I mean, look, obviously deep decarbonization, right? We can get to it. But like, if you want to make like very quick progress in certain sector sectors in the power sector with renewables or electrification of cars, we now know that like what you need to do is just like import very cheap technology from China. But of course that comes with a whole slew of issues that is in many cases from a political economy perspective or in some cases, right. There may be some national security questions, et cetera, like just in some cases just unacceptable. And so I think that puts some really tough questions in front of the climate community of saying what is our strategy within that? Right. And I think it's going to be important, for example, to have very clear ideas of what is a national security threat and what isn't, because things can get securitized very, very rapidly. I think we saw that with electric vehicles in the United States with the connected vehicle rule, right? We have the conversation about inverters. Like I feel like every few months that comes up again, right? I think they're needs to be like really good, clear standards where people know where they stand. Right? Because I think in many cases it's really technical, difficult conversation. But then I think the same conversation needs to be had about trade. Like, does it matter if your country make this technology or not? And if it does, then how do you make. What's your strategy in order to make that happen without sort of slowing down decarbonization.

[A]

So you stress, what does all of this mean for the US Electric vehicle industry and really for US Policy you talk about in the report, it's like early days for the EV industry, and I guess it is. It's less early days than it was maybe three years ago. And I feel like there's at least another three or two and a half years of US Automakers being not having a lot of policy support. But what does this whole mix mean for the US EV industry? When you looked at these six countries and said, okay, the US Played this role, or if it took this. This approach, that would be a good opportunity for US Companies and to develop a kind of equivalent US Engine here?

[B]

Yeah, look, as we said, a lot of these countries don't have domestic OEMs, right. They don't have a Detroit. And so I think that puts them in a completely different category compared to the United States. I think India is interesting, right, Because India does have its own domestic players. And so I think. And it also has some foreign players that are quite important. But I don't think India's. I wouldn't say India's figured it out either. There's still some very big challenges. So I don't think anybody has offered, like, a clear template for how the United States needs to proceed. But I do think the fact that everybody's grappling with how much do we rely on Chinese technology is something that the United States will also eventually have to confront more in a more upfront way. Because I think, you know, ultimately, once you dig up, like, through the value chain of your. At some point, it's quite likely that a Chinese company touched something in that value chain. Right. Whether it's the IP or the machinery or the rock, it's quite difficult to get, like, a fully pure DNA there that's not contaminated by Chinese.

[A]

Well, as the Trump administration basically learned, because they initiated this giant economic conflict with China, and then immediately China did what everyone who knew about the topic expected to be China's, like, step one in major economic conflict with the United States, which is cut off or otherwise restrain rare earth and critical mineral exports. And the Trump administration responding to what would literally be on, like, page one of what, any briefing document about what a U.S. china economic conflict would look like, the Trump administration responded like, oh, my gosh, what is this? We're so behind. We're Totally taken by surprise by this major development that nobody could have seen coming. And now the Trump administration, I mean since day one as well, has been really hot on critical minerals too, though they don't want to do anything with them. It feels like we're getting there. Just we could identify all these issues with the US Economy and the US kind of innovative capacity and simply from a global economic standpoint today it's not clear to me what we would then do about them once we identified them.

[B]

That's the thing, right? Like I, this is what I always said, it's like fine, if we want to do it completely separately from China, that's okay, but it's going to be, then we have to start moving and put like all the pieces in into place because it requires a lot of investment, it requires a lot of cooperation with coordination with allies. Right. Or like countries that we don't think are necessarily as threatening. Right. And I just, we haven't done that to the extent that's necessary. I think the IRA tried to a certain extent, but certainly I think we're in a different moment and I think we're seeing that China is building a global export control regime for rare earths that is comparable to the US Semiconductor export control regime. They are introducing some export controls on battery technology, which has been interesting. I don't think we're certainly very far away from China actually sort of enforcing that. But I think that's interesting that they've certainly identified batteries as a potential sort of area that is, has strategic relevance and strategic importance. So I think there's definitely strategic reasons why countries may want to build out their battery industry, but I don't know that we currently have very comprehensive policy to make that happen in the short term.

[A]

What would be the sign to you that the US is taking it seriously? Would it be that, like, I don't know, undergrads at state institutions are changing their major from computer science and communications to mechanical engineering because they think there's going to be such so many jobs and there are so many jobs in these fields that they feel like they have to go into it. Like, what is the sign to you that the US is actually taking this seriously? And not just that the US is kind of absent mindedly throwing untargeted money at the problem, but not actually trying to move up the value chain in a conservative way.

