00:00Let's talk to Professor David Bailey at Birmingham University's Business School.
00:04Always great to have you on Global Business, David.
00:06Now look, China's become a global force in EV manufacturing and exports.
00:13How are companies like BYD transforming Europe's small EV market?
00:20It's completely turned the industry upside down and the market.
00:24So what BYD and other Chinese players have done is be able to really get costs down.
00:28So as the IEA report said today, they have a cost advantage of something like 30%.
00:33So they're, you know, really efficient. They build at scale.
00:36It isn't just about costs. Also, the technology is often brilliant, particularly in terms of batteries.
00:41So they've been at this for a long time. They have huge experience.
00:45And the European makers in particular are playing catch up.
00:48So whereas before Europe was leading and China was lagging, now it's completely flipped around.
00:53So why is Europe idling in the slow lane? And have they left it too late to match China's pace?
01:01Well, they were way too slow to go electric.
01:03For a long time, European companies placed their bets really on diesel engines in an attempt to get emissions down.
01:10Then, of course, we had the whole Volkswagen cheating scandal and that kind of blew that away.
01:15They've been since then trying to play catch up on electric vehicles.
01:18But part of the problem is that governments have kind of waxed and waned in terms of their support for electric vehicles,
01:24taking subsidies away and then putting them back again.
01:27But also demand, whilst it's been rising in Europe, it's not been as quickly as anticipated.
01:32So some European firms have cut back on the investment.
01:35That's entirely the wrong things to do because in China, firms are still plugging away on it.
01:39So Europe really needs to speed up and try and close the gap.
01:43Yeah, but you talk about the market in China there.
01:46I'm wondering where you think that's going because it faces challenges too.
01:50Price falls, for example.
01:52I mean, what's your outlook?
01:54That's absolutely right.
01:56So way for thin margins, in some cases, firms unable to sell all the cars they make,
02:01pre-register them and then sell them at a discount.
02:05Also, there are way too many companies.
02:07You know, you've got dozens of electric vehicle makers.
02:10They all won't survive.
02:11This is going to collapse down to maybe 10 or 12 firms, firms like BYD, maybe Geely, some of the others,
02:18which will emerge as very powerful players and which will compete globally.
02:22So the industry in China, whilst very successful, is going through a period of fundamental kind of turmoil and change.
02:30We don't fully know which firms are going to survive that.
02:33What about the U.S. market with Trump's tariffs skewed in its favor?
02:39You know, companies like Tesla face different kinds of challenges, don't they?
02:44That's right.
02:45There was a company also which was trying to scale up in order to get costs down, which has been very successful at disrupting things.
02:52But other American firms have been much slower on the EV take-up.
02:56And they've largely tended to focus on pick-ups, smaller trucks where they can make huge margins.
03:02Now, what Trump has done is try to insulate the American market from Chinese electric vehicles with tariffs of 100 percent and also tariffs on European companies as well.
03:13But ultimately, that is going to push up costs in America.
03:16It is going to reduce competition.
03:18And if anything, I think it's going to put the American industry behind the curve as against the transition.
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