This podcast isn’t personal advice. If you’re not sure what’s right for you, seek advice. Tax rules can change and benefits depend on personal circumstances.
This podcast isn’t personal advice. If you’re not sure what’s right for you, seek advice. Investments rise and fall in value, so investors could make a loss.
Full podcast episode transcript
Susannah Streeter: Hello and welcome to Switch Your Money On from Hargreaves Lansdown. I’m Susannah Streeter – Head of Money and Markets.
Sarah Coles: And I’m Sarah Coles – Head of Personal Finance – and it’s good to be back and to have made it through the monsoon to get to the recording today.
Susannah Streeter: Yes – although it set back my hopes for an autumn camping getaway – though, given that I have actually invested in a van this year, it is a bit cosier, whatever the weather! Though, in recent weeks, I seem to have just spent time trundling time the rain-soaked roads to find a super-fast charger.
Sarah Coles: Oh, yes – claxon-alert! So, Susannah has joined the EV revolution.
Susannah Streeter: Yes – and I’m loving it – and I’m not alone. Although sales have slipped, pure electric vehicles will still make up almost a fifth share of the market this year.
Sarah Coles: But there are still a lot of question marks surrounding the industry – not least, of course, ongoing trade wars – and, on the US presidential election trail, Donald Trump has been ratcheting up the rhetoric, promising even tougher tariffs in China – and its potential partners – and a lot has been centring around EVs.
Susannah Streeter: So, in this episode of the podcast – which we’re calling ‘Charged Up’ – we’re going to be looking at just what’s at stake in these latest trade skirmishes – and what they could mean for the EV industry and China’s prospects.
Sarah Coles: We’re going to chat to motoring guru, Quentin Willson – formerly a Top Gear presenter – who’s written a myth-busting book about electric vehicles.
So, Quentin – what’s the biggest myth you’ve heard about why there’s been a slowdown in EV sales?
Quentin Willson: I think the biggest one is people just think they catch fire spontaneously. They’ve seen all the stuff from Facebook, but all the data says that you are 20 times less likely to have a fire in an EV than in a combustion car, but it’s these myths which get really embedded.
Susannah Streeter: Thank you very much, Quention – we look forward to lots more myth-busting to come. We’re also gonna hear from Senior Equity Researcher, Matt Britzman , who’ll look at some of the listed companies in the sector – and what tariffs could mean for them – and our Head of Investment Analysis and Research, Emma Wall, will be getting the fund management perspective on China.
But, of course, tit-for-tat tariffs are hardly a new occurrence affecting industries. During Donald Trump’s first term as President, he sent seismic tremors through the global trade system – pulling out of the Trans-Pacific Partnership pact and breaking World Trade Organisation rules by [ph. unilatering 2:33] imposing tariffs on China. The aim was to reduce the US deficit and bring manufacturing jobs back to the USA.
However, China retaliated – and a number of studies showed that up to 250,000 jobs were lost instead - and that they led to a 1.4% decline in manufacturing employment in the US.
Nevertheless, such tariffs are actually considered to be politically popular – and the Biden administration has increased some tariffs on Chinese-made goods. It’ll go up to 100% on electric vehicles, 50% on solar sales, and to 25% on electrical vehicle batteries. The idea is that it shows the Democrats want to protect the US car industry.
Susannah Streeter: But now, on the presidential election campaign, there is a growing divergence of policy.
Trump has vowed to increase tariffs by another 10-20% on most foreign goods – and even by 100% on countries that move away from using the dollar to trade – in an attempt to keep the dollar’s dominance in financial markets.
Sarah Coles: Those are quite impressive tariffs – and, meanwhile, Kamala Harris has warned that such tariffs would constitute an effective tax on American households because they’d push up the price of goods. But the US is far from alone in imposing higher tariffs on Chinese-made goods – particularly EVs.
Susannah Streeter: Yes – in the EU, there is huge concern about the competition China poses for the block’s car industry.
The powerhouse that is VW has warned it’s considering axing 30,000 jobs – with factories in Germany at risk of closure due to weaknesses in the industry.
Sarah Coles: The EU is now raising tariffs on Chinese electric vehicles – they’ll range from 17.4% to 37.6% – and that’s on top of a 10% duty that was already in place for all electric cars imported from China.
