China's dominant position in lithium-ion battery and electric vehicle production creates significant risks for the global automotive industry, especially under changing political circumstances.
Chinese Policy and Global Risks
China's policy could heavily impact global car production. The country controls 75% of the world's lithium-ion battery production, making it a significant player on the international stage. The Ministry of Industry and Information Technology of China actively promotes new manufacturing initiatives, attracting attention from companies like CATL and BYD, which hold key positions in the electric vehicle sector.
Impact of Tariffs on the Automotive Industry
Automakers from the US, Europe, and Japan express concern regarding China's growing market control. Following the introduction of tariffs in the US, there has been an increase in vehicle and component prices. Specifically, US shipments dropped by 40% due to redirection of supply sources, and China retaliated with tariffs on rare earth metals critical to manufacturing.
Need for Supply Diversification
Industry leaders are urging the search for alternative supply sources, confirming the necessity to diversify risks associated with dependence on China. Political tensions and strategic maneuvers highlight the vulnerability of existing supply chains, requiring proactive measures from companies to ensure stability.
With China's growing influence in the global automotive market, the need for supply chain diversification is becoming increasingly urgent. The European automotive sector has already stated that it can no longer rely on outsourcing, and must strengthen resilience in the face of growing risks.
