Getting very not so high on your own supply

Have you ever been bullied in school? I'm guessing you have. Probably because your hair was funny or you had the wrong shoes. We all did. And I'm also guessing you cried like a baby when you were bullied an ran to the teacher for help. At which point you probably exaggerated your crying to increase the likelihood that the bully would be punished even harder for his obviously correct pointing out of your questionable fashion choices. But if all this effort failed, I'm guessing you didn't then turn around and told your bully you'd help him bully you even more the next time, right?

Why am I telling you your school yard happenings with great accuracy, you ask? Well, dear reader, it's because pretty much the same thing is happening in the EU right now, and nobody seems to notice.

I'm off course talking about the Chinese car makers renting and buying production space in factories of European car manufacturers. The move is quite logical when you look at it from the Chinese perspective. It means producing cars locally in a market where growth is still very much an option and margins are quite nice and juicy. It also means that the margins can remain plump, because European production means les shipping and best of all, not European tariffs to pay. So better supply to a growing market at a competitive cost, which translates to a better competitive position from which to bully the local car makers.

It's good to know this (kind of) all started when EV's where getting pushed more and more because of environmental regulations. This meant local car makers went into higher margin EV's, because the smaller, cheaper ones weren't financially smart yet. This is where the Chinese bully entered the market. They came in hot and fast with cheap, small and medium EV's, which gained market share quickly. Local car makers didn't have an answer to this bullying and had to take the losses, which meant cutting production, because demand for the expensive EV's was declining and the smaller EV's where mostly in development.

As a result European factories of for example Ford and Volkswagen are operating at half capacity, which is very expensive to run. So what are the local car makers doing? Looking to the Chinese car makers to 'help' them out by renting production capacity from them, so the factories can run at full efficiency, which is cheaper for the landlord and the renter.

It means the car companies that are being bullied into a price war by the Chinese newcomers, are kind of enabling their bullies to bully them even more, while making a bit of cash from it.

And all this is happening while the EU, which in this case is the teacher who's trying to punish the Chinese bully, is trying to figure out how to punish the bully and not quite figuring it out because the both the bullied and the bully are changing the scenario.

Bystanders (lobbyists and industry parties) are screaming that the bully must me punished way in more gruesome ways, maybe even evicted from school. If that doesn't happen, the bullied won't survive another year in class and his body will probably be found unalived behind the school dumpster somewhere.

What really is happening: Volkswagen is in talks with multiple Chinese manufacturers, including competitor BYD, to see if they can start production in German and Spanish factories. Ford seems to be doing the same with Geely, which already has it's own (Volvo)factory in Belgium and Sweden.

At the same time the EU is trying to find a way to make it harder for the undercutting Chinese to compete unfairly with European car makers, by setting up a "EU only" scheme, which already includes the UK and Japan and will maybe even end up including the whole world except China and maybe Russia. We don't know. The EU doesn't know. Policy makers in Brussels are not that bright. I think they might be traumatically bullied when they were young.

In this case it very much seems like renting out your own supply severely limits your ability to get high on it. If that is a good thing?

In other news:

It's been a while since I felt this excited for a LEGO-set to be released. In fact, I can't remember being excited for one to be released since I probably was around 9 or 10 or so. But LEGO did it. It's making the Hoonicorn as an affordable Speed Champions set. And it even features a Ken Block figurine with the iconic Derelict jacket which he wore in the famous image from Gymkhana Seven made by Larry Chen. It almost can't get any better than this.

In contrast: this is bad news. At least, I think it is. Musk dropped the new logo for the Tesla Roadster. Arguably the best looking car the brand has ever produced. But I'm guessing the thing is getting overhauled to fit into the boxy design language of modern Tesla. Worst case: it's going to be a sleek trash can. Best case: it's just the logo that's shit. I'm not putting my money on the last one...

More good news: we can be proud of Porsche again. The company has regained the record for fastest 'electric executive car' with the special Porsche Taycan Turbo GT with Manthey kit. It couldn't have done it without that last part, we know, they've tried. The special built, which can be ordered for your Taycan too, beat the previous record holder, the Xiaomi SU7 Ultra by 9 seconds. Very cool to have Germans holding the record on the German track. As it should be. Shame the Taycan was made to look like this to be able to do it...