China’s electric vehicles pose an existential threat to the U.S. car industry, auto executives fear. The speedy rise of the country’s EV industry means it is not only satiating demand at home but also supplying low-cost EVs abroad. To address this, among many other trade issues, U.S. Treasury Secretary Janet Yellen traveled to Beijing this past week, and her message to her Chinese counterpart was clear: "You’re producing too much stuff!"

It’s Monday, and we’re back this week with Critical Materials, your daily round-up of key events unfolding in the EV space. It’s a balmy 60 degrees Fahrenheit in New York, and today we’re discussing more about Yellen’s complaints about China, a critical Tesla Autopilot trial that’s expected to begin in California this week, and the explosive footfall at New York Auto Show’s EV test track.

30%: Yellen Addresses China's Industrial “Imbalance”

NIO ET7 customer deliveries kicked off in China on March 28

Yellen was in China this past week on a four-day trip to address Beijing’s industrial overcapacity and how it’s impacting the global economy.

Just to show you where China’s EV exports are going, nearly 20% of the roughly 300,000 EVs sold in the European Union last year were made in China, one NGO said. Moreover, Chinese automakers like BYD are also seeking to take control of the Latin American EV market. That simply cannot happen in the U.S.—Yellen referred to the “China shock” of the early 2000s when Chinese imports destroyed some 2 million American jobs.

Here are some of Yellen’s remarks from the U.S. Department of Treasury:

I expressed concern to senior Chinese officials that there are features of the Chinese economy that have growing negative spillovers on the U.S. and the globe. 

I am particularly worried about how China’s enduring macroeconomic imbalances—namely its weak household consumption and business overinvestment, aggravated by large-scale government support in specific industrial sectors—will lead to significant risk to workers and businesses in the United States and the rest of the world. 

China has long had excess savings, but investment in the real estate sector and government-funded infrastructure had absorbed much of it. Now, we are seeing an increase in business investment in a number of “new” industries targeted by the PRC’s industrial policy. That includes electric vehicles, lithium-ion batteries, and solar. 

China is now simply too large for the rest of the world to absorb this enormous capacity. Actions taken by the PRC today can shift world prices. And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.

China’s Minster of Commerce Wang Wentao responded to some of these concerns during a roundtable in Paris with executives from more than 10 Chinese firms, including BYD, Geely, and CATL. Wentao said Chinese EV makers rely on "continuous technological innovation" and "sufficient market competition" to develop rapidly, and not just subsidies to gain competitive advantages.

He added that China's EV industry is actively responding to climate change and embracing a “green and low-carbon transformation.”

He doubled down on the Chinese government's active support for enterprises in "safeguarding their legitimate rights and interests.” This may be true for the auto industry, but the rise of Chinese EVs contradicts the country’s renewed investments in coal-fired power plants. The country approved two coal power plants every week last year.

All said, Yellen has not threatened any additional tariffs on Chinese imports for now but did not rule out that possibility either. 

60%: Who’s At Fault, Tesla Driver Or Autopilot?

Screenshot from allegedly staged 2016 Tesla video promoting Autopilot

Tesla’s Autopilot driving assistance system is under the legal spotlight again. 

A major trial is set to begin in a few days in a California court, concerning the death of an Apple employee. Walter Huang, a 38-year-old engineer was behind the wheel of a Model X, with the Autopilot turned on when his electric SUV crashed into a barrier at 70 miles per hour. The blunt force trauma resulted in Huang’s death, The Wall Street Journal reported.

Huang’s family alleges that Tesla oversold the capabilities of Autopilot, and didn’t take enough measures to prevent abuse of the technology.

From WSJ this morning:

On the morning of the March 2018 crash, Huang was making his commute to work after dropping his son off at preschool. With Autopilot engaged while on the highway, Huang’s Model X approached a dividing area that sits between travel lanes of the highway and an exit ramp.

The Autopilot system moved the vehicle off the highway and into the dividing area, and then struck a barrier at about 70 miles an hour. Huang died as a result of blunt force trauma injuries sustained in the crash.

His family’s attorneys say Tesla is to blame for the incident because reasonable drivers believe Autopilot is safe and can navigate highway roads, according to court filings, citing statements and advertising by Musk and the carmaker.

Tesla said Huang was playing a videogame just moments before the crash. Make what you will of that last nugget of information, but if Tesla’s claims are true, there's little to debate about right and wrong here. Driver supervision and readiness to take control are paramount to your safety, and the safety of other motorists on the road.

However, this doesn’t absolve Tesla from responsibility. Even though the company’s guidelines on Autopilot and Full Self-Driving (FSD) require active driver supervision, the broader messaging is misleading. Musk believes that Autopilot is a game changer, but an InsideEVs investigation of crash data released by Tesla found that the system didn’t improve by much over last year and the data provided had several limitations.

This trial could go on for weeks. Should the jury favor the family accusing Tesla of misconduct, several other plaintiffs might be emboldened to press charges similarly.

90%: EV Test Tracks Attract Throngs Of Visitors

New York Auto Show EV Test Track

Yesterday was the final day of the 2024 New York International Auto Show. While the show itself has lost its mojo with fewer new reveals and global debuts compared to pre-pandemic years, there’s one thing that’s attracting visitors: the EV test track.

I attended the press days about two weeks ago and returned during one of the public days last week to see the turnout for myself. Last year, some 120,000 visitors showed up at the EV test track over two weeks. This year’s first weekend saw a 78% increase. We’re awaiting overall numbers, but expect them to be much higher—a sign that curiosity is growing among Americans regarding EVs.

New York Auto Show's EV test track is located inside the Javits Center in Hudson Yards, a posh Manhattan neighborhood with towering commercial skyscrapers. The test track spans 90,000 square feet, 57% larger than a regular football field. Not massive, but enough for visitors to get a taste of EVs. There’s a slalom course, a launch pad, some slow-speed corners, and artificial bumps to test ride quality. Each ride lasts about five minutes, and indoor safety precautions mean you're only a passenger while hired professional drivers give it the beans. 

Dozens of non-Tesla EVs were available to ride in, including the Lucid Air, Cadillac Lyriq, Chevrolet Blazer EV (with fixed software!), Ford F-150 Lightning and Mustang Mach-E, Lexus RZ 450e, Hyundai Ioniq 5 and Ioniq 5 N, Kia EV6 GT, and EV9 among others. It felt unusual not to have my nostrils tingling with the smoke from gas-guzzling cars. No smoke, no noise (apart from tires, of course), and just a stress-free environment overall.

The launch pad had people grinning ear to ear at the explosive acceleration of Kia EV6 GT, Mustang Mach-E and Lucid Air among others, leaving many of them smitten.

Several members managing the EV test track I spoke to confirmed that they were witnessing a record turnout. “This is the only one that does it to this scale. This is a bigger event with more people than it was previously. More vehicles are available now and the variety of manufacturers helps with that,” an Electrify America stall member who preferred anonymity told me.

100%: Can EV Test Tracks Spur Demand?

New York Auto Show EV Test Track

Auto shows, in their traditional format, are bordering on obsolescence. But can EV test tracks, where several automakers congregate to offer test rides, have a positive impact?

The turnout at NYIAS has proved that Americans are curious about EVs. How many of them end up making a switch is another story for another day, but do you think this is a good way for automakers to help potential buyers familiarize themselves with the technology? Leave your thoughts in the comments.

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