Dec 10, 2023·edited Dec 11, 2023Liked by Noah Smith
There is absolutely no one better on the planet than Noah Smith at 'splaining economic issues. He is superbly well informed on economics, and his communication skills are exceptional.
But I frequently disagree with his geopolitical assessments. Even if the US stops supporting Ukraine, Russia cannot win and then attack Poland and the Baltics.
1. As military technology changes, the advantage shifts back and forth between offense and defense. Military analysts agree that the Ukraine war proves that without a robust Air Force, defense Is currently dominant. Neither Russia nor Ukraine has a robust Air Force, and neither has been able to budge the frontline significantly since November 2022. Thus, Ukraine can return to their tactics of 2014 - 2021, and simply hold Russia to the territory they already occupy with relative ease.
2. Because Russia cannot occupy the whole of Ukraine, there is no way they will ever attack Poland and the Baltics. This war has diminished Russia's military resources by at least half. Not even Putin is crazy enough to sign up to attack a NATO country. He would have to totally rebuild the Russian army before he even tried.
3. The following is a minor consideration, but Putin does pay attention to public sentiment in Russia. A telephone poll indicated that more than 50% of Russians would like the war to end right now. The war is so unpopular in Russia that Putin doesn't plan to mention it during his presidential campaign. Russian is currently obtaining most of its recruits from non-Russian populations. If the Russian people have no bodies of loved ones to bury, their only suffering is economic, and Putin can continue to pursue a policy that has basically become unpopular. As for the non-Russian populations, they are so fragmented, that they have little collective political power.
I'm so glad I ran into you your work. You are one of five economists I read, and none of them is better than you. I think economics explains about half of what is going on in the world, and I'm trying to cover a good chunk of the rest.
I appreciate this analysis, and if anything, would accentuate that Russia's demographics make ongoing territorial expansion increasingly difficult.
However, I believe your analysis discounts:
1) Russia since January 2009 has sent troops periodically into the Baltics. Putin tests NATO regularly with plausibly denied troop movements on NATO territory and is successfully wearing down Article 5 invocation.
2) Putin's MO has consistently been piecemeal. He pauses until conditions are favourable and then annexes more. In this manner, Russia's military limitations are rendered moot. The need to reconstitute an army is a matter of time.
3) Russia doesn't need to occupy all of Ukraine before moving on the Balitcs, Putin just needs a Kiev he can control, and a compliant Moldova, and he can have that if the US and Europe fold.
That puts any move into the Baltics years away though, not months. Several things would have to align, including higher oil prices.
4) Russia is competent at cyber warfare, and uses it effectively to undermine its enemy's political resolve and opposition.
5) The 2022 Ukraine war, if the USA and Europe fold as appears increasingly likely, proves claims that the West cannot focus on threats and has become politically incapable of mounting large-scale operations for a long time period. In the event of a stalemate, the Baltics will know they cannot count on NATO, and to some extent will become Russian vassals again. Russian soft-invasion of the Baltics, as it has done elsewhere via passports and presence, becomes negotiable.
Therefore, ensuring Putin makes 2022 his last of 7 or 8 de-facto western annexations and Kiev remains politically independent, requires a vigilant West that is willing to pour $2-3T into Ukraine to reconstitute its infrastructure, and turn it and the Baltics into well-trained and maintained fortresses for at least the next decade. That's plausible, but IMO less likely than Putin reconstituting and reaching for more when favourable conditions return.
All those are good points, but I would point out that Ukraine bravely held the line against Russian aggression from 2014 through 2022 with hardly any support from the West. Has Putin actually taken over any territory in the Baltics? Or were they simply temporary incursions? Even if the US temporarily loses interest in resisting the Russians, I don't see the Europeans doing so. They managed to wean themselves off Russian oil which was a big factor keeping them semi subservient.
Ukraine held the line against Russian-backed and assisted rebels, not so much Russia itself. And that period showed that without significant Western help with intelligence and arms, Ukraine can't permanently take back what Russia chooses to take.
If I wrote "Balkans", it was my typo. Putin has only moved troops through the Baltics, not the Balkans. He has taken territory in neither. He is already along the road of annexing the Baltics however, as he did Abkhazia, South Ossetia, Crimea, Donbas, etc, giving out Russian passports, making noises about treatment of Russian-speakers, test-incursions of troops, etc.
European action is also required, not just interest, and there are always too-high barriers to necessary action. There is still no sign that Europeans, even Poland, will build the production necessary to guard the sovereignty of the easternmost nations. They are being outproduced by Russia, which is pathetic. Poland is (smartly) buying its way out of being a target, but its budget, once we find out what it is under the new government, is likely unsustainable. The eastern states can't do this alone - central and western European governments would have to re-arm their nations and pour money into the eastern states.
It is hard to believe just how far European (and American) capacity has fallen since the '90s. The major European powers can't put an armored division in the field. Even some of the formerly top militaries like Canada can only field an infantry brigade. Very few have recent combat experience outside of foreign bases (UK excepted). Notably, Ukraine has by far the largest, most experienced and now well-armed militaries in Europe now, which was not the case in 2014 or 2022.
Balkans was my mistake. My reading is that the Europeans are aroused and will continue to do more in the future. NATO has changed its doctrine from defense in depth, assuming that the aggressor will make it over the border and be pushed back by a NATO counterattack. Now the doctrine is defending every square kilometer of territory, and they are working at getting troops much closer to the border.
If Europe does not take the Russians threat seriously, they run a great risk.
The following has a description of a new North Europe security group that was formed as a supplement to NATO. Sounds very promising.
JEF is the most promising thing going, and includes 3 of Europe's 6 non-negligible militaries. If Poland joins JEF *and* they get moving on significant integration *and* they get building lots of munitions factories, to reverse their decline - then we might be able to say that Europe really has awoken and could do something credible. That's very expensive, deterrence is inherently 'wasteful', and I don't think their electorates will tolerate the scaling back of non-defence spending that it would really take.
My reading is that Germany is not going to be a significant contributor after all, which I'd hoped in 2022, although they'll still happily build and sell to others. Germany has to scramble to save its commercial industries, and that's going to take priority. France has arguably the most capable European military of all, but has the least incentive and in any case, is headed towards bigger division, like the US.
What I love about geopolitics is that I'm pretty good about getting most things right, but since history can still turn on a single person's decision, or a single conversation, it will always retain the capacity for surprise. Sometimes outcomes seem as inevitable as an eroding mountainside, and sometimes decisions really are made by those who show up. In a world of enormous systems, human agency remains paramount, and that is cause for optimism.
Kathleen, I appreciate reading your comments on Noah's blog, and want you to know that even when I disagree with a point you make, I'm likely still thinking it over. Keeping one's understanding of the world accurate requires being open to persuasion and prepared for reconsideration.
I write a lot about China US relations on my substack, and I'm working on a post now. I think you are a subscriber, but I would really appreciate it if you would subscribe.
I think Europe is awake in a way it hasn't been since just about forever.
Russia trying to attack anyone could set off nuclear brinksmanship. Europe will have to be ready.
The Baltic are small population wise and geographically. Making a mad rush to take them before NATO can reinforce isn't out of the question. Sweden/Finland really help with this.
I wouldn't expect them to want to join Russia. But it's a great pretext for invasion. Protecting his persecuted fellow countrymen etc. Sort of like the Russian speaking Ukranians he used as a pretext to invade for this war.
One point re Ukraine and Putin. Russia doesn’t need to go to war with Poland to attack NATO. They can launch a series of “plausible deniability” attack just to demonstrate eg Article 5 is empty clause and no one going to war with Russia if say they dropped a bomb on a facility near border “by mistake”.