This would be a major setback for China – given the EU is its largest overseas market for its EV industry.
Susannah Streeter: Let’s go on – because there is now the spectre being raised about the knock-on impact of these tariffs for other sectors as well.
Luxury goods companies – they’ve been under pressure as questions whirl around about the potential for fresh tit-for-tat tariffs to be imposed by China. They might be sought after by Chinese fashionistas, but the latest handbags, belts, or raincoats are hardly vital components for Chinese-heavy industry – and could be the first in line to be targeted.
Sarah Coles: And, even after all of this – given how much cheaper Chinese EVs already are – even this level of tariff might mean they’re still competitive and will give European manufacturers a run for their money.
Global auto-research company, Auto Forecast Solutions, reckons tariffs on Chinese-made EVs will create a hurdle, but not a barrier to trade.
Susannah Streeter: Cheaper Chinese models may also be more attractive to motorists, who appear to have been put off by the higher prices they’re currently being charged.
Sarah Coles: So, research by Autotrader’s shown that the median retail price of a new fully-electric car is £51,000 – and that’s around a third higher than a new petrol or diesel model.
The Society of Motor Manufacturers and Traders, here in the UK, wants to see more incentive for drivers to switch – and better investment in charging infrastructure.
Susannah Streeter: It is still patchy in some parts of the UK – although, on the whole, the charging experience has been pretty easy for me. In fact, it’s actually a great excuse to sit and do nothing for 25 minutes while the car is on an ultra-fast charge – it does actually make a difference to carve out a bit more space in my life! It’s a bit of a mindset change that I am quite enjoying.
Sarah Coles: It definitely makes a change from living your life at 100 miles an hour. But, although adoption does appear to be slower than was estimated over the past year or so, BloombergNEF’s long-term electric vehicle outlook shows that EV adoption is still growing.
It forecast that rapidly falling battery prices – and advancements in next-gen technology will help – and, although, right now, they’re still a lot pricier, the authors also reckon we’ll see improving relative economics of electric vehicles – compared with internal combustion engine counterparts – which should continue to underpin long-term EV growth globally.
Susannah Streeter: So, does Quentin agree with all of this, or are there still some myths to bust?
Quentin – what is holding back consumers?
Quention Willson: There are a lot of things, but not least the misinformation – the disinformation – that they’ve been reading.
When you think that this is a trillion-dollar industry – oil, petrol, cars, parts, workshop revenue... you can understand that there’s a lot of pushback – and, even though we can’t identify who’s spreading all this stuff, it’s definitely there – and it’s global as well.
So, they worry about EVs catching fire – the fact that the batteries don’t last – when there’s a mountain of stuff that proves that the batteries are outlasting the cars. I drove a Tesla the other day with 250,000 miles on it – and it was as fresh as paint – it was perfect. But, unless you really want to find this stuff out – and it fits into your belief system – then people just amplify the sort of stuff they keep reading on Facebook – and the whole community says that EVs are a dead duck – but there are 1.2 million people out there driving them. And you see them strobing up and down the motorway – you should think, if all these people are driving them – and living with them quite happily – they can’t be that bad.
Sarah Coles: So, you’ve got the group of people who use EVs – and very happy with them – and then there’s the group of people who’d never consider them. How do you convert one into the other?
Quention Willson: I’ve got this lovely group called ‘A Fair Charge’ – so we talk to politicians, public, and journalists about EVs. One of the projects we’ve got this year is called ‘Voices of the Million.’ So, we will be recording people who have folded EVs into their lives for perhaps four, five years – and get them to tell, independently – and without an agenda – how that has worked for them – and whether they like them or not.
These people – we never hear their voices, do we? We only hear the voices of people – and this is the irony – who never drive EVs – and they’re the ones who talk with the most volume and vitriol. So, I’m really keen to capture those million people who drive them every day – and actually love them. And all the surveys say that, once you’ve driven an EV, you’re 95% happy and would never go back to a combustion car. So, it’s just getting that message out.
Susannah Streeter: It’s funny – I’m only four to five months in, but I think I was one of those that have actually held onto my petrol car – just as a standby – to make sure I was completely happy! But I’m definitely gonna sell it – ‘cause I am happy.
