April 10, 2024

Electric vehicles are upon us but it won’t be led by U.S. In fact, China is at the leading the charge.

My studies on EVs that spans more than a decade, proves that the global shift in the world of mobility, from petroleum-powered vehicles to electric is likely to happen sooner rather than later. This shift is already taking place in China which is the largest automotive market, having 23 million vehicles sold in the year 2018. As Western countries are nearing peak ownership, there’s still many millions of Chinese families who do not own a vehicle in any way or even at least two.

A lot of them are purchasing electric vehicles. In 2015, electric vehicle sale across China had been able to surpass U.S. levels. In the year 2018, Chinese sales topped 1.1 million vehicles and over 55% more the electric vehicles sold across the world and greater than three times the number as Chinese buyers had purchased two years before. U.S. electric vehicle sales in the year 2017 were only 358,000.

One of the most important aspects of the price an electric car will pay is the price of its battery – and China has already manufactures the majority of the electric vehicle batteries in the world. Prices for batteries continue to decline and industry experts are now suggesting that within five years, it will be more affordable to purchase an electric vehicle than a gasoline or diesel-powered vehicle.

According to forecasts, that the Chinese manufacturing 70% or more percent of the world’s electric car batteries in 2021, as demand for electric vehicle batteries rises.

Huge government backing

China has an growing, yet ambitious automotive industry. It hasn’t been capable of compete with the effectiveness or quality of the established automakers in creating gas-powered vehicles, however electric automobiles are more affordable to construct which gives Chinese companies the chance to be competitive.

The Chinese government has chosen to focus on the electric vehicle as one of the 10 industries that are central to their ” Made in China” initiative to promote technological advancement in the industrial sector. The government’s efforts include the use of hundreds of billions to help subsidize the manufacturing of batteries and electric vehicles and encouraging businesses and consumers to purchase electric vehicles and batteries.

The government is aware that electric cars can help address certain of China’s biggest environmental and energy issues The massive air pollution in the major cities of China, security officials from the national government are worried about the amount of oil imports the country is and China is currently the country which contributes the most to the global emissions of climate change.

New companies

scores of Chinese auto-making firms have risen to benefit of these government subsidies. One of the biggest players is BYD, which means “Build Your Dreams,” with its headquarters in Shenzhen. About a decade ago a millionaire financier Warren Buffett bought about one-quarter of the company for a price of US$232 million and a stake that has now a value of over $1.5 billion.

The initial plans of the company to export its vehicles for sale to U.S. proved premature and failed. BYD instead shifted its focus exclusively on the Chinese automobile market, and creating electric buses to serve the international market which it now has a dominant position in.

If BYD’s electric vehicle plans fail there are other Chinese firms that are ready to take up the gaps.

The 2019 Yuan 360EV by BYD is a fully electric SUV for sale in China. BYD

More assistance

Alongside the government support to make sure that BYD and its competitors enjoy plenty of customers, new regulations from the government are in effect. The Chinese government has now required all automakers that sell in China either domestically or foreign companies to produce a set percent of their sales electric via a complicated crediting system. The requirement will be more strict in the future, possibly requiring all companies to produce at minimum 7% of their sales electrical in 2025..

The major foreign car companies have huge investment across China and are unable to afford to quit the market. Volkswagen is one example. Volkswagen is currently is selling 40% of their products in China and this is the major reason why the company is striving to create automobiles that are electric.

The automakers in China’s domestic market have not yet entered into the international market. Industry analyst for electric vehicles Jose Pontes says there are three main reasons for their hesitation. First there is the fact that there is a reason that the Chinese market is large enough to support the current volume of production. The second reason is that many of the car manufacturers operating in China are not well-known in the West and therefore, customers will be cautious about buying from a foreign brand. In addition, their cars aren’t yet in compliance with strict safety requirements within both the U.S. and Europe.

However, all of these issues can be overcome with time and funds. The possibility is that Chinese electric car manufacturers might enter the low- to mid-income market of the West like Volkswagen did 60 years ago..

If or when it happens, low-cost electric cars that are reliable and efficient could be introduced to across the West from China overtaking Tesla or the other American or European electric vehicle projects. Only Western government efforts to protect automakers in the US with tariffs as well as other trade barriers could hinder this growth.

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