Russian fighter planes are already buzzing and almost hitting British and US reconnaissance planes in the Black Sea. I guess we'll have to deal with that sort of thing when it happens.
I don't believe that Putin has an end game other than reconsituting the Soviet Union and it's Eastern European empire, or as much of it as possible. There is not timeline beyond his health and lifetime. Sometimes he will be retreating, at others advancing. But because he holds a part of Ukraine, does not mean his project is over.
So advancing on the Baltics may require reconstituting an army, but if we consider a longer timeframe than 12 months, then that is possible, especially if conflict arises in the far east and he receives materiel from China/NK to maintain a second front, or Trump wins election and takes a completely isolationist position.
Putin knows that he is running out of time. He invaded in 2022 because someone convinced him that Kiev would fall in three days. IMO, the biggest problem we face is that the next guy may be much crazier than Putin. Crazier meaning more risk tolerant or strategically blind.
As you point out, on EVs, China has built real capability. Right now, ignoring Tesla, they are likely the best at building EVs...world class. There is also real innovation happening there in mass production of batteries which is why Ford wants to license from Chinese battery maker. The real question is: Will the CCP find a way to screw this up ? We will see, but my guess is yes. One need only look at Alibaba to see what can happen. The regression of the Xi regime vs the Deng regime is very sad.
At a higher level, one thing to keep in mind is that the dominant role of an automobile is declining. At a very fundamental level, conventional passenger cars are one of the worst utilized assets one can own. The average automobile is parked 95%+ of the time. Capitalism, especially driven by the explosion of on-demand services, is relentlessly optimizing this down with sophisticated alternatives which are lower cost and higher productivity. As this continues, the aggregate demand for traditional cars will go down .... based on utilization alone... this can go down by an order-of-magnitude (10X). Virtualization was the first big turn in this move (ecommerce, online education, telehealth, work-from-home, etc), Fleetization (uber, food delivery, other shared services model) is next, and the final turn will be autonomy (when the technology matures).
Fifty years from now the importance of traditional auto will be as muted in the overall economy as trains from the 19th century.
Convenience will go a long way to keeping the auto in the driveway. Americans are used to planning many things, but scheduling their use of an automobile is not one of them.
We will see... I used to hear that about retail shopping vs ecommerce. My sense is that autos will not go away from the driveway... there will just be less of them. Also, youth have a decreasing desire to own cars... for good reasons.
I would assume that you would agree with me that ecommerce is very much more convenient than retail shopping. I can get virtually anything I need delivered within hours.
It's a rare day when I go to a store these days, which lessens my need for the car that still sits in my driveway.
Indeed..... it is convenient if you are willing to wait to get the good delivered. My point is that the other advantages of ecommerce overcame the immediate convenience of getting the physical good. When ecommerce started, there were many statements made to the effect of: "Noone will buy something they cannot see," or "how can you trust giving money to someone online," or the final one... "Americans are just not going to tolerate the waiting for the good to arrive." This was an issue...until it suddenly was not an issue.
On automobiles, as the actual usage of cars falls, their very poor economics are more exposed. Instead of having one car per person...it may well go down to one per household. In the youth, I don't see the level of passion around cars as adults...they have a very utilitarian view of transportation and transactions. For older adults (retirees), I see lots of folks cutting down to one automobile.
The net-net of all of the above is a reduction in the demand for cars. This is one of the many reasons conventional automotive OEMs have embraced EVs. EVs represent a wholesale shift in the existing stock. A very large opportunity. In the conventional ICE world, they saw slower to declining growth.
Funnily enough, you're proving Rahul Razdan's point wonderfully.
You can't fathom how someone would find retail shopping to be preferable over the amazing ecommerce experience of today and yet it was painfully slow and expensive to shop online a mere decade ago. Americans used to covet brick and mortar, and now they largely don't.
People always fail to see the world drastically different than it is today. "Americans love cars, they love driving everywhere, America is too spread out which necessitates cars, etc" -- this is just stuck in the present. A future where you can call on a vehicle that arrives within minutes of your door and takes you wherever you want for far less than you would pay owning that very same car is one where Americans will absolutely flock to.
One day that maybe true, But that time it's not here yet. Due to eye surgery, I was recently dependent on calling a ride and I had to schedule an hour ahead for fear that I would be late. The whole process doubled my commuting time. The great era of rides on demand has not yet arrived.
physical retail is massive and given all the product categories, the shift to ecommerce will take a long time. What will be the stable point ? My sense is that there are some items where you just cannot wait for the delivery. Traditionally, food has been in that category, but there is even innovation there. Of course, there are whole product categories which are now dominated by e-commerce (books, electronics, etc). Right now every retailer (including automobiles) is facing the challenge of the ecommerce model.
On the growth, this seems to be largely about the pandemic.. a bit of cherry picking.
Malls didn’t die, indoor malls did. Outdoor malls are mostly thriving. Furthermore, malls were overbuilt leading up to e-commerce any ways and a lot of people were predicting it’d crash. This was before Amazon had even entered the game
You’re assuming cars are unused at an even rate throughout the day, which is simply not true. Look around in the morning and there’s hardly any cars parked in drive ways. In other words, demand for transportation has massive spikes and close to 0 at times. Remote work rates have stabilized, so number of people who need to get around is not going to change. How else would they move if not without cars? American cities are too spread out for public transport. Uber is not going to maintain a fleet that’ll remain idle for majority of the day. As a result you get is huge shortages during those spikes, precisely what happen already in places like NYC. There’re also been several ride hailing startups that tried ride sharing vans that all failed in NYC, Chicago and Washington.
Hell, even if we do go all Uber, why would car usage change? You still need the same amount of people transported, the only thing changed is ownership.
A personal anecdote: I used exclusively Uber/Lyft for a few months instead of car/public transport. It fucking sucked, especially at high demand times. 2 minute pick up times become 14, drivers randomly cancelling, $20 rides becoming $60 rides, or even more in bad weather, etc. I used ride sharing apps for years before with no issues, but using them regularly made me realize how shitty of an experience it is. I guarantee you personal cars aren’t going anywhere any time soon.
Does electrification break the link between the domestic automotive sector and reserve capacity for military production?
I'm assuming tanks and other military vehicles aren't going to be electrified (although I could be wrong?) Once ICE vehicles are no longer sold or manufactured in Europe, would an all-electric civilian car industry still be relevant for making those if needed?
When batteries get good enough, I don't see why they couldn't be used in military vehicles. If the infrastructure for ICE goes away and is replaced by an infrastructure for EVs, it may be inevitable.
Right now, there is a trend in warfare to say the age of the tank is over. Anti-tank weapons are getting so good that tanks end up being destroyed easily by both sides in Ukraine. However, as military technology develops, the tank may get its role back at any moment.
There will always be vehicles needed to transport troops.
I love your humor, but what they've discovered in Ukraine is stealth is everything. You keep yourself and your drones underground and come out for a moment and launch them. Tanks in Ukraine have been sitting ducks, and I would not want to be in one myself.
An M1A tank weighs 60 tons and uses a 1500 HP engine with a range of 225 miles which means the fuel stores 15,000 KWH. The best Li ion batteries store 250 KWH per ton, which means (almost weirdly) 60 tons of battery is needed to preserve the range. But now your tank weighs twice as much, so double the batteries, but then keep doing it. We need greatly improved batteries.