The thing is though, they are more expensive – I have been saving for a while to buy mine. Just how expensive are they at the moment compared to petrol and diesel models?
Quentin Willson: It’s between £10,000 and £7,000 – comparing equivalent Is to EV – but, when you get to second-hand, there’s price parity now.
So, you can buy a Tesla Model 3 – which is a really good car – for about 15 grand now – a second-hand one – and the cute little Fiat 500 Electric – probably 13 grand – Nissan LEAFs for 10 grand. People say they’re far too expensive – but, second-hand, they’re absolutely amazingly good value.
But then you’ve got car manufacturers like Vauxhall – who’ve just brought out their Electric Frontera – which is gonna be the same price as the combustion equivalent. So, we’re gonna see this price disparity shrink and shrink – and, to be fair, what we call ‘The Legacy Autocar Makers’ – they’ve had a lot of time to get this right – and, instead of producing a £25,000 small Fiesta-type EV, they chose to make £120,000 SUV electric cars – and the market didn’t want that – and still doesn’t. So, that’s why we haven’t got the adoption that we should because of this affordability issue, but it is changing.
Sarah Coles: We talked quite a bit about the price war – and how prices are being cut in China – and we’re not seeing the same sort of thing in European markets – but do you think prices will get more competitive further down the line?
Quentin Willson: Yeah, definitely – because we’ve seen battery costs really come down – they’ve declined significantly over the last couple of years. And, in China, it’s $50 per kilowatt hour. Now, broadly, the industry always thought, ‘If we can get them to $100 per kilowatt hour for a battery, that’s great, but China’s beat us to it.’ And this whole thing about ignoring China – and hoping they’re gonna go away: they’re not – they are years ahead of us.
What we’ve gotta do is understand that we shouldn’t try and play catch-up – ‘cause we won’t – and we’ve got to look at things like tariffs and say, ‘Is this really a good thing?’ We want cheaper cars for consumers – and the Chinese can deliver them – and they are – and I’ve driven quite a few: really decent quality.
Susannah Streeter: What d’you think the impact of taxes and incentives can be? How can they nudge behaviour – and what’s the example been like in other countries?
Quention Willson: They’re huge – and, if you look at Norway, they have 94% what they call ‘EV penetration.’ That’s 94% of all the cars in Norway are EV. So, it’s massive – but they were doing it ages ago – and things like free parking – free use of high-occupancy lanes – things like that.
Here in the UK, we have nothing. We’ve taken away the subsidies to help you buy one – we’ve even taken away the subsidy to have a charge box. There is nothing for private buyers to incentivise them.
When you look at the Norway model – and you see how successful they’ve been – and their cut-off date for having no more combustion cars is 2025. So, they really are ahead of everybody – and those subsidies have done it. But I’m not advocating that we give away taxpayer money – I think we should look at other simpler levers to enable people to think, ‘Actually, there’s an advantage in me owning an electric car.’
Sarah Coles: If you were writing the budget from an EV perspective, are there things that you would like to see in it in order to help promote EV-ownership?
Quention Willson: I’ve spent the last couple of years writing and talking to the Treasury about reducing the VAT on public charging – which is 20% – and putting it in line with domestic home-charging, which is 5%.
Now, that’s a barrier to adoption – and it would only cost – and we’ve worked this out with Zapmap... that’s £71m at current rates of adoption. That’s a range of a better [s.l. notion 12:46], compared to the £2bn we spent just on the recent 5p post-COVID fuel duty cut. So, it’s really important that Government pulls these relatively inexpensive levers.
I’d like to see that. I’ve just written to Sadiq Khan – who’s gonna stop what they call ‘The Clean Vehicle Discount’ on the congestion charge – which means that, if you’ve got an EV in London, you don’t pay the congestion charge. He’s stopping that in 2025 – and I’m saying, ‘That’s completely nuts.’
Let’s look at things like free parking. Why can’t we have certain towns where it is free to park an
EV? – and, if you can give consumers reasons like this to change their behaviour...
