China did to solar panels what everyone said couldn't happen to a complex manufactured good: it turned them into a commodity, drove prices down 90%, and eliminated the margins that Western producers relied on.
This should be ominous. Cars are getting commodified now, and tokens are right beyond. Chinese passenger vehicle exports have grown 10x since 2020, and the effects are showing up all over, from their increasing presence on UK streets, to financially weakening competitors. For example, analyst estimates for BMW's 2026 have been cut to nearly zero.
Some implications:
- The AI token cost floor is not fixed.
- Inference efficiency gains compound with Chinese chip output and model distillation.
- The floor will drop faster than Western models, just as in solar and cars.