New Delhi, May 10 (IANS). China is currently trying to gain geopolitical advantage by taking advantage of its hold on critical minerals required for New Energy Vehicles (NEVs) i.e. electric vehicles. Its power lies in the ability to influence or disrupt global supply chains.
According to an article published in ‘The Diplomat’, this lead may end in the coming times, because work on new technologies is being done very fast in western countries. Companies like American tech company Tesla are progressing rapidly in new battery technology and driverless vehicles.
The article says that at present, the NEV industry is the only major manufacturing sector in China in which it has real potential to overtake the world and remain competitive in the long run. On the other hand, sectors like semiconductors or robotics may be prestigious and hold promise, but in these areas China is still far behind the international level.
Although China’s NEV sector is growing rapidly, new technological advances from Western countries are bringing changes that could render existing NEV supply chains redundant. The article says that new battery technologies will decide who will capture the future upgrade market.
Apart from this, there is also competition regarding integrated manufacturing cost. Earlier, Chinese manufacturing had an edge in terms of costs, but Tesla is reducing costs through its high-density production lines. With this, it can give tough competition to China’s NEV manufacturing.
Additionally, Tesla is also far ahead in driverless vehicle technology, which has been described as a ‘revolutionary change’ in the article. These three technological advances are considered changes that could weaken or render China’s current supply chain strategy ineffective.
According to the article, given average industrial cycles, we estimate that China has only a three to five year window. The lead that China currently enjoys in certain parts of the supply chain may reduce during this period. If China is not able to continuously make big and effective technological changes, then this opportunity for it will be limited for a very limited time.
–IANS
AY/ABM