There’s also a thing that’s coming into law – called ‘The Expensive Vehicle Supplement.’ So, EVs need to pay road tax – I agree with that – but, if your EV is over £40,000, then you have to pay an extra amount. So, most EVs will be paying about £510, £520 road tax every year.
Now, it’s cheaper to tax a 2006 Bentley Continental GT with its 6-litre engine than it is to pay the road tax on an EV.
Susannah Streeter: There is still a lot of scepticism around about the future for EVs. Some would say, ‘Look – we should be putting more money into hydrogen fuel-cell cars instead. What’s your take on the alternative green cars of the future?
Quentin Willson: We’ve gotta have parallel technologies – and hydrogen, at the moment, is very expensive and not very energy-efficient.
The amount of electricity it takes to make green hydrogen – which is not a byproduct of a fossil fuel process – is a lot – and you might as well just put that electricity into a battery and make it go. The emissions of hydrogen – they’re technically zero – but the process of making it is so difficult – unless you’re purely green – and that is massively expensive.
Then, there’s the infrastructure – then it has to be really cold and high-pressure. So, the challenges of running a hydrogen infrastructure – compared to an electric infrastructure – are just massive.
Most experts say, ‘We will have hydrogen for passenger cars. We might have it for HGVs, maritime, and maybe short-haul aviation – but, unless it comes down substantially in price, don’t wait for a hydrogen car ‘cause it ain’t coming anytime soon.’
Sarah Coles: All the tariffs that we were talking about – and the trade wars... presumably, this is just an additional barrier to EVs that people just don’t need it right now.
Quentin Willson: The Americans... Trump is obsessed with tariffs – and everybody knows that they are preferred – the American consumer – and it’s gonna cost a lot of money. But, if you look at the EU – I’m hoping that their reasons are to encourage Chinese automakers to come to Europe and build factories. So, you – onshore – they’re battery-manufacturing – and they’re EV-manufacturing – so we don’t have to import Chinese EVs on diesel boats with all the emissions – ‘cause that’s not very green.
That’s why, I think – in the UK – we won’t be having tariffs – and we’ll be having conversations with Chinese carmakers to create jobs – to create factories – to create GDP – and to give consumers the cheaper EVs – the £15,000 electric car, for instance.
So, I’m against tariffs. There is an opportunity here for our country to build these factories – ‘cause we can’t do them – we’re not good at it. Look at Britishvolt – and, if you look at Northvolt, they’re struggling as well.
Susannah Streeter: And these are the focused battery manufacturers, aren’t they? That big Britishvolt plan collapsed because of a lack of funding from the Government.
Quentin Willson: And the same with Northvolt. Northvolt’s had £50bn in investment, but they still can’t make a profit – and BMW have walked away from a £2m battery deal ‘cause they were slow in delivering them.
So, the big battery manufacturers – like CATL in China – are just so good at what they do – and we can learn so much from them.
Susannah Streeter: As you say, you’re a myth-buster. There’s still a lot of opposition – not least for the fact that some people say, ‘Look – EVs have a larger carbon footprint when they set off on the road than other vehicles do.
What would you say to that final opposition that’s often put forward?
Quentin Willson: That’s a myth. If you’re trying to argue that mining for EV batteries is greater than all the emissions from expiration, drilling, refining, shipping, and transportation of oil – it’s just nuts. And there’s multiple surveys that say that an EV pays off its carbon debt in about 14,000 miles in a European power grid.
So, I am optimistic – and the thing that’s gonna swing it is... when enough people realise that they can drive for 2p a mile – and they don’t have any servicing – or very little servicing... In the 45,000 and four years I’ve owned my electric car, I’ve spent 700 quid on one set of tyres.
Susannah Streeter: Thank you. D’you know what I’m most impressed by is the acceleration! I didn’t quite expect it to be just so fast when you set off – that really has taken me by surprise.
Appreciate your time, Quention – and keep up the good work!
Quentin Willson: Pleasure!
Sarah Coles: So, that’s the lowdown on the EV slowdown from Quention. How is all of this having an impact on listed companies in the sector?
Let’s bring in Matt Britzman. So, let’s start with Tesla. China’s a crucial market for them – how important is it – and could any trade issues disrupt that?