I don’t think it’s a joke. If China and the US go to war it will be $10M US tanks vs 100 $10k lightly armored cars and $100M F-35s vs 1000 $10k drones. I don’t think the advantage here goes to us, but we won’t know unless it happens.
Advantage easily goes to US, it’s not even close. To compare drones to F35s is just odd. It’s like comparing missiles to rifles. They’re not even remotely for the same role. Neither are tanks and lightly armored vehicles. Absolute numbers don’t matter like they did in WWII either.
US has technological advantage in every area that most people don’t understand because it’s not something that can’t be depicted in movies. There’s nothing exciting about a sophisticated computer doing a ton of work automatically, followed by a pilot pressing a button and hitting infrastructure or other jets without being detected. You want to see how powerful US is in conventional warfare, go see day one desert storm or notice how its outdated old gear decimated Russia in Ukraine.
Beyond that, the logistics network and bases US has is unmatched.
Let’s say China attacks Taiwan and we deploy a few aircraft carriers with 100 F-35s for air dominance. China doesn’t bother to send up any airplanes and instead launches 100,000 drones with bombs to attack Taiwan. How is that going to work out for us?
Taiwan is going to get decimated, which will be very sad for the amazing modern Taipei I just visited. Our air cover can probably make it rough for any invasion fleet. But there is no way we can shoot down 100,000 or even 1,000 drones.
Our aircraft carriers are sitting ducks too. I know we don’t think so, but they are. What are going to do to protect them against thousand of drones or missles?
It's great that the Biden administration is putting research money into this area, but having a low carbon footprint is never going to be the main criterion for designing a tank.
One of the reasons the M1A1 uses a turbine engine is to be able to run on virtually any available fuel. Militaries need to be able to work in rally challenging conditions, requiring the availability of a 100kV charging station everywhere they go is going to be a nonstarter, and you can’t just ship batteries around the way you can with diesel fuel. Energy density is also a big challenge, a tank needs to carry around many tons of ammunition and armor and so can’t afford to be 50% battery the way a passenger car is. IMO if militaries want to go green they’ll do so using synthetic kerosene or something rather than battery electric vehicles.
This is a tangent but its possible to engineer ice engines that run on hydrogen (as opposed to hydrogen fuel cell vehicle that have ev like power trains). jcb have this as a readyish market offering for their diggers. etc. They say this works specifically well for vehicles that are dealing with challenging conditions etc. If this became the standard for this class of vehicle it avoid any issue with industrial know how and capacity relating to ice engines
I wonder if you’d want to store a large quantity of hydrogen in your armored vehicle though, it seems like it would cook off pretty explosively if the tank got breached by a round.
Noah, Europe surely has a problem that you point out. But the U.S. automakers are losing market share in a big way to Chinese EVs in our own backyard - Mexico. It looks like the US may have to work together with the Europeans on this issue, over and above the Inflation Reduction Act.
I live in Monterrey, Mexico and the amount of Chinese cars here in the past two years is astonishing. Koreans and Japanese automakers, plus Ford, traditionally dominated here.
“since Putin will then turn his eyes to Poland and the Baltics”. Will he? Ukraine was supposedly at risk of joining NATO. Meaning a potential enemy in direct sight of Moscow. Why do you think Poland and the Baltics would be next?
Highly unlikely. Considering they are NATO countries (and Finland to the north just joined too), it would be a major escalation — and to what end?
The ethnic Balts have none of the ambivalent cultural ties that Putin *thought* he could benefit from in Ukraine. Through the centuries, they have come to pretty much just hate the Russian state in its varying forms, and don't really trust Russians, either, at least to the extent they display or hold any of the imperialist, expansionist or merely exceptionalist tendencies and attitudes prevalent in Russia. The overt and covert resistance by the ethnic majorities would be a major pain in the ass in every possible way.
As for the Russians living in Baltic countries, I don't think Russia would be able to use them as much more than just mostly unwilling propaganda props. Although many of them might feel themselves a bit disadvantaged in relation to the ethnic majority, I believe they still very much prefer that to anything Russia could offer — considering, e.g.,higher living standards, EU citizenship, access to the EU labor market, etc. And the younger generations are much better integrated than the previous ones. It's not that their historical presence there has been long and proud, either: most of the Russians were forcibly transferred there by Stalin post-WWII (in part replacing the tens of thousands of natives deported to Siberia to just mostly vanish).
So, no. Mostly, these are pretty markedly anti- or non-Slavic ethnostates in their cultural self-conception.
Ukranian alone ground the old Soviet military to a pulp. Putin has lost a huge chunk of his inherited military and Poland would be a much tougher opponent, especially since Germany would rather fight Russia there than in Germany. Even a Trump led isolationist US might get involved.
That’s way off, more like 2.5% as this link shows 126 thousand vehicles out of 5 million total. The urban areas with large car lots, lack of charging stations, expensive parking and expensive electricity make EVs not very popular there.
You might be right but here is where i got my numbers
According to the Japan Automobile Dealers Association (JADA), sales of new electric vehicles in 2020 reached close to 1.4 million. New electric vehicles accounted for 36.2% of total new car sales, up from 35.2% in 2019, and 32.9% in 2017.
Japan Transition to Electric Vehicles - International Trade Administ…
That has a confusingly worded post describing the JADA numbers, it calls BEV,PHEV, HEV and FCEV (battery, plug-in hybrid. Hybrid, fuel cell, respectively ) as all being electric vehicles. Of the 36% electric vehicles sold in 2020 it says 96% of those are hybrid vehicles, which most people do not call electric vehicles, and less than 2% where battery electric vehicles.
Fair enough. Probably most would not call a hybrid an electric vehicle, but then is the hybrid Japan's answer to the question of how to counter the Chinese flood of cheap imports. At least until they work out the manufacturing of all electric vehicles.
Noah contends at one point that the substantial subsidies for EV consumption in Europe and substantial subsidies for EV production in China is an easy Econ 101 question. Then he introduces Econ 102 issues like the existing car production labor being 7% of jobs and Econ 103 issues like a need to maintain (and improve) current and future potential defense production. All clearly important factors in how economic systems between countries interact and often clash. But then we get the statement "But the shock came, in the form of the shift to EVs, and now the long, easy daydream is over." Using Noah's Econ 101 explanation the shock of shifting to EVs was heavily impacted by government policy, not by market choices. As an extreme example, replace the EV subsidies with a Euro 5k "infrastructure tax" (for building out charging stations). Policy decisions can impact markets substantially. It would be easy to make consumer EV demand approach zero if there was a large tax.
From a technical viewpoint BMW and VW built some incredible diesel engines with large engineering investments, but VW got caught cheating and those wonderful engines went away. I am fortunate to have one of the incredible turbo-diesel BMWs, a 328d XDrive wagon ; 287 ft/lb of torque, only 185 HP, 4 wheel traction control (can be turned off), avg. 35mpg around town (driven like the go-kart it is with that much torque in a car about the size of a Toyota Corolla) up to 50mpg on long road trips in the intermountain west, and a 500 mile range on the highway.
A few things to think about with future transportation changes. 1.) Two of the deepest engineering talent bases by company are BMW and Toyota; both are still committed across the globe to producing plug-in hybrids. A close friend on the Penisula just replaced his BMW 535D with a 530i (a plug-in hybrid with an 18mi battery). The west facing roof of his 1918 house in Burlingame produces plenty of solar, with a 2nd battery in the works, and a fast charger in the tiny garage for his BMW (even after putting a dozen or more in at rental properties he manages in Hillsboro, Burlingame, San Mateo, Half Moon Bay, ..., with tons of contacts it was still a >$12K electrical upgrade [1918 -> it is a detached garage]). With his driving habits, mostly daily around mid-Penisula, but regularly in the City, some managed properties in Palo Alto, he is around 95mi/gallon and keeps trying for 100mi/gallon. The performance around town is crappy compared to a 535D, with ca. half the torque, and he got 32mpg in the far higher performance 535D.
