Why Your Next Car Will Be Made in China

The future of global automobile manufacturing

Ric Edelman: It's Wednesday, February 28th. I want to talk to you about the future of auto manufacturing. But to do that, I want to go backwards, first to 2009. It was in 2009 that China became the world's biggest producer of cars. Today, there are 150 carmakers in China. And now today, China is the world's biggest exporter of cars. They sell Chinese cars in more than 70 countries. Nio is now building an electric vehicle factory in Hungary to serve the European market. 42% of car sales in China are either electric or hybrid, compared to 25% for Europe.  

By 2030, 90% of the cars sold in China will be electric vehicles. Volkswagen's market share in China is only 14% and its share of electrics is only 3%. Clearly, the Chinese prefer to buy Chinese vehicles rather than imports from Europe and America. And this notion of electric vehicle explosion, well, China now makes 70% of the world's lithium-ion batteries, and those are crucial for electric vehicles. Chinese consumers rate their cars infotainment systems as better than either US or European carmakers, even though they say that Europe and the US make safer, more reliable and more comfortable vehicles. Apparently, the Chinese care more about their infotainment systems than their seatbelts.  

In 2023, China sold 2.2 million electric vehicles in Europe, 9% of all electric vehicle sales. And those vehicles are 15% cheaper than Volkswagen's ID3 or Tesla's Model 3. And China is expected to grab a 20% market share in Europe by 2030. In the United States, we hit Chinese cars with a 27.5% tariff. That's what makes Chinese cars really expensive here in the US, which is why we don't buy many of them. That's a good thing because in Mexico, which doesn't have a tariff, China has a 20% market share. That would happen here if it wasn't for the tariffs. In the future, the car you might be driving just might be made in China.  

Many years ago, one of my listeners wrote a song about me. We brought him into the studio where he performed the song for everyone. The link to that recording is here. Now another listener, Mark Stone, has written a poem about me. It's going to be published by the Society of Classical Poets. It's been entered into the organization's annual international poetry competition.  

So here's the poem read by its author, Mark Stone, called The Wisdom of Ric Edelman.  

Tush on the sofa and heels on the hassock.  

Buying a fancy car. New or a classic.  

Drinks with umbrellas imbibed on the strand.  

These are the golden years that we have planned.  

Fruitful investing is hard to intuit.  

Learning the basics will help you get through it.  

How can you grow your retirement coffer?  

Ric has some nuggets of wisdom to offer.  

What should you purchase? Each fund has its facets.  

Why are there so many classes of assets?  

Ric’s learned counsel is simple and terse,  

own some of each, so your nest eggs diverse.  

When one of the classes of assets you own  

grows faster than others, you might then be prone  

To just let it grow. One can see the attraction.  

Rebalancing, though, is the more prudent action.  

Don't fret when the market is falling or rising.  

Invest every week with a long-time horizon. 

A pittance saved weekly for decades, compounding  

will yield a remittance that's truly astounding.  

Saving for college should start right at birth.  

Growth over decades will maximize worth.  

It's easy to set up a 529 plan.  

Growth is tax-free, so it's really a fine plan.  

You may not develop a nest egg as stellar  

as those of Jeff Bezos and John Rockefeller,  

But using Ric's wisdom assiduously  

will render your nest egg the best it can be.  

Ric Edelman: That's Mark Stone, the poet who wrote The Wisdom of Ric Edelman. Thank you Mark. I'm grateful for your kind words.  

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