Matt Britzman: China is massive for Tesla. It’s the largest EV market in the world – and Tesla’s gigafactory in Shanghai is responsible for a big chunk of their global output.
Now, recent data suggests Tesla’s deliveries in China are gonna be strong this quarter, but the looming trade tensions between the US and China could have an impact further down the line.
Susannah Streeter: So, at the moment, how does Tesla’s performance in Europe stack up?
Matt Britzman: Over in Europe, Tesla’s still growing its market share, but the overall EV market has softened a bit.
Recent news headlines – looking at August’s figures – have exaggerated the scale of the dip in EV sales, with a largely driven by the same period last year seeing an inflated demand. Even so, Tesla has managed to hold its own. As new models come out next year – particularly those aimed at the lower end of the market – there’s scope for some strong volume growth across Europe.
Sarah Coles: So, Tesla’s got some challenges to overcome, but also some big opportunities – right?
Matt Britzman: Exactly. The pressure on margins is still there – especially with the price cuts and finance offers used to stimulate demand – but new models could help. If Tesla can leverage its existing factories to produce more of these models at scale, it could turn into a margin-improvement story – not just a volume one.
Susannah Streeter: There’s so much going on at Tesla. What else should we be watching?
Matt Britzman: Yeah – it’s really a story of innovation – and whether you believe Tesla will deliver the revolutionary products that Elon Musk talks about.
We see the future of Tesla being as much about technology as the cars. For now though, the next year or so will definitely be a transition period.
Sarah Coles: Now, let’s dive into BMW. There’s been some news from the Investor Day – back in July – what can you tell us?
Matt Britzman: That’s right. BMW’s Investor Day’s previewed a new platform – which is a significant part of its strategy to bridge the gap between electric vehicles and internal combustion engines – the main goal being margin parity between the two – sooner than their competitors. That’s big – because BMW have been pretty conservative in the EV race so far.
Susannah Streeter: So, what does make the new platform so important for BMW?
Matt Britzman: It’s designed to roll out multiple EV models – starting in late 2025. What’s impressive is how modular and efficient it is. The new design should help cut costs – and the aim is to be highly scalable. We’re expecting cost reduction in manufacturing as a result.
Sarah Coles: That’s a lot of innovation. So, how does this fit into BMW’s wider market strategy – particularly in places like China?
Matt Britzman: China is a key market for BMW, but demand there has been a bit soft recently. Still, BMW’s strategy looks well-positioned to adapt.
There’s not just a focus on EVs in Europe and the US – the aim is for global production and that includes China.
Sarah Coles: Are there any risks or concerns?
Matt Britzman: Yes – so, aside from the trade tensions – we’ve already discussed the impacts – the entire industry. BMW’s big plans and EV space – at a time when adoption has reached an inflexion point – definitely adds risk. Having said that, BMW does have a strong brand: Premium Product Lineup and the NEXTGen platform that looks set to roll out soon.
Susannah Streeter: Now, let’s move onto TSMC – Taiwan Semiconductor Manufacturing Company. It plays a pivotal role in the chip supply chain.
Just how important is it to the broader tech landscape – specifically with AI and EVs becoming so much more prominent?
Matt Britzman: TSMC are central to the global tech ecosystem. It’s the world’s largest contract jet manufacturer, with a market share of around 62%. The chips they make power everything from Smartphones to datacentres – but what’s really driving the business now is AI – and, increasingly, EVs.
Sarah Coles: So, it benefits from the AI surge, but how does that play into the EV story?
Matt Britzman: It’s all connected, really. EVs are becoming more like rolling computers – and they need advanced chips for everything from battery management to self-driving features – and TSMC is right at the heart of that supply chain.
The same goes for AI – and companies like Nvidia design the chips – but it’s TSMC that actually makes them. Recent results showed how critical AI demand is – they’re reporting over 30% growth in both revenue and profit last quarter.
Susannah Streeter: And how might trade or tariffs impact TSMC in the future?
Matt Britzman: Just like we talked about with Tesla and BMW, trade restrictions could certainly complicate things for TSMC. It’s a critical player in the tech supply chain, so any disruptions could have ripple effects. That said, they’ve done a good job so far navigating those risks – and its global presence does help mitigate some of that. With factories in the US – and plans for more in Japan – it’s building some resilience into operations.
