China flooded its own market with electric vehicles. Turns out making 47 million cars for a country that already owns 46 million cars creates what economists call "a f*cking problem."
The solution? Ship them overseas. American automakers watched this happen and responded by building their fourth truck plant in Texas.
Chinese EV makers now invest more abroad than U.S. companies. They're building factories in Thailand, Brazil, Indonesia. Places where the average worker makes $400 a month but sure, let's set up shop to sell $35,000 sedans. Brilliant geographic arbitrage.
U.S. automakers can't keep pace because they spent the last decade perfecting the $80,000 electric pickup truck that gets 250 miles per charge if you don't turn on the heat or drive uphill or look at it wrong. Ford lost $4.7 billion on EVs last year but at least the F-150 Lightning has a front trunk you can fill with groceries you can no longer afford.
China's strategy relies on the fact that developing nations will subsidize these factories with tax breaks and cheap land. Then in five years when the factory closes and moves to the next desperate country, everyone acts surprised. It's offshoring but with extra steps and lithium batteries that explode in humid climates.
Retail traders see this headline and think it's time to short Ford. They'll buy puts, watch the stock go up 8% on no news, then blame market manipulation instead of their own inability to read a 10-K.
The real story? China solved oversupply by making it someone else's problem. U.S. automakers solved oversupply by pretending it doesn't exist and building more $90,000 electric Hummers for dentists in Scottsdale.
One strategy involves global expansion and long-term market positioning. The other involves hoping Americans keep buying cars they can't afford. Both strategies are stupid but at least China's stupid plan involves leaving the house.
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