Trade war and safety concerns take centre stage at Shanghai auto show
SHANGHAI, April 23 (Reuters) - China's annual major auto shows have become a showcase for the rise of ever-cheaper, better-performing electric vehicles and more confident local brands in the world's biggest market for cars.
But the Shanghai auto show opened on Wednesday amid deep industry-wide uncertainty over how the U.S.-China trade war could dampen demand and scramble supply chains as 100 more models launch into an already crowded market with more losers than winners.
In a further complication, Chinese regulators signalled more and tougher scrutiny for smart-driving features that many automakers had seen as the next big thing in setting apart their cars from competitors just a week ago.
U.S. President Donald Trump 's move to impose a 145% tariff on Chinese imports and Beijing's counter-tariffs and trade restrictions have pushed global growth forecasts lower and forced automakers and their suppliers to confront new risks.
As the Shanghai show began on Wednesday, a coalition of U.S. auto industry groups sent a combined letter to Trump urging him to roll back 25% tariffs on all imported auto parts, warning the duties would cut vehicle sales and raise prices.
The first blitz of presentations by automakers in Shanghai focused on safety and plans for a rapidly expanding portfolio of EVs from brands like Volkswagen (VOWG.DE), opens new tab and Nio (9866.HK), opens new tab without discussion of the economic uncertainty.
Car demand in China has held up so far this year despite the trade war. Industry-wide auto sales through March were up 12.5%, led by gains for BYD (002594.SZ), opens new tab and Geely (GEELY.UL), China's two top automakers.
But there are also signs of trouble. China is now the world's largest car exporter by volume. While the U.S. market is essentially closed due to tariffs, analysts expect the Trump administration's trade policies to put pressure on Chinese automakers. That could come through weaker demand in China if its economy wobbles or pressure from Washington that could force other U.S. trade partners to align their tariffs.
CHINA CRACKS DOWN ON 'SMART DRIVING'
Chinese automakers, which had been preparing to heavily market their driver-assistance features to set their cars apart from competitors at the show, were forced at last minute to switch to a "safety first" message.
Regulators last week cracked down on the use of marketing terms like "smart driving" and "autonomous driving" after a fatal accident involving Xiaomi's (1810.HK), opens new tab best-selling SU7 EV in March that triggered concerns over how drivers were using systems not designed to be fully self-driving.
Chinese automakers, led by BYD, had previously been pushing advanced and autonomous driving systems, including on cheaper models, in a challenge to Tesla (TSLA.O), opens new tab.
Xpeng (9868.HK), opens new tab, a brand built on the appeal of its in-house technology, including an artificial intelligence-powered virtual assistant, said it would launch a "training camp" for drivers on how to use its systems safely.
'We will emphasise the capability boundaries of the driving assistance functions to ensure safety,' Xpeng CEO He Xiaopeng told reporters on Wednesday.
Geely said it would complete a global security testing center, which it described as the world's largest standalone safety laboratory, in the second half of this year.
Volkswagen (VOWG.DE), opens new tab stressed its rigorous German craftsmanship and strict testing standards.
Lei Jun, the celebrity CEO of Xiaomi (1810.HK), opens new tab who stole the limelight with a crowd of cameras following his every move at last year's Beijing show, was absent from Shanghai as the show opened.
CHINA SPEED
China's hyper-competitive local market remains a minefield for foreign brands. Sales for Honda (7267.T), opens new tab and Nissan (7201.T), opens new tab, for example, were down 34% and 28% respectively in the first quarter from a year earlier.
Volkswagen, once China's top-selling passenger car brand, saw sales drop 6% in the first quarter. Under an electronic banner with the motto 'CHINA SPEED,' the German automaker on Wednesday unveiled the first of five new models, including for its premium Audi brand.
More than 70 Chinese and international auto brands will show off more than 100 new or refreshed models this week.
Less than 10% of the more than 160 auto brands competing in China have a market share higher than 2%, according to data from Jato Dynamics. Most still lose money. Among the winners: BYD, Chery and Geely are profitable, along with EV-focused Leapmotor (9863.HK), opens new tab and Li Auto (2015.HK), opens new tab.
Tesla, the only foreign automaker with a top-selling EV in China, said on Tuesday that it would have to reassess its growth forecast in three months because of the difficulty in predicting 'the impacts of shifting global trade policy on the automotive and energy supply chains."
