Musk said that once China figures out how to make something, its ability to ramp up production often exceeds that of the rest of the world combined. Lithium batteries and solar power are examples, and memory chips could be the same.
But there’s a counterexample: once Chinese companies enter the market and drive prices down, they often end up unable to make money themselves, turning an entire industry from a blue ocean into a red ocean.
That’s what happened with solar power. LONGi, Tongwei, JinkoSolar, Trina Solar, and JA Solar—the five industry leaders—each cut their workforce by more than 30% in 2024, and three of them reported substantial losses. Module prices were pushed below cost. The world’s largest production capacity brought collective losses instead.
Electric vehicles are no different. BYD priced the Qin at 70,000 yuan. From then on, the auto industry entered a cutthroat price war. Apart from BYD, which still makes a slim profit, virtually no one else is making money. The government had to step in to mediate the price war.
Production has scaled up, profit margins have shrunk. The market has been captured, but no one is having an easy time.
I wonder whether ChangXin can chart a different course this time.
$BTC $ETH #Binance Square
But there’s a counterexample: once Chinese companies enter the market and drive prices down, they often end up unable to make money themselves, turning an entire industry from a blue ocean into a red ocean.
That’s what happened with solar power. LONGi, Tongwei, JinkoSolar, Trina Solar, and JA Solar—the five industry leaders—each cut their workforce by more than 30% in 2024, and three of them reported substantial losses. Module prices were pushed below cost. The world’s largest production capacity brought collective losses instead.
Electric vehicles are no different. BYD priced the Qin at 70,000 yuan. From then on, the auto industry entered a cutthroat price war. Apart from BYD, which still makes a slim profit, virtually no one else is making money. The government had to step in to mediate the price war.
Production has scaled up, profit margins have shrunk. The market has been captured, but no one is having an easy time.
I wonder whether ChangXin can chart a different course this time.
$BTC $ETH #Binance Square