Ultimately, TSMC is in a unique position because you can’t have any AI transitions – or even an EV revolution without chips – and you can’t make those chips without a manufacturer like TSMC. But it’s not without challenges, of course. Geopolitics is a key risk – with TSMC being based in Taiwan – and tensions between Taiwan, China, and the US are an evolving risk.
Susannah Streeter: Thanks, Matt – it’s a super-interesting sector to look at.
Let’s delve into the wider macroeconomic situation now – particularly the effects of tariffs on China – and what could be ahead for the world’s second-largest economy.
Earlier this year, China announced an ambitious goal of reaching 5% economic growth in 2024. There are still questions about whether it can achieve that target – although we have had big stimulus pumped in by the People’s Bank of China – the Chinese Central Bank – in recent weeks. But consumers remain cautious with the struggling property sector still acting as a drag on growth.
Sarah Coles: So, let’s bring in Emma Wall – our Head of Investment Research and Analysis – who’s been discussing the sector in detail with Jason Pidcock of Jupiter Asset Management.
Emma Wall: Hi, Jason – we’re here today to talk about China – and, as an Asian Equity Investor, you’re a specialist in this area, but you have a rather contrarian view to most Asian equity investors – indeed most emerging market investors – which is that you’re not particularly bullish on what is potentially the largest economy within your investable universe. Is that right?
Jason Pidcock: That is right. We haven’t had any direct holdings in Mainland China since July 2022. We’re not expecting to go back into China anytime soon – and that probably means years rather than months. We’d prefer to invest elsewhere in the region. Some of the companies we invest in do give us exposure to China’s economy, but their indirect exposure – and we’re much more comfortable with that.
Emma Wall: Let’s pick off some of those headwinds, one by one.
Let’s start with the economy. Economics is not necessarily what drives markets, but they are more intertwined in emerging markets, aren’t they? What are your views on the Chinese economy?
Jason Pidcock: There’s been very little correlation between China’s GDP growth and its stock market returns over the last 30 years. China’s had one of the worst-performing stock markets – in US dollar terms – since the end of 1993 – of any market anywhere in the world – despite having supposedly high GDP growth for most of the last three decades.
Even now, we’re not entirely convinced by the GDP numbers that come out of China – it doesn’t look to us like a country that is growing at 5% per year – and we have, in recent times, seen very low correlation between supposed growth rates and the stock market. So, for us, it’s the stock market returns that are important, not GDP numbers.
Emma Wall: That said, they do have a growing economy in terms of consumers – although that has been hampered by the one-child policy – and that generation entering into the working environment.
So, how do you get access to those millions of people – and their growing consumer trends? Are you saying that you can do that without investing in Chinese equities?
Jason Pidcock: We can – we do invest in companies in Taiwan, South Korea, Singapore, Australia – that have sales into China – so we feel that we have enough indirect exposure. In terms of the pie, itself, it is a very large pie, but we don’t see it growing as fast as the other pies in the region – so India being the second-largest emerging market – but also other markets that are smaller, but we think will grow as quickly or faster.
China now does have a lot of growth challenges – demographics aren’t the tailwind that they were over the last three decades – they are now a headwind. The population is now shrinking by roughly 250,000 people every month. The number of people expected to retire over the next decade is extremely high. Foreign direct investment into China has now gone negative – so foreign firms are taking money out of China rather than investing in – and, of course, there’s the geopolitical challenge, which means tariffs on Chinese products are being raised, not just by developed markets, but also some emerging markets. So, even in sectors that China has been very successful in exporting – such as autos and solar panels – counties elsewhere want to raise trade barriers.
So, we do think there are a lot of challenges to China’s growth – whereas there are other markets in the region where demographics are more favourable – they’re seen as friendly nations from the point of view of many countries in the West – and, therefore, are benefitting from production being moved from China to those other markets. So, India would be one example – Vietnam – elsewhere in South-East Asia... you’ve probably heard of the term ‘Friendshoring’ – that is going on.
Emma Wall: I want to dig into the politics – ‘cause demographics, alone, is not enough to hold back a market. You need to look at the US, for example – where you’ve got developed market demographics of aging populations – and the returns that they’ve had over the last 10 years – past performance being no guarantee of future returns.
