4 Read all HKUST IEMS Thought Leadership Briefs at http://iems.ust.hk/tlb T: (852) 3469 2215 E: iems@ust.hk W: http://iems.ust.hk A: Lo Ka Chung Building, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon With Support from Alicia García Herrero is the Chief Economist for Asia Pacific at Natixis. She also serves as Senior Fellow at the Brussels-based European think-tank BRUEGEL and a non-resident Senior Follow at the East Asian Institute (EAI) of the National University Singapore (NUS). Alicia is also Adjunct Professor at the Hong Kong University of Science and Technology. Finally, Alicia is a Member of the Council of Advisors on Economic Affairs to the Spanish Government and an advisor to the Hong Kong Monetary Authority’s research arm (HKIMR) among other advisory and teaching positions. In previous years, Alicia held the following positions: Chief Economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria (BBVA), Member of the Asian Research Program at the Bank of International Settlements (BIS), Head of the International Economy Division of the Bank of Spain, Member of the Counsel to the Executive Board of the European Central Bank, Head of Emerging Economies at the Research Department at Banco Santander, and Economist at the International Monetary Fund. As regards her academic career, Alicia has served as visiting Professor at John Hopkins University (SAIS program), China Europe International Business School (CEIBS) and Carlos III University. Alicia holds a PhD in Economics from George Washington University and has published extensively in refereed journals and books. Her publications can be found in ResearchGate, Google Scholar, SSRN or RePEc. She is also active on international media such as BBC, Bloomberg, CNBC and CNN as well as social media (including LinkedIn and Twitter). SUMMER 2022 NO.64 / THOUGHT LEADERSHIP BRIEF Figure 3. Key Producers of Automobiles (%) Note: Data as of 2019. Automobiles include motor vehicles and their parts and accessories. Source: Natixis, UNCTAD The difference is that mainland China is trying to reduce its lag in the semiconductor industry compared with the US or even Taiwan in recent years, while it is clearly ahead in battery components. This becomes a much more obvious challenge when Chinese exports of EVs grow beyond the current rather meager share (Figure 3). In short, in the race to dominate the electric-vehicle sector, China is clearly ahead in demand - currently from its own consumers and soon from the rest of Asia - but also in supply, since China not only accounts for a good part of the world's automobile production, but more important, it controls battery components. Faced with this reality, countries that have benefited from Europe's leadership position in the automotive sector need to get their act together by starting production and ensuring the supply of their components. As for Asia ex-China, it is time to think of stepping up production of EVs and batteries to avoid excessive reliance on Chinese exports. All in all, another potential bottleneck in the global supply chain, centered to batteries for EVs, seems unavoidable with obvious consequences in terms of reinforced industrial policy in major countries and a reshuffling of the EV supply chain to avoid bottlenecks. The story of the semiconductor industry can serve as a good example. 25 20 15 10 5 0 Global market share (parts) Global market share (vehicles) Share in exports (vehicles) JP DE KR UK FR US IN CN Share in exports (parts)
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