In a sense, the 69-year-old Liu Xiangshang may have returned to the original point, but he may play a key role in the future of the automotive field. LK Technology Group is one of China’s emerging manufacturers, actively competing with traditional companies in the United States, Japan and Europe in the emerging electric vehicle industry. Electric vehicles may shake up the auto industry, which in turn shakes up employment, technology, and geopolitical influence. Take General Motors and Volkswagen as examples. Such auto giants have given the United States and Germany huge economic influence and international reputation.
China is about to become a major player in the field of electric vehicles, and Tesla and a number of Chinese electric vehicle upstarts are helping Chinese companies become more competitive. Tesla’s large factory in Shanghai cooperates with local suppliers to produce increasingly complex parts and help them confront Western and Japanese auto suppliers. Liu Xiangshang said: “The way Tesla produces cars has put tremendous pressure on traditional automakers. The latter has realized how severe the situation is and is transitioning to new energy vehicles.”
Electric vehicles are the core of the U.S. government’s promotion of clean energy and the revitalization of U.S. manufacturing. But likeAppleAs it has done with electronic products, Tesla is establishing closer ties with China to bring its manufacturing supply chain closer to the huge market of auto buyers.
Cheng Peng, CEO of NavInfo, a Beijing map and autonomous driving technology company, said: “China is surpassing its competitors by changing the track in the car race. This race used to be about fuel vehicles, but now it is about electric vehicles. “In the Chinese automobile industry, people often hear the term “overtaking on a curve.” Many senior executives and engineers at NavInfo believe that the transition to new energy vehicles has brought similar opportunities to the mobile Internet in the past decade, when Chinese companies created powerful platforms such as mobile instant messaging app WeChat and short video apps. sound.
This is the biggest reason the Chinese government welcomes Tesla with open arms and provides cheap land, loans, tax incentives and subsidies to Musk’s company. China is seeking what the business community calls the “catfish effect”, which is to throw a fierce predator into a pool so that other fish will struggle harder to survive.
This approach is good for Tesla and Chinese suppliers. Musk said at the company’s shareholders meeting in October that Tesla’s Shanghai plant was completed within one year in 2019 and has surpassed the factory in Fremont, California in terms of output. He said that the Shanghai factory is “the factory with the best quality, the lowest cost, and the least trouble.” For Chinese suppliers, this is also a big deal. Tesla said that in the fourth quarter of 2020, its Shanghai plant purchased 86% of outsourced Model 3 and Model Y parts in China. In contrast, the proportion of Tesla vehicles produced at its California plant is 73%.
With the increase in production capacity, Tesla’s stock price has more than doubled in the past year, and the company’s valuation has exceeded $1 trillion. Analysts following Beijing’s machinery stocks said that Tesla’s China strategy has played a role. They said: “If Tesla hadn’t built a factory in China, would its stock price rise so much? Will its earnings improve so much? Not necessarily.”
The stocks of Chinese suppliers of Tesla and other electric car manufacturers are also very eye-catching. So far this year, the share price of Liu Xiangshang’s listed subsidiary of Lijin Technology Group has risen about nine times. In 2019, Tesla commissioned the Lijin Group to manufacture “the world’s largest casting machine.” Musk said that this machine is about the size of a small house and can cast the rear body of a car at a time, thereby reducing the number of parts and reducing costs.
Liu Xiangshang said that it took more than a year for Lijin Technology Group and Tesla to build this machine. He said: “Every once in a while, Tesla will ask us if it is possible to do this or that. Every time they make design changes, we also need to improve our machines.”
Liu Xiangshang has been fascinated by cars since he was a child. He was born in a Chinese family in Indonesia. He first helped dismantle used cars and then reassemble them with parts in his father’s car shop. He went to school in China in 1966 and moved to Hong Kong in 1972. Seven years later, he founded a machinery company that provided manufacturing equipment for toy manufacturers and watchmakers.
Since then, Liu Xiangshang has always been at the forefront of China’s manufacturing chain. He started to build machines for motorcycle factories, and then for smartcell phone, The car factory provides equipment. At the height of the global financial crisis in 2008, Liu Xiangshang took two strategic measures against two companies that were on the verge of bankruptcy: becoming an equipment supplier for General Motors, and spending about US$5 million to acquire the Italian foundry equipment manufacturer Idra.
Liu Xiangshang said that as more and more automakers adopt Tesla’s method of manufacturing cars, by early 2022, Lijin Technology Group will also provide similar giant casting machines to six Chinese companies. He said that Tesla’s goal of producing 20 million vehicles per year is indeed ambitious, but “not impossible” because it simplifies the manufacturing process. General Motors sold 6.8 million vehicles in 2020, while Tesla delivered only 500,000 vehicles.(Editor’s note: According to Tesla’s data, when the rear body of Model Y was previously produced, 70 parts were needed to create a structure. With the integrated die-casting technology, a giant structural part can be used to build a structure. Instead, the production of this huge structural part only takes a few minutes, which is much faster than the previous production of 70 scattered parts and then integration.)
By changing the way cars are manufactured, Tesla can bring to Chinese electric car manufacturers the impact that Apple has brought to the Chinese smartphone industry.iPhoneMany of the Chinese suppliers began to cooperate with local brands to help them produce better phones. nowHuawei,MilletwithaliveMobile phones are very popular in Europe, India, Southeast Asia and Africa.
However, manufacturing a car is obviously more difficult. Tesla has developed many manufacturing technologies on its own, so it may be difficult for Chinese brands to replicate Tesla’s success by cooperating with suppliers. Musk said on an investor conference call last year: “We have built machines that can make machines and hope to reduce outsourcing.”
More broadly, Chinese electric car manufacturers and their suppliers need foreign-made chips and other technologies. The Chinese auto market is the largest in the world, producing about 25 million cars annually, but the most popular are brands such as Toyota and Chevrolet, and local brands have not yet become popular overseas.
Musk is obviously very optimistic about the future potential of the Chinese market. In July of this year, he posted on Twitter: “China’s economic achievements are indeed amazing, especially in infrastructure! I encourage people to see it with their own eyes!” At the September Internet Conference, Musk said in a video. Said China is “a global leader in the field of digitalization.” In a video earlier this month, Musk praised Chinese automakers as “the most competitive manufacturers in the world.”
Although China has made progress, there is still a long way to go. Liking Technology Group hopes to deliver the same type of casting machine as Tesla to many Chinese companies in the next two years, but these companies are working hard to find the kind of car designers Tesla owns. After all, without a design plan, Lijin Technology Group cannot deliver the machine. Liu Xiangshang said: “Many Chinese automakers are negotiating with us to make machines, but most of them are still in the design process. We have encountered the bottleneck of lack of designers in China.”