It would be interesting for Noah to investigate and do his analysis on automobile and motorcycle racing around the world. The most expensive racing series globally today use incredibly high-tech "power-units", a technologically impressively complex of mechanical engineering and real-time computer analysis from hundreds/thousands of sensors, but based around a turbo charged V6 engine, with battery backed supplemental energy available after harvesting through (incredibly complex engineering) braking. What companies currently make F1 power units? Honda/Red Bull, Ferrari, Mercedes, and Renault. What companies will make F1 hybrid power units in 2026? Odds currently are that Red Bull will become Red Bull/Ford, but most of the lineup will be European companies: Renault, Audi, Ferrari, Mercedes. A closer focus on hybrid power at the highest level of racing engineering is the current Le Mans and elsewhere hybrid specs in the highest end of sports car racing where Toyota has often dominated.
Hybrids likely solve some of the Econ 102 and 103 issues. Technologically they are the most complex (with related expense). But we have the engineering talent to do this.
There is zero chance that my next vehicle will be an EV. I need a 1/2 ton pickup truck with a shell/pop-up-camper, serious fishing/hunting/camping off road capability, and a 300+ mile range (a mile of 4WD low in difficult terrain is 20+ miles of gas). This would be considered standard by anyone who lives and camps and skis and hunts and fishes in the entire western US, and all of Canada, and a 300mile range is questionably low.
The transition to EVs will be far slower than Noah envisions. Real infrastructure work for most all uses will be dominated by diesel powered machines for decades. It is difficult to envision long distance trucking in the US transitioning to EVs from diesel in under 2 decades. The US economy depends on long haul trucking. Sections of major interstate highways in the west, to this day, have gaps of 40-60mi without any fuel. It will be a long time until an EV truck can even exist in this important economic environment.
A big issue for EU is that alot of time an money goes into ensuring this didn't happen and yet it has. EU industry has got somewhere with wind turbines,. Green building and engineering. But has wiffed massively on evs despite churning out some reasonably competence evs in the past. BMW decided it would prefer not to be a mass market car manufacturer. Volkswagen decided it could write its own software (why?). And renault seems to have got caught out by the pandemic (last one is so odd - how can you sell a shit ton of Zoe's and then fail to bring the magane in in anything like appropriate volume or cost? )
“An electric vehicle is a much simpler machine than an internal combustion car — it’s basically just a battery with wheels.”
I always thought this fact would mean a proliferation of EV companies and an easy pivot by existing auto cos. Why is the pivot so difficult? Does the Chinese advantage come down to subsidization (including of the supply chain)?
Battery mass production is a logistical nightmare. Raw materials are scattered all over the world, shipping partners must be aligned, probability of at least one not delivering on time and stalling the whole thing is high. Some material is hazmat and difficult to ship. China doesn’t have these problems, so they’re going to dominate the battery market for a while. Other countries are looking to fix this obviously
Pivot difficult in great part because the market is relatively small. I think e-cars make a lot of sense for a daily commute or other "from home and back" day trips, but this is because you can charge it yourself at home. Or you can pay someone to charge it for you overnight (yes, that is a thing in some communities). But for a long "road trip"? Nope. Unless you limit your daily distance to safely within the battery (which wear-deteriorate and fail eventually) and you are confident in their being an available charging station at each destination. Solve that "confidence in ubiquitous charging" problem, and the market will vastly grow.
I agree that EVs have hurdles to wider acceptance but why is it so hard for a Ford for example to create an EV division that can compete with Tesla? Rather than being simpler it turns out that the tech needed to make a modern EV compelling is actually quite sophisticated?
I get your point that if it was so easy to do, why isn't it being done. I suspect that if the demand was the same as it has been for ICE vehicles the past century, they would. But, hard to say without an alternative parallel universe.
“Some forecasts say that by 2025, about 15% of EVs bought in Europe will be made in China — some by Western automakers like Tesla and Volkswagen, some by Chinese companies like BYD.”
What’s China’s plan when an American company brings a silicon anode Li-ion battery to market in 2025? Don’t think it’s a better, cheaper, and safer battery? Then why are Chinese smart phone manufacturers falling all over themselves to be the first to install it in their devices? 30% more energy density that will run a smart phone on a neural network, to say nothing of true 5G or 6G; silicon a secure, inexpensive off-the-shelf commodity, patented 3D architecture with stainless steel plates to reduce substrate expansion/contraction/cracking (longer battery life), and patented technology to mitigate thermal runway (short-circuited fires). Elon Musk has publicly stated that the silicon anode is the way forward for lithium-ion batteries. And at some future point (2027?), we may see a solid state battery brought to market by an American company. Sure, BYD brags about greater energy density/driving range with EV batteries; but the greater the energy density the greater the risk of thermal runway/short-circuited fires. Ask the NYFD about Li-ion battery fires. With an Li-ion battery short circuit, you have 60 seconds before the battery reached 1000F and starts spraying molten substrate. I’m not sure I want to be driving a huge bank of batteries in a serious collision.
It’s not a good idea to bet against creative American technologies. Just ask MSB or Putin about oil-field tracking, horizontal drilling, to name just two. Or as Sinovel that got caught stealing the best wind-turbine technology in the world from AMSC, which also invented a deGaussing technology that renders U.S. destroyers invisible to current surveillance technologies.
Sure, we have some overregulation, but entrepreneurs in the U.S. aren’t arrested or disappeared for being too successful -- just ask Jack Ma. Better still, ask Elon Musk, who has opened and operates an EV battery pack factory in China (40,000 battery packs/year, so far).
It occurs to me that one of the things that Europe could do is to limit the number of EV's from China coming into their region. China could of course build auto plants in Europe. Giving labor costs perhaps companies like VW might shift plants away from China to other places in Southeast Asia
There is absolutely no one better on the planet than Noah Smith at 'splaining economic issues. He is superbly well informed on economics, and his communication skills are exceptional.
But I frequently disagree with his geopolitical assessments. Even if the US stops supporting Ukraine, Russia cannot win and then attack Poland and the Baltics.
1. As military technology changes, the advantage shifts back and forth between offense and defense. Military analysts agree that the Ukraine war proves that without a robust Air Force, defense Is currently dominant. Neither Russia nor Ukraine has a robust Air Force, and neither has been able to budge the frontline significantly since November 2022. Thus, Ukraine can return to their tactics of 2014 - 2021, and simply hold Russia to the territory they already occupy with relative ease.
2. Because Russia cannot occupy the whole of Ukraine, there is no way they will ever attack Poland and the Baltics. This war has diminished Russia's military resources by at least half. Not even Putin is crazy enough to sign up to attack a NATO country. He would have to totally rebuild the Russian army before he even tried.
3. The following is a minor consideration, but Putin does pay attention to public sentiment in Russia. A telephone poll indicated that more than 50% of Russians would like the war to end right now. The war is so unpopular in Russia that Putin doesn't plan to mention it during his presidential campaign. Russian is currently obtaining most of its recruits from non-Russian populations. If the Russian people have no bodies of loved ones to bury, their only suffering is economic, and Putin can continue to pursue a policy that has basically become unpopular. As for the non-Russian populations, they are so fragmented, that they have little collective political power.
Thanks for the kind words.
