A revolution in electric vehicles is on the way. However, it will not be governed by the U.S. China will lead the charge. Leading the charge.
My research into E.V.s, which spans more than a decade, proves that the global shift in the world of mobility, from petroleum-powered vehicles to electric, is coming sooner rather than later. This shift is already taking place in China, the largest auto market, selling 23 million vehicles in 2018. As Western nations prepare to reach peak ownership, thousands of Chinese families still do not have a car in any way or even one or two.
Many of them are now buying electric vehicles. By the year 2015, the electric car market share within China had exceeded U.S. levels. In 2018, Chinese sales topped 1.1 million vehicles, greater than 55% percent of the electric vehicles sold worldwide, and over three times the number Chinese buyers had purchased two years prior. U.S. electric vehicle sales this year were only 358,000.
The most significant aspect of the price an electric car will pay is the price of its batteries. China is the country that manufactures the majority of the electric vehicle batteries in the world. Prices for batteries continue to decline, and industry experts are now suggesting that in five years, it will be more affordable to purchase an electric vehicle than a gasoline or diesel-powered one.
The forecasts suggest that the Chinese manufacturing 70% or more percent of the world’s electric automobile batteries by 2021 as demand for electric vehicle batteries rises.
Huge government backing
China has the world’s growing yet very ambitious automobile industry. It has yet to be successful in achieving the same effectiveness or quality as established automakers when it comes to creating gas-powered vehicles. However, electric automobiles are more affordable to construct and offer Chinese companies a chance to be competitive.
The Chinese government has chosen to focus on the electric vehicle as one of the ten commercial sectors that form the basis of their ” Made in China” initiative to promote technological advancement in the industrial sector. The government’s efforts include using hundreds of billions to help subsidize the production of electric vehicles and batteries and urging companies and consumers to purchase the batteries.
The government knows electric cars could solve many of China’s most significant environmental and energy concerns. Due to the massive air pollution in the major cities of China, security officials in China are worried about the number of oil imports in the country. China is currently the country that contributes the most to the global emissions of climate change.
New companies
Scores of Chinese auto-making firms have risen to benefit from these government subsidies. One of the major players is BYD, a reference to “Build Your Dreams,” located in Shenzhen. In the past ten years, millionaire financier Warren Buffett bought about one-quarter of the company at 232 million, which now has a value of over $1.5 billion.
The initial plans of the company to export its vehicles into the U.S. proved premature and failed. BYD instead shifted its focus exclusively on the Chinese automobile market and constructing electric buses for the international market, where it currently has a dominant position.
If BYD’s electric vehicle plans fall apart, other Chinese companies are ready to pick up the gaps.
More assistance
In addition to the federal support to ensure that BYD and its rivals have many customers, new regulations from the government are in effect. The Chinese government now requires all automakers that sell in China, whether domestic or foreign, to produce a set percentage of their electrical sales via a complex crediting model. The requirement will be more strict as time passes and could eventually require all companies to produce 7 percent of their sales electrical in 2025.
Large foreign car manufacturers have huge investments across China and need help to afford to leave the market. Volkswagen is one example. Volkswagen currently sells 40% of its production in China, which is the primary reason why the company strives to create electronic vehicles.
China’s automakers have yet to embrace the market for exports. An analyst in the industry of electric vehicles, Jose Pontes, says there are three main reasons for their indifference to exports: First, it is because the Chinese market is large enough to support the current production. The second reason is that many car manufacturers operating in China need to be recognized in the West. Therefore, customers will be wary of purchasing from a brand that is not well-known. In addition, their cars still need to comply with the strict safety standards within Europe, the U.S., and Europe.
However, these issues can be overcome with the right amount of time and resources. Chinese electric car manufacturers could be able to enter the low to mid-income market in the West as Volkswagen did over 60 years ago.
If or when this happens, cheap electric vehicles could be introduced across the West from China, overtaking Tesla and other American or European electric vehicle initiatives. Only Western government efforts to protect automakers in the U.S. with tariffs and other trade barriers could stop this progress.