The trade war has already hit Tesla. Its China sales were down 22% through March from a year earlier. The company has suspended orders for the Model S and Model X because of China's counter-tariffs and paused some imports of China-sourced components.
Tesla CEO Elon Musk said on Tuesday while announcing a 71% plunge in first-quarter net profit that the EV maker's already-delayed production plans for its Optimus humanoid robot had been slowed by China's restrictions on the export of the rare earth magnets needed for the motor powering the robot's arms.
Musk had earlier predicted the robot would be working in Tesla factories this year.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Belfast Telegraph
42 minutes ago
- Belfast Telegraph
Steel industry welcomes 25% tariffs but warns ‘uncertainty remains'
The US President has decided to 'provide different treatment' to the UK after a deal that was struck between Washington and London last month, as he doubled tariffs on imports from elsewhere to 50%. Levies will remain at 25% for imports of steel from the UK into America, however Britain could still be subject to the higher 50% rate from July, or the quotas in the agreement could come into force, effectively eradicating the tax. The 50% tariff rate for imports of steel and aluminium from other nations is due to come into force from 12.01am Washington DC time on Wednesday, which is shortly after 5am in the UK. The Government said on Tuesday night they were 'pleased' that the industry 'will not be subject to these additional tariffs'. Gareth Stace, the director general of UK Steel, said that Mr Trump's decision is a 'welcome pause'. He added: 'Continued 25% tariffs will benefit shipments already on the water that we were concerned would fall under a tax hike. 'However, uncertainty remains over timings and final tariff rates, and now US customers will be dubious over whether they should even risk making UK orders. 'The US and UK must urgently turn the May deal into reality to remove the tariffs completely.' Prime Minister Sir Keir Starmer's trade deal with the US, struck last month, included relief on the steel and aluminium tariffs, but it has not yet come into force. Officials have been working to try and finalise the details of the agreement. According to the text of the order, published by a White House X account on Tuesday, Mr Trump has 'further determined that it is necessary and appropriate to allow for the implementation of the U.S.-UK Economic Prosperity Deal of May 8, 2025 (EPD), and to accordingly provide different treatment, as described below, for imports of steel and aluminium articles, and their derivatives, from the United Kingdom'. We need your consent to load this Social Media content. We use a number of different Social Media outlets to manage extra content that can set cookies on your device and collect data about your activity. The order later says that rates will for now stay at 25% and adds: 'On or after July 9, 2025, the Secretary may adjust the applicable rates of duty and construct import quotas for steel and aluminium consistent with the terms of the EPD, or he may increase the applicable rates of duty to 50 percent if he determines that the United Kingdom has not complied with relevant aspects of the EPD'. The Government has pledged to keep working with the US to get the agreement up and running, and the 25% tariff rate 'removed'. A spokesperson said: 'The UK was the first country to secure a trade deal with the US earlier this month and we remain committed to protecting British business and jobs across key sectors, including steel as part of our Plan for Change. 'We're pleased that as a result of our agreement with the US, UK steel will not be subject to these additional tariffs. We will continue to work with the US to implement our agreement, which will see the 25% US tariffs on steel removed.' The Conservatives have said that Labour's 'botched negotiations have left businesses in limbo'. Shadow business and trade secretary Andrew Griffith said: 'Keir Starmer stood in front of the nation and insisted to the British public that his Labour government had achieved a trade deal with the US – and now one month later our industries face a fresh tariffs blow. 'So once again it seems that Keir Starmer's promise was just like the rest: hollow and broken. Labour's botched negotiations have left businesses in limbo and this country simply cannot afford their continuing failure.' Business Secretary Jonathan Reynolds met White House trade representative Jamieson Greer in Paris on Tuesday. According to the Department for Business and Trade, Mr Reynolds and Mr Greer discussed a desire to implement the deal struck between London and Washington as soon as possible, and committed to working closely to make it happen. The general terms for the agreement between the UK and US were published in May when the deal was announced, and outline the intended plans. White House press secretary Karoline Leavitt was asked if there was a text of the full deal ready to be released, and told reporters on Tuesday: 'There 's most definitely text with this deal, there is language that this side has seen. 'You'll have to ask the UK Parliament why they haven't seen it from their own Government, I obviously can't answer that question.'