I'm so glad I ran into you your work. You are one of five economists I read, and none of them is better than you. I think economics explains about half of what is going on in the world, and I'm trying to cover a good chunk of the rest.
I appreciate this analysis, and if anything, would accentuate that Russia's demographics make ongoing territorial expansion increasingly difficult.
However, I believe your analysis discounts:
1) Russia since January 2009 has sent troops periodically into the Baltics. Putin tests NATO regularly with plausibly denied troop movements on NATO territory and is successfully wearing down Article 5 invocation.
2) Putin's MO has consistently been piecemeal. He pauses until conditions are favourable and then annexes more. In this manner, Russia's military limitations are rendered moot. The need to reconstitute an army is a matter of time.
3) Russia doesn't need to occupy all of Ukraine before moving on the Balitcs, Putin just needs a Kiev he can control, and a compliant Moldova, and he can have that if the US and Europe fold.
That puts any move into the Baltics years away though, not months. Several things would have to align, including higher oil prices.
4) Russia is competent at cyber warfare, and uses it effectively to undermine its enemy's political resolve and opposition.
5) The 2022 Ukraine war, if the USA and Europe fold as appears increasingly likely, proves claims that the West cannot focus on threats and has become politically incapable of mounting large-scale operations for a long time period. In the event of a stalemate, the Baltics will know they cannot count on NATO, and to some extent will become Russian vassals again. Russian soft-invasion of the Baltics, as it has done elsewhere via passports and presence, becomes negotiable.
Therefore, ensuring Putin makes 2022 his last of 7 or 8 de-facto western annexations and Kiev remains politically independent, requires a vigilant West that is willing to pour $2-3T into Ukraine to reconstitute its infrastructure, and turn it and the Baltics into well-trained and maintained fortresses for at least the next decade. That's plausible, but IMO less likely than Putin reconstituting and reaching for more when favourable conditions return.
All those are good points, but I would point out that Ukraine bravely held the line against Russian aggression from 2014 through 2022 with hardly any support from the West. Has Putin actually taken over any territory in the Baltics? Or were they simply temporary incursions? Even if the US temporarily loses interest in resisting the Russians, I don't see the Europeans doing so. They managed to wean themselves off Russian oil which was a big factor keeping them semi subservient.
Ukraine held the line against Russian-backed and assisted rebels, not so much Russia itself. And that period showed that without significant Western help with intelligence and arms, Ukraine can't permanently take back what Russia chooses to take.
If I wrote "Balkans", it was my typo. Putin has only moved troops through the Baltics, not the Balkans. He has taken territory in neither. He is already along the road of annexing the Baltics however, as he did Abkhazia, South Ossetia, Crimea, Donbas, etc, giving out Russian passports, making noises about treatment of Russian-speakers, test-incursions of troops, etc.
European action is also required, not just interest, and there are always too-high barriers to necessary action. There is still no sign that Europeans, even Poland, will build the production necessary to guard the sovereignty of the easternmost nations. They are being outproduced by Russia, which is pathetic. Poland is (smartly) buying its way out of being a target, but its budget, once we find out what it is under the new government, is likely unsustainable. The eastern states can't do this alone - central and western European governments would have to re-arm their nations and pour money into the eastern states.
It is hard to believe just how far European (and American) capacity has fallen since the '90s. The major European powers can't put an armored division in the field. Even some of the formerly top militaries like Canada can only field an infantry brigade. Very few have recent combat experience outside of foreign bases (UK excepted). Notably, Ukraine has by far the largest, most experienced and now well-armed militaries in Europe now, which was not the case in 2014 or 2022.
Balkans was my mistake. My reading is that the Europeans are aroused and will continue to do more in the future. NATO has changed its doctrine from defense in depth, assuming that the aggressor will make it over the border and be pushed back by a NATO counterattack. Now the doctrine is defending every square kilometer of territory, and they are working at getting troops much closer to the border.
If Europe does not take the Russians threat seriously, they run a great risk.
The following has a description of a new North Europe security group that was formed as a supplement to NATO. Sounds very promising.
https://channelsofinfluence.substack.com/p/weekly-channels-of-influence-no1
JEF is the most promising thing going, and includes 3 of Europe's 6 non-negligible militaries. If Poland joins JEF *and* they get moving on significant integration *and* they get building lots of munitions factories, to reverse their decline - then we might be able to say that Europe really has awoken and could do something credible. That's very expensive, deterrence is inherently 'wasteful', and I don't think their electorates will tolerate the scaling back of non-defence spending that it would really take.
My reading is that Germany is not going to be a significant contributor after all, which I'd hoped in 2022, although they'll still happily build and sell to others. Germany has to scramble to save its commercial industries, and that's going to take priority. France has arguably the most capable European military of all, but has the least incentive and in any case, is headed towards bigger division, like the US.
Score 1 for the Europeans today. I didn't foresee Orban letting EU accession talks begin. I wonder what he received in return.
So maybe you're right, and the Europeans will see this through. Talks will be years, but today may turn out to be a tipping point.
Fingers crossed!
What I love about geopolitics is that I'm pretty good about getting most things right, but since history can still turn on a single person's decision, or a single conversation, it will always retain the capacity for surprise. Sometimes outcomes seem as inevitable as an eroding mountainside, and sometimes decisions really are made by those who show up. In a world of enormous systems, human agency remains paramount, and that is cause for optimism.
Kathleen, I appreciate reading your comments on Noah's blog, and want you to know that even when I disagree with a point you make, I'm likely still thinking it over. Keeping one's understanding of the world accurate requires being open to persuasion and prepared for reconsideration.
I write a lot about China US relations on my substack, and I'm working on a post now. I think you are a subscriber, but I would really appreciate it if you would subscribe.
I think Europe is awake in a way it hasn't been since just about forever.
Russia trying to attack anyone could set off nuclear brinksmanship. Europe will have to be ready.
The Baltic are small population wise and geographically. Making a mad rush to take them before NATO can reinforce isn't out of the question. Sweden/Finland really help with this.
The accession of Finland and Sweden definitely makes placement of Baltic-invasion deterrence forces much easier for NATO.
That means that Putin's annexation of the Baltics will have to be achieved initially through his softer tactics, which he's used successfully before.
I wouldn't expect them to want to join Russia. But it's a great pretext for invasion. Protecting his persecuted fellow countrymen etc. Sort of like the Russian speaking Ukranians he used as a pretext to invade for this war.
It's the same excuse he used in Abkhazia and Ossetia as well. Classic revanchist move, I'm amazed that educated people lend it an iota of credibility.
Russia has been riding to the rescue of “beleaguered” Russian speaking minorities since at least the 19th century.
One point re Ukraine and Putin. Russia doesn’t need to go to war with Poland to attack NATO. They can launch a series of “plausible deniability” attack just to demonstrate eg Article 5 is empty clause and no one going to war with Russia if say they dropped a bomb on a facility near border “by mistake”.
Russian fighter planes are already buzzing and almost hitting British and US reconnaissance planes in the Black Sea. I guess we'll have to deal with that sort of thing when it happens.
I don't believe that Putin has an end game other than reconsituting the Soviet Union and it's Eastern European empire, or as much of it as possible. There is not timeline beyond his health and lifetime. Sometimes he will be retreating, at others advancing. But because he holds a part of Ukraine, does not mean his project is over.
So advancing on the Baltics may require reconstituting an army, but if we consider a longer timeframe than 12 months, then that is possible, especially if conflict arises in the far east and he receives materiel from China/NK to maintain a second front, or Trump wins election and takes a completely isolationist position.