But there’s something that’s different about China – and it’s the politics, you’ve mentioned. How much of that is behind your decision not to invest in direct Chinese equities?
Jason Pidcock: It’s a very large part. We break it down into the domestic political system – which we think isn’t as encouraging of new business development – as encouraging of entrepreneurial growth – and does clog up the workings of the market – and we also think about geopolitics and how other countries see China – and how countries want to invest in China – and trade with China in the future. Clearly, there have been restrictions on tech exports to China as well as other trade restrictions – such as tariffs.
We do think China’s political system is a hardline communist dictatorship – and, historically, those kinds of countries have not been good places to put investors’ money. Free markets aren’t allowed to work as easily. If you’re a company in China – a business of any particular size – you probably will be forced to have Communist Party Committees within your company. Once you get to be quite large, there’ll be a communist representative at board-level – and, if you become a Mega Cap, the country will take a golden share in your business – as has happened with Tencent and Alibaba.
Emma Wall: You said this was a multi-year view for yourself – and for your investment team. What would have to change for you to consider direct Chinese equities again for the portfolio?
Jason Pidcock: We’d probably like to see the style of government change at a minimum – but, ideally, a bigger change in the political system – and also relations between China and the West – particularly the US – change. So, less rhetoric, less noise, less confrontation over Taiwan – and the South China Seas... less confrontation with other neighbouring countries, such as the Philippines.
The State gets involved in all sorts of areas – and there’ve been accusations of state-sponsored industrial espionage on a very large scale – and that kind of thing deters investors. So, probably in the next few years, there won’t be enough changes, but maybe some future leader – at some point – does take the view that they don’t want to see what happened to the Soviet Union happen to China – and that there will need to be more market-friendly reforms – and that, diplomatically, relations will need to improve with a greater number of other countries around the world – not just Russia, North Korea, and Iran.
Emma Wall: Thank you very much for sharing your views, Jason.
Jason Pidcock: Thank you, Emma.
Susannah Streeter: That was Emma Wall talking to Jason Pidcock of Jupiter Asset Management. And please bear in mind that these are the views of the fund manager and are not individual stock recommendations.
You’re listening to Switch Your Money On from Hargreaves Lansdown – and, before we go, there is time for a quick fact of the week. For this, we’re going to go back in time – because this isn’t the first time electric vehicles have had a moment in the sun.
But which of these statements about electric cars do you think is true:
Were there fleets of battery-powered taxis in London and New York at the end of the 19th century?
Or, by 1900, did electric vehicles make up a third of all cars on the road in the US?
Or did Henry Ford work with Edison on electric cars?
Sarah Coles: They all sound like you’ve made them up – which isn’t very helpful! I suppose I’ll have to pick one of them – I’ll go for those fleets of electric taxis.
Susannah Streeter: You are right on one level – the taxis are true – but, actually, so are the other two claims. Electric cars really were big news at the end of the 19th century – back before speeds increased, and roads improved, and cars tended to stick to shorter journeys.
Sarah Coles: So, it’s gonna be interesting to see whether we look back at this as another moment in the sun, or the beginning of the rise and rise of electric cars.
Sarah Coles: That’s all from us this time – but, before we go, we do need to remind you that this was recorded on 30th September 2024 – and all information was correct at the time of recording.
Susannah Streeter: Nothing in this podcast is personal advice and you should seek advice if you’re not sure what’s right for you. Investments and any income they produce can rise and fall in value, so you could get back less than you invest – and past performance is not a guide to the future.
Sarah Coles: Yes – this is not advice or a recommendation to buy, sell, or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.
Susannah Streeter: And this hasn’t been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.
Sarah Coles: Non-independent research is not subject to FCA rules prohibiting dealing ahead of research. However, HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.
Susannah Streeter: And you can see our full non-independent research disclosure on our website for more information.
So, all that’s left is for me to thank our guests: Quentin, Jason, Matt, Emma, and our Producer, Elizabeth Hotson – and you , of course, Sarah!
Sarah Coles: Thank you – and thanks also for listening. We’ll be back again soon – goodbye!