Reuters
an hour ago
- Reuters
Advanced nuclear companies and others urge Senate to keep energy tax credits
June 3 (Reuters) - Energy companies representing technologies that provide baseload, or stable and consistent power, on Tuesday urged U.S. Senate leadership to preserve clean energy tax credits that were effectively gutted by a Republican bill passed last month by the House of Representatives. Republicans including U.S. President Donald Trump have criticized clean energy tax credits for incentivizing intermittent renewable energy sources like wind and solar that vary depending on weather conditions. They say the nation needs more baseload power, which includes coal and natural gas, to serve soaring electricity needs tied to data centers and artificial intelligence. But in the letter sent on Tuesday, a group of nuclear, energy storage, geothermal and hydropower companies and organizations said they, too, need the subsidies to support their baseload technologies. "Baseload technologies rely on these credits to secure financing, plan multi-decade investments, and build the infrastructure needed for a reliable and resilient grid. Altering the availability, phase-out schedule, or transferability of these credits would jeopardize the firm capacity now in active development and undercut America's broader goals of energy security and productive investment," the companies said in the letter addressed to Senators John Thune, the Republican leader, Chuck Schumer, leader of the minority Democrats, Mike Crapo, the Republican chairman of the Senate finance committee, and Ron Wyden, the committee's top Democrat. The letter was signed by geothermal company Fervo Energy, storage firm Form Energy, nuclear technology companies Oklo and TerraPower, among others. It was also signed by several advocacy groups representing hydropower, geothermal and advanced nuclear energy.
BBC News
an hour ago
- BBC News
Lee Jae-myung: South Korea's new president has a Trump-shaped crisis to avert
South Korea's new president, Lee Jae-myung, has secured a storming victory, but his honeymoon will barely last the former opposition leader is not getting to enjoy the two-month transition period usually afforded to new leaders, so they can build their team and nail down their vision for the country. Instead he is entering office immediately, to fill the hole left by the impeachment of the former president, Yoon Suk Yeol, who last December tried and failed to bring the country under martial electing Lee, with almost 50% of the vote , South Koreans have vehemently rejected the military dictatorship that was almost forced upon them. Lee campaigned on the promise that he would strengthen South Korea's democracy and unite the country, after a divisive and tumultuous six that will have to wait. First, he has a Donald Trump shaped crisis to avert. In the coming months, Trump has the power to destabilise South Korea's economy, its security, and its volatile relationship with North Koreans were dismayed when Trump slapped 25% tariffs on all Korean imports in April, after already hitting the country with aggressive tariffs on its core industries – steel and cars. They had assumed that being longstanding military allies from the days of the Korean War, and having a free-trade agreement with the US, would spare these tariffs take effect "they could trigger an economic crisis", a seasoned advisor to Lee's Democratic Party, Moon Chung-in, said. Before Trump's announcements, South Korea's economy was already slowing down. The martial law chaos constricted it further. Then, in the first quarter of this year, it contracted. Fixing this has been voters' number one demand, even above fixing their beleaguered democracy. But without a president, talks with Trump have been on hold. They cannot be put off any there is much more than South Korea's economy at stake in these US currently guarantees South Korea's security, by promising to come to its defence with both conventional and nuclear weapons, were it to be attacked by its nuclear-armed neighbour, North Korea. As part of this deal there are 28,500 US troops stationed in the Trump has made clear he does not plan to differentiate between trade and security when negotiating with South Korea, signalling that Seoul is not pulling its weight in either a post on his Truth Social platform in April, Trump said that during initial tariff talks with South Korea he had "discussed payment for the big time military protection we provide", calling it "beautiful and efficient one-stop shopping".This approach makes Seoul uniquely vulnerable. Evans Revere, a former senior US diplomat based in Seoul, fears a crisis is coming. "For the first time in our lifetime we have a US president who does not feel a moral and strategic obligation towards Korea".In his first term as president, Trump questioned the value of having US forces stationed in Korea and threatened to withdraw them unless Seoul paid more to have them. It seems likely he will demand more money this time may not want to pay more, but it can afford to. A bigger problem is that Trump's calculations, and that of his defence department, seem to have changed. This is no longer just about the money. Washington's top priority now in Asia is not just stopping North Korea attacking the