Putin knows that he is running out of time. He invaded in 2022 because someone convinced him that Kiev would fall in three days. IMO, the biggest problem we face is that the next guy may be much crazier than Putin. Crazier meaning more risk tolerant or strategically blind.
As you point out, on EVs, China has built real capability. Right now, ignoring Tesla, they are likely the best at building EVs...world class. There is also real innovation happening there in mass production of batteries which is why Ford wants to license from Chinese battery maker. The real question is: Will the CCP find a way to screw this up ? We will see, but my guess is yes. One need only look at Alibaba to see what can happen. The regression of the Xi regime vs the Deng regime is very sad.
At a higher level, one thing to keep in mind is that the dominant role of an automobile is declining. At a very fundamental level, conventional passenger cars are one of the worst utilized assets one can own. The average automobile is parked 95%+ of the time. Capitalism, especially driven by the explosion of on-demand services, is relentlessly optimizing this down with sophisticated alternatives which are lower cost and higher productivity. As this continues, the aggregate demand for traditional cars will go down .... based on utilization alone... this can go down by an order-of-magnitude (10X). Virtualization was the first big turn in this move (ecommerce, online education, telehealth, work-from-home, etc), Fleetization (uber, food delivery, other shared services model) is next, and the final turn will be autonomy (when the technology matures).
Fifty years from now the importance of traditional auto will be as muted in the overall economy as trains from the 19th century.
Convenience will go a long way to keeping the auto in the driveway. Americans are used to planning many things, but scheduling their use of an automobile is not one of them.
We will see... I used to hear that about retail shopping vs ecommerce. My sense is that autos will not go away from the driveway... there will just be less of them. Also, youth have a decreasing desire to own cars... for good reasons.
I would assume that you would agree with me that ecommerce is very much more convenient than retail shopping. I can get virtually anything I need delivered within hours.
It's a rare day when I go to a store these days, which lessens my need for the car that still sits in my driveway.
Indeed..... it is convenient if you are willing to wait to get the good delivered. My point is that the other advantages of ecommerce overcame the immediate convenience of getting the physical good. When ecommerce started, there were many statements made to the effect of: "Noone will buy something they cannot see," or "how can you trust giving money to someone online," or the final one... "Americans are just not going to tolerate the waiting for the good to arrive." This was an issue...until it suddenly was not an issue.
On automobiles, as the actual usage of cars falls, their very poor economics are more exposed. Instead of having one car per person...it may well go down to one per household. In the youth, I don't see the level of passion around cars as adults...they have a very utilitarian view of transportation and transactions. For older adults (retirees), I see lots of folks cutting down to one automobile.
The net-net of all of the above is a reduction in the demand for cars. This is one of the many reasons conventional automotive OEMs have embraced EVs. EVs represent a wholesale shift in the existing stock. A very large opportunity. In the conventional ICE world, they saw slower to declining growth.
Funnily enough, you're proving Rahul Razdan's point wonderfully.
You can't fathom how someone would find retail shopping to be preferable over the amazing ecommerce experience of today and yet it was painfully slow and expensive to shop online a mere decade ago. Americans used to covet brick and mortar, and now they largely don't.
People always fail to see the world drastically different than it is today. "Americans love cars, they love driving everywhere, America is too spread out which necessitates cars, etc" -- this is just stuck in the present. A future where you can call on a vehicle that arrives within minutes of your door and takes you wherever you want for far less than you would pay owning that very same car is one where Americans will absolutely flock to.
One day that maybe true, But that time it's not here yet. Due to eye surgery, I was recently dependent on calling a ride and I had to schedule an hour ahead for fear that I would be late. The whole process doubled my commuting time. The great era of rides on demand has not yet arrived.
I was curious about the trends on this. Perhaps the death of shopping malls has been exaggerated?
https://www.forbes.com/sites/jasongoldberg/2022/02/16/brick-and-mortar-sales-grew-faster-than-e-commerce-in-2021/
physical retail is massive and given all the product categories, the shift to ecommerce will take a long time. What will be the stable point ? My sense is that there are some items where you just cannot wait for the delivery. Traditionally, food has been in that category, but there is even innovation there. Of course, there are whole product categories which are now dominated by e-commerce (books, electronics, etc). Right now every retailer (including automobiles) is facing the challenge of the ecommerce model.
On the growth, this seems to be largely about the pandemic.. a bit of cherry picking.
Malls didn’t die, indoor malls did. Outdoor malls are mostly thriving. Furthermore, malls were overbuilt leading up to e-commerce any ways and a lot of people were predicting it’d crash. This was before Amazon had even entered the game
You’re assuming cars are unused at an even rate throughout the day, which is simply not true. Look around in the morning and there’s hardly any cars parked in drive ways. In other words, demand for transportation has massive spikes and close to 0 at times. Remote work rates have stabilized, so number of people who need to get around is not going to change. How else would they move if not without cars? American cities are too spread out for public transport. Uber is not going to maintain a fleet that’ll remain idle for majority of the day. As a result you get is huge shortages during those spikes, precisely what happen already in places like NYC. There’re also been several ride hailing startups that tried ride sharing vans that all failed in NYC, Chicago and Washington.
Hell, even if we do go all Uber, why would car usage change? You still need the same amount of people transported, the only thing changed is ownership.
A personal anecdote: I used exclusively Uber/Lyft for a few months instead of car/public transport. It fucking sucked, especially at high demand times. 2 minute pick up times become 14, drivers randomly cancelling, $20 rides becoming $60 rides, or even more in bad weather, etc. I used ride sharing apps for years before with no issues, but using them regularly made me realize how shitty of an experience it is. I guarantee you personal cars aren’t going anywhere any time soon.
Does electrification break the link between the domestic automotive sector and reserve capacity for military production?
I'm assuming tanks and other military vehicles aren't going to be electrified (although I could be wrong?) Once ICE vehicles are no longer sold or manufactured in Europe, would an all-electric civilian car industry still be relevant for making those if needed?
When batteries get good enough, I don't see why they couldn't be used in military vehicles. If the infrastructure for ICE goes away and is replaced by an infrastructure for EVs, it may be inevitable.
Right now, there is a trend in warfare to say the age of the tank is over. Anti-tank weapons are getting so good that tanks end up being destroyed easily by both sides in Ukraine. However, as military technology develops, the tank may get its role back at any moment.
There will always be vehicles needed to transport troops.
Ha, just had a vision of a future tank as primarily a drone charging station 😳
Maybe we need a DFV
Drone Fighting Vehicle 🤔
Mobile platform to launch, retrieve, recharge and reload drones
Possibly during peace time doubles as an
Amazon Delivery Vehicle
(for the last mile solution) 🤣
I love your humor, but what they've discovered in Ukraine is stealth is everything. You keep yourself and your drones underground and come out for a moment and launch them. Tanks in Ukraine have been sitting ducks, and I would not want to be in one myself.
Yeah, I guess I was supposing Electronic Warfare would give some measure of protection. Probably a sitting duck for now.
An M1A tank weighs 60 tons and uses a 1500 HP engine with a range of 225 miles which means the fuel stores 15,000 KWH. The best Li ion batteries store 250 KWH per ton, which means (almost weirdly) 60 tons of battery is needed to preserve the range. But now your tank weighs twice as much, so double the batteries, but then keep doing it. We need greatly improved batteries.
Thank you for the information.
How about a heavily armored Prius? Just joking.
"How about a heavily armored Prius?"
You live in LA?
No. I'm just trying to get a job writing jokes for Stephen Colbert.
Well, he sure could use one. Guy used to be funny until Trump broke his mind.
