New Delhi, May 10 China is currently leveraging its driven by its dominance in critical minerals inputs required for the production in sectors such as New Energy Vehicles (NEV) to gain a geopolitical advantage through its capability to disrupt global supply chains.
However, according to an article in The Diplomat, this advantage is likely to be overturned in the near future with the leap in new technology that is taking place in Western countries, with companies such as US tech giant Tesla forging ahead with new battery technology and driverless vehicles.
The article states that the only major manufacturing sector in which China has a genuine prospect of leading and maintaining global competitiveness is the NEV industry. Other sectors, such as semiconductors or robotics, hold significant prestige and offer some hope of achievement, but China’s offerings remain far behind the international standard.
However, while China’s NEV sector rises, Western technological advancements are bringing in new upgrades that threaten to render existing NEV supply chains obsolete, as per the article.
It highlights that new battery technologies will determine who commands the post-upgrade future market.
There is also the competition over integrated manufacturing costs. While Chinese manufacturing had previously secured a relative advantage, this edge is constantly at risk of being blunted by electric carmaker Tesla, which is using high-density production lines to reduce costs, which can potentially outcompete Chinese NEV manufacturing. Besides, Tesla has a big lead in driverless vehicle technology, which will represent "a revolutionary leap forward", it said.
These three technological advancements are seen as having the potential to render China’s current supply chain strategy ineffective.
"Based on average industrial cycles, we estimate a window of three to five years. In other words, China’s current advantages within specific segments of the supply chain are likely to erode within that timeframe. Unless China can consistently achieve meaningful breakthroughs in technological advancement, the window of opportunity remains remarkably narrow," the article observed.
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