South, it is also to contain China's military ambitions in the region and against Taiwan. Last year, a now senior US defence official, Elbridge Colby, said that South Korea was going to have to take "overwhelming responsibility for its own self-defence against North Korea", so the US could be ready to fight option is that the troops stationed here would switch their focus to constraining China. Another, touted by a couple of US defence officials last month, is that thousands of soldiers would be removed from the peninsula altogether and redeployed, and that Seoul's military would also have to play a role in deterring only could this put South Korea in a dangerous military predicament, but it would also create a diplomatically difficult Lee, who historically has been sceptical of Korea's alliance with the US, wants to use his presidency to improve relations with China, South Korea's powerful neighbour and trading partner. He has stated several times that South Korea should stay out of a conflict between China and Taiwan."We must keep our distance from a China-Taiwan contingency. We can get along with both", he said during a televised debate last month. The political advisor Mr Moon, who once served as national security advisor, reiterated Lee's concerns. "We are worried about America abandoning us, but at the same time we are worried about being entrapped in American strategy to contain and encircle China", he said. "If the US threatens us, we can let [the forces] go", he Mr Revere, the former US diplomat, this combination of Lee, Trump and China threatens to create "the perfect storm". "The two leaders may find themselves on very different pages and that could be a recipe for a problematic relationship. If this plays out, it would undermine peace and stability in North East Asia".In Pyongyang, Kim Jong Un will no doubt be watching closely, keen to exploit the shifting ground. His nuclear weapons programme is more dangerous than ever, and nothing or no-one has been able to convince him to wind it down - including Donald Trump who, during his first term, was the first US president to ever meet a North Korean returning to office Trump has indicated he would like to resume talks with Kim, which ended without agreement in 2019. In Seoul, there is real concern that this time the pair could strike a deal that is very bad for South fear is that Trump would take an "America first" approach, and ask Kim to stop producing his intercontinental ballistic missiles that threaten the US mainland, without addressing the multiple short-range nuclear weapons pointed at Seoul. And in return, Kim could demand a high price. Kim has far more leverage than he did in 2019. He has more nuclear warheads, his weapons are more advanced, and the sanctions that were supposed to put pressure on his regime have all but collapsed, thanks largely to Vladimir Putin. The Russian leader is providing Kim with economic and military support in return for North Korea's help fighting the war in therefore gives Kim the cover to make more audacious requests of the US. He could ask Trump to accept North Korea as a nuclear weapons state, and agree to a deal that would reduce Pyongyang's weapons count rather than get rid of them altogether. Another of his requests could likely be for the US to remove some the security it provides South Korea, including the troops."North Korea is in the driver's seat now. The only curveball is how much risk President Trump will take", said Sydney Seiler, who was involved in the 2019 negotiations on the US side. "The idea there might be some sort of troop withdrawal [included in a deal] is really not that far-fetched".Mr Seiler stressed that the US would "not leave South Korea in the dust," but advised South Korea's new president to "establish a relationship with Trump early on", and be clear they expect to be part of any process, if talks new president must move quickly on all fronts, added Mr Revere, arguing that Lee's first homework assignment should be to come up with a list of 10 reasons why South Korea is an indispensable partner and why American dollars are being well spent; reasons that can convince a sceptical and transactional Trump. One Ace card South Korea is hoping to play is its shipbuilding prowess. It builds more vessels than any other country bar China, which is now the world's dominant ship builder and home to the largest naval fleet. This is a frightening prospect for the US whose own industry and navy are in month I visited South Korea's flagship shipyard in Ulsan on the south coast - the largest in the world – where Hyundai Heavy Industries builds 40-50 new ships a year, including naval destroyers. Sturdy cranes slotted together sheets of metal, creating vessels the size of small is hoping it can use this expertise to build, repair and maintain warships for the US, and in the process convince Washington it is a valuable partner."US shipbuilding difficulties are affecting their national security", said Jeong Woo Maan, head of strategy for Hyundai's naval and ship unit. "This is one of the strongest cards we have to negotiate with".In his campaign for president, Lee Jae-myung declared he did not want to rush into any agreements with Trump. Now in office, he could quickly find himself without this luxury.