I don’t think it’s a joke. If China and the US go to war it will be $10M US tanks vs 100 $10k lightly armored cars and $100M F-35s vs 1000 $10k drones. I don’t think the advantage here goes to us, but we won’t know unless it happens.
Where do you see China and the US using tanks or armored cars against each other? South Korea?
If there is a military clash in the neighborhood of Taiwan, most people see it as a sea power and air power conflict.
Advantage easily goes to US, it’s not even close. To compare drones to F35s is just odd. It’s like comparing missiles to rifles. They’re not even remotely for the same role. Neither are tanks and lightly armored vehicles. Absolute numbers don’t matter like they did in WWII either.
US has technological advantage in every area that most people don’t understand because it’s not something that can’t be depicted in movies. There’s nothing exciting about a sophisticated computer doing a ton of work automatically, followed by a pilot pressing a button and hitting infrastructure or other jets without being detected. You want to see how powerful US is in conventional warfare, go see day one desert storm or notice how its outdated old gear decimated Russia in Ukraine.
Beyond that, the logistics network and bases US has is unmatched.
Let’s say China attacks Taiwan and we deploy a few aircraft carriers with 100 F-35s for air dominance. China doesn’t bother to send up any airplanes and instead launches 100,000 drones with bombs to attack Taiwan. How is that going to work out for us?
Taiwan is going to get decimated, which will be very sad for the amazing modern Taipei I just visited. Our air cover can probably make it rough for any invasion fleet. But there is no way we can shoot down 100,000 or even 1,000 drones.
Our aircraft carriers are sitting ducks too. I know we don’t think so, but they are. What are going to do to protect them against thousand of drones or missles?
Tank has seen its better days.
All these drones are already electrified and really only function because of electrification.
Yeah, but this article seems to suggest that for manned ground vehicles, batteries still don't have enough horsepower to compete with ICEs:
https://news.bloomberglaw.com/environment-and-energy/us-armys-electric-tanks-on-hold-as-battery-technology-develops
It's great that the Biden administration is putting research money into this area, but having a low carbon footprint is never going to be the main criterion for designing a tank.
One of the reasons the M1A1 uses a turbine engine is to be able to run on virtually any available fuel. Militaries need to be able to work in rally challenging conditions, requiring the availability of a 100kV charging station everywhere they go is going to be a nonstarter, and you can’t just ship batteries around the way you can with diesel fuel. Energy density is also a big challenge, a tank needs to carry around many tons of ammunition and armor and so can’t afford to be 50% battery the way a passenger car is. IMO if militaries want to go green they’ll do so using synthetic kerosene or something rather than battery electric vehicles.
Right. So to my question: how much does preserving an EV industry in Europe help them make military vehicles if they need to?
This is a tangent but its possible to engineer ice engines that run on hydrogen (as opposed to hydrogen fuel cell vehicle that have ev like power trains). jcb have this as a readyish market offering for their diggers. etc. They say this works specifically well for vehicles that are dealing with challenging conditions etc. If this became the standard for this class of vehicle it avoid any issue with industrial know how and capacity relating to ice engines
I wonder if you’d want to store a large quantity of hydrogen in your armored vehicle though, it seems like it would cook off pretty explosively if the tank got breached by a round.
Noah, Europe surely has a problem that you point out. But the U.S. automakers are losing market share in a big way to Chinese EVs in our own backyard - Mexico. It looks like the US may have to work together with the Europeans on this issue, over and above the Inflation Reduction Act.
I live in Monterrey, Mexico and the amount of Chinese cars here in the past two years is astonishing. Koreans and Japanese automakers, plus Ford, traditionally dominated here.
“since Putin will then turn his eyes to Poland and the Baltics”. Will he? Ukraine was supposedly at risk of joining NATO. Meaning a potential enemy in direct sight of Moscow. Why do you think Poland and the Baltics would be next?
The Baltic are like 25% ethnic Russian in population. Putin has displayed maps of "greater russia" with territory from several neighboring countries.
Countries like this tend to want more every time they get something. They keep going until someone stops them.
Highly unlikely. Considering they are NATO countries (and Finland to the north just joined too), it would be a major escalation — and to what end?
The ethnic Balts have none of the ambivalent cultural ties that Putin *thought* he could benefit from in Ukraine. Through the centuries, they have come to pretty much just hate the Russian state in its varying forms, and don't really trust Russians, either, at least to the extent they display or hold any of the imperialist, expansionist or merely exceptionalist tendencies and attitudes prevalent in Russia. The overt and covert resistance by the ethnic majorities would be a major pain in the ass in every possible way.
As for the Russians living in Baltic countries, I don't think Russia would be able to use them as much more than just mostly unwilling propaganda props. Although many of them might feel themselves a bit disadvantaged in relation to the ethnic majority, I believe they still very much prefer that to anything Russia could offer — considering, e.g.,higher living standards, EU citizenship, access to the EU labor market, etc. And the younger generations are much better integrated than the previous ones. It's not that their historical presence there has been long and proud, either: most of the Russians were forcibly transferred there by Stalin post-WWII (in part replacing the tens of thousands of natives deported to Siberia to just mostly vanish).
So, no. Mostly, these are pretty markedly anti- or non-Slavic ethnostates in their cultural self-conception.
I think they can “attack” nato successfully without going to Berlin on tanks - https://www.noahpinion.blog/p/car-wars/comment/45125548?r=2fz40&utm_medium=ios
Ukranian alone ground the old Soviet military to a pulp. Putin has lost a huge chunk of his inherited military and Poland would be a much tougher opponent, especially since Germany would rather fight Russia there than in Germany. Even a Trump led isolationist US might get involved.
In Japan EV sales seem to be over 35% of new car sales. How is Japan dealing with the Chinese EV makers and exporters.
That’s way off, more like 2.5% as this link shows 126 thousand vehicles out of 5 million total. The urban areas with large car lots, lack of charging stations, expensive parking and expensive electricity make EVs not very popular there.
https://www.statista.com/outlook/mmo/electric-vehicles/japan?ssp=1
You might be right but here is where i got my numbers
According to the Japan Automobile Dealers Association (JADA), sales of new electric vehicles in 2020 reached close to 1.4 million. New electric vehicles accounted for 36.2% of total new car sales, up from 35.2% in 2019, and 32.9% in 2017.
Japan Transition to Electric Vehicles - International Trade Administ…
www.trade.gov/market-intelligence/japan-transition-electric-vehicles
www.trade.gov/market-intelligence/japan-transition-electric-vehicles
That has a confusingly worded post describing the JADA numbers, it calls BEV,PHEV, HEV and FCEV (battery, plug-in hybrid. Hybrid, fuel cell, respectively ) as all being electric vehicles. Of the 36% electric vehicles sold in 2020 it says 96% of those are hybrid vehicles, which most people do not call electric vehicles, and less than 2% where battery electric vehicles.
Fair enough. Probably most would not call a hybrid an electric vehicle, but then is the hybrid Japan's answer to the question of how to counter the Chinese flood of cheap imports. At least until they work out the manufacturing of all electric vehicles.
Noah contends at one point that the substantial subsidies for EV consumption in Europe and substantial subsidies for EV production in China is an easy Econ 101 question. Then he introduces Econ 102 issues like the existing car production labor being 7% of jobs and Econ 103 issues like a need to maintain (and improve) current and future potential defense production. All clearly important factors in how economic systems between countries interact and often clash. But then we get the statement "But the shock came, in the form of the shift to EVs, and now the long, easy daydream is over." Using Noah's Econ 101 explanation the shock of shifting to EVs was heavily impacted by government policy, not by market choices. As an extreme example, replace the EV subsidies with a Euro 5k "infrastructure tax" (for building out charging stations). Policy decisions can impact markets substantially. It would be easy to make consumer EV demand approach zero if there was a large tax.