[B]

So more mechanical engineers would be fantastic, but I don't think there's like a one policy that fixes it all. I think it would have to be like a concerted mix of different elements where you start seeing like more support. Yes. For education and talent or figuring out how to ensure that there's actual demand in the US for the batteries that we need that can support the building out of an industry with more investment for next generation technologies to ensure that they can actually reach the market. There's a lot of different things that you can do, like thinking about the financing. Right. Do we actually have the institutions that support that sort of financing piece? I think these you see signals at the federal level, at the local level, at the private sector. Right. Like you want to see a lot of that. And again, I would stress, I think it would be good to see coordination or partnerships of some sort with other countries as well. Just because this is something that a lot of other countries are also striving for. And US could really sort of leverage that I think probably more effectively than on many other countries. Just because the US is in that sort of still in that position where it has like a broad reach. Right.

[A]

We're trying, we're trying to get rid of it. We're trying to get rid of it, but it's still something we could theoretically do. Last question. You've been studying for a long time these industrial policies in China that were able to build up the CV industry. You were studying them before the EV industry was built up. What's the lesson of that experience that you think the United States should take away from as it now tries to catch up to.

Far more competitive and Chinese competitors with much greater scale?

[B]

Well, I don't even know if right now we have an official strategy of catching up on EVs with China, but.

[A]

Well, I would say there's no US strategy. But you, you do hear folks like Jim Farley, the CEO of Ford, say we should catch up. It doesn't mean that Ford's doing anything particularly to catch up or that it even supports the policies that would help the US Catch up. But he has identified that this could be something the US could do. So let's say there was a strategy.

[B]

Well, no. And look, to Jim Farley's credit, it's not something that necessarily Ford alone can fix. I think the lesson is that you need a combination of different factors. So it needs a certain level of policy stability. You need policies that help sort of develop the market. You need certain level of pressure, incentives for the automakers. There was certainly a lot of pressure actually on Chinese automakers to, to start making EVs. And then you need a lot more, I think, investment on the like full value Chain. Right. Get batteries, I think, are actually. That's the key. That's the linchpin. Right. It turns out, as we said, like, when you look at a lot of other countries, not that difficult to make the shell of the vehicle, but to make a really good battery at low cost, that's challenging. So I think there's all these different elements. So you need to have. You need to think through policies and sort of work with companies in ways to ensure that the policies are actually implementable. So that's not easy. It's pretty difficult. And in China, it took over a decade. That's the problem of trying to catch up up.

[A]

Do you ultimately think it was the Chinese policies that were successful or was it simply like the Chinese government got out of the way enough and the Chinese population was at a kind of sufficient level of health and education and the Chinese market was big enough that once the leadership was no longer getting in the way, the country was able to achieve a pathway, and it would have achieved that pathway with or without industrial policy.

[B]

Are you talking about like, the Chinese economy or EVs?

[A]

Let's say EVs, but we could talk about the Chinese economy too. I'm kind of asking about that as well.

[B]

Well, I actually think there's an interesting question about the Chinese economy versus sort of these high tech industries which have been the priority of the government. And so I think when it comes to unis, I think policy was very important. Now. I think also the timing of the policy, the companies that were involved, all those were really important as well. And so I think it was sort of like that package that worked really well. But I think they're definitely having, like, consistent support over time was really important, and also, I think, important even for consumers. Right. As a consumer, you're like, I know the government's going to continue to support this, that this is a technology I know is going to continue to grow. Right. It's got resale value. It's not like, you know, the charging infrastructure is going to follow, etc. I don't expect this to be, like a total failure. So I think all that would really matter for Yi's now Chinese economy as a whole. It's like, I think, a far more complex story and, you know, maybe a different podcast episode, but certainly very interesting.

[A]

It's. It's only the most important historical question of the late 20th century and early 21st century. I don't know that we're going to be able to cover it here.

[B]

My answer would be like, it's a mix of the above, right? There's like in some cases it was the government getting out of the way. In some cases it was the government stepping in some other area. So I think it's not sort of a cop out answer. But like I think it's a complicated country with complicated economy.

[A]

Excellent. Laria, thank you so much for joining us on Shift Key. This was great.

[B]

No, thank you. It's always a pleasure.

[A]

Thanks so much for joining us on this episode of Shift Key. My co host Jesse Jenkins will be back next week. If you enjoyed this show, please leave us a review on your favorite podcast app. It actually really does mean a lot. You can follow me on Axe at Robinsmeyer or on Bluesky at my name or LinkedIn under my name. Shift Key is a production of Heatmap News. Our editors are Gillian Goodman and Nicol Orochala. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodberry. Our music is by Adam Paramalau. Thanks so much for listening as always and see you next week.