All weekend long I’ve been driving on a brand new BMW 535xi sports coupe. Driving off-road in the mud, off-road in the snow. I recently hit 100 kph (60 mph) for the first time ever. What I have learned is that it’s possible to drive a sporty, refined German all-wheel drive car on very rough roads that I could never have dreamt of driving on before.
I have done it driving electric in a small village road up a hill flanked by red roofs on a sunny day. In return, I have encountered plenty of cheery Germans chatting with me, often with a postcard under their arm. I have even encountered a group of Russians pulling a little camper on their snout and hauling a couple of bicycles on their backs.
I enjoy the loud sound of their enthusiasm and sense of engagement. I have a feeling they love what they do. Well, actually, they enjoy their work. It’s not about profit and money, but about making something useful that does useful things and makes you feel good about yourself. And that’s rare in an economy where each individual is weighed and judged based on their number of resources and belongings.
The BMW is just a really well tuned car, but when you drive another electric vehicle that feels the same, it’s often harder to internalize. And that makes it harder to build businesses that can expect the same, because the car is now offering a different standard and therefore an intrinsically different level of quality. The BMW has the luxury cachet and traffic snarls in London don’t. The Volkswagen Scirocco was a four seat V8 with lots of power. The Renault Zoe is a coupe with 125 kW (240 PS) with 150 kW (240 PS) available when the batteries are depleted. The Tesla Model S Diesel is ridiculous.
It’s hard to think of any market like China right now where all the manufacturers are increasingly likely to out-compete each other. People here really care about the brand. Their one-third of GDP spent on autos has already led to the world’s largest auto companies: Evergreen, Dongfeng, Changan, FAW-Volkswagen, Geely, SAIC, BMW, Mercedes Benz, Volvo, and a smattering of others. But in the absence of some sort of export market, most of them will be pretty local. I mean, those guys will hopefully build a real brand in Europe, but if they don’t, the company that sells thousands of cars there, perhaps and I don’t know which, will dominate the Chinese market just like everyone in the foreign press wants.
In the long term, China does not need to keep buying all the foreign models to have an effect. It can build more electric vehicles and keep importing the electric models. What’s interesting here is that in the long term, developing a more competitive domestic electric-vehicle market would benefit the overall economy, because by forcing a price war, more buyers are coming into it, and by driving down prices, it will be cheaper for everyone. The more flexible and efficient the market forces that offer cars more affordable for everyone, the more foreign manufacturers can lower prices. And in the end, that will create more jobs in Europe, even though its finished goods will only be cheaper in China. It’s a Darwinian thing, but it’s a conservative Darwinian thing because it will have a measurable economic impact.