From a technical viewpoint BMW and VW built some incredible diesel engines with large engineering investments, but VW got caught cheating and those wonderful engines went away. I am fortunate to have one of the incredible turbo-diesel BMWs, a 328d XDrive wagon ; 287 ft/lb of torque, only 185 HP, 4 wheel traction control (can be turned off), avg. 35mpg around town (driven like the go-kart it is with that much torque in a car about the size of a Toyota Corolla) up to 50mpg on long road trips in the intermountain west, and a 500 mile range on the highway.
A few things to think about with future transportation changes. 1.) Two of the deepest engineering talent bases by company are BMW and Toyota; both are still committed across the globe to producing plug-in hybrids. A close friend on the Penisula just replaced his BMW 535D with a 530i (a plug-in hybrid with an 18mi battery). The west facing roof of his 1918 house in Burlingame produces plenty of solar, with a 2nd battery in the works, and a fast charger in the tiny garage for his BMW (even after putting a dozen or more in at rental properties he manages in Hillsboro, Burlingame, San Mateo, Half Moon Bay, ..., with tons of contacts it was still a >$12K electrical upgrade [1918 -> it is a detached garage]). With his driving habits, mostly daily around mid-Penisula, but regularly in the City, some managed properties in Palo Alto, he is around 95mi/gallon and keeps trying for 100mi/gallon. The performance around town is crappy compared to a 535D, with ca. half the torque, and he got 32mpg in the far higher performance 535D.
It would be interesting for Noah to investigate and do his analysis on automobile and motorcycle racing around the world. The most expensive racing series globally today use incredibly high-tech "power-units", a technologically impressively complex of mechanical engineering and real-time computer analysis from hundreds/thousands of sensors, but based around a turbo charged V6 engine, with battery backed supplemental energy available after harvesting through (incredibly complex engineering) braking. What companies currently make F1 power units? Honda/Red Bull, Ferrari, Mercedes, and Renault. What companies will make F1 hybrid power units in 2026? Odds currently are that Red Bull will become Red Bull/Ford, but most of the lineup will be European companies: Renault, Audi, Ferrari, Mercedes. A closer focus on hybrid power at the highest level of racing engineering is the current Le Mans and elsewhere hybrid specs in the highest end of sports car racing where Toyota has often dominated.
Hybrids likely solve some of the Econ 102 and 103 issues. Technologically they are the most complex (with related expense). But we have the engineering talent to do this.
There is zero chance that my next vehicle will be an EV. I need a 1/2 ton pickup truck with a shell/pop-up-camper, serious fishing/hunting/camping off road capability, and a 300+ mile range (a mile of 4WD low in difficult terrain is 20+ miles of gas). This would be considered standard by anyone who lives and camps and skis and hunts and fishes in the entire western US, and all of Canada, and a 300mile range is questionably low.
The transition to EVs will be far slower than Noah envisions. Real infrastructure work for most all uses will be dominated by diesel powered machines for decades. It is difficult to envision long distance trucking in the US transitioning to EVs from diesel in under 2 decades. The US economy depends on long haul trucking. Sections of major interstate highways in the west, to this day, have gaps of 40-60mi without any fuel. It will be a long time until an EV truck can even exist in this important economic environment.
A big issue for EU is that alot of time an money goes into ensuring this didn't happen and yet it has. EU industry has got somewhere with wind turbines,. Green building and engineering. But has wiffed massively on evs despite churning out some reasonably competence evs in the past. BMW decided it would prefer not to be a mass market car manufacturer. Volkswagen decided it could write its own software (why?). And renault seems to have got caught out by the pandemic (last one is so odd - how can you sell a shit ton of Zoe's and then fail to bring the magane in in anything like appropriate volume or cost? )
I love the way your publication times suggest you write everything late at night
I remarked on this, and Noah replied that he mostly schedules the release of his posts at night.
“An electric vehicle is a much simpler machine than an internal combustion car — it’s basically just a battery with wheels.”
I always thought this fact would mean a proliferation of EV companies and an easy pivot by existing auto cos. Why is the pivot so difficult? Does the Chinese advantage come down to subsidization (including of the supply chain)?
Battery mass production is a logistical nightmare. Raw materials are scattered all over the world, shipping partners must be aligned, probability of at least one not delivering on time and stalling the whole thing is high. Some material is hazmat and difficult to ship. China doesn’t have these problems, so they’re going to dominate the battery market for a while. Other countries are looking to fix this obviously
Pivot difficult in great part because the market is relatively small. I think e-cars make a lot of sense for a daily commute or other "from home and back" day trips, but this is because you can charge it yourself at home. Or you can pay someone to charge it for you overnight (yes, that is a thing in some communities). But for a long "road trip"? Nope. Unless you limit your daily distance to safely within the battery (which wear-deteriorate and fail eventually) and you are confident in their being an available charging station at each destination. Solve that "confidence in ubiquitous charging" problem, and the market will vastly grow.
I agree that EVs have hurdles to wider acceptance but why is it so hard for a Ford for example to create an EV division that can compete with Tesla? Rather than being simpler it turns out that the tech needed to make a modern EV compelling is actually quite sophisticated?
I get your point that if it was so easy to do, why isn't it being done. I suspect that if the demand was the same as it has been for ICE vehicles the past century, they would. But, hard to say without an alternative parallel universe.
“Some forecasts say that by 2025, about 15% of EVs bought in Europe will be made in China — some by Western automakers like Tesla and Volkswagen, some by Chinese companies like BYD.”
What’s China’s plan when an American company brings a silicon anode Li-ion battery to market in 2025? Don’t think it’s a better, cheaper, and safer battery? Then why are Chinese smart phone manufacturers falling all over themselves to be the first to install it in their devices? 30% more energy density that will run a smart phone on a neural network, to say nothing of true 5G or 6G; silicon a secure, inexpensive off-the-shelf commodity, patented 3D architecture with stainless steel plates to reduce substrate expansion/contraction/cracking (longer battery life), and patented technology to mitigate thermal runway (short-circuited fires). Elon Musk has publicly stated that the silicon anode is the way forward for lithium-ion batteries. And at some future point (2027?), we may see a solid state battery brought to market by an American company. Sure, BYD brags about greater energy density/driving range with EV batteries; but the greater the energy density the greater the risk of thermal runway/short-circuited fires. Ask the NYFD about Li-ion battery fires. With an Li-ion battery short circuit, you have 60 seconds before the battery reached 1000F and starts spraying molten substrate. I’m not sure I want to be driving a huge bank of batteries in a serious collision.
It’s not a good idea to bet against creative American technologies. Just ask MSB or Putin about oil-field tracking, horizontal drilling, to name just two. Or as Sinovel that got caught stealing the best wind-turbine technology in the world from AMSC, which also invented a deGaussing technology that renders U.S. destroyers invisible to current surveillance technologies.
Sure, we have some overregulation, but entrepreneurs in the U.S. aren’t arrested or disappeared for being too successful -- just ask Jack Ma. Better still, ask Elon Musk, who has opened and operates an EV battery pack factory in China (40,000 battery packs/year, so far).
It occurs to me that one of the things that Europe could do is to limit the number of EV's from China coming into their region. China could of course build auto plants in Europe. Giving labor costs perhaps companies like VW might shift plants away from China to other places in Southeast Asia