The world is moving to electric vehicles and China is leading this global transformation in mobility. China continues to be the world’s largest automobile market with 23 million vehicles sold in 2018.
Car ownership is reaching saturation point in the West while millions of Chinese families still don’t own a car. Electric vehicles (EVs) are a popular choice among Chinese car buyers with over 1.1 million cars sold in 2018, representing more than 55% of total global sales.
The battery constitutes a significant component of an EV’s price. With China manufacturing more than half of the world's EV batteries, combined with falling battery prices, it will soon be cheaper to buy an electric car than a gas- or diesel-powered one.
Electric vehicles represent a new opportunity for the Chinese automobile industry, which has never been able to match the efficiency and quality of established auto manufacturers. China’s auto industry has the backing of the Government, which has identified EVs as one of 10 commercial sectors central to their ‘Made in China’ effort to boost advanced industrial technology.
Support for the industry comes in the form of billions of dollars in subsidies for the manufacture of EVs and batteries.
Electric vehicles are also being seen as a panacea for the country’s environmental problems arising out of massive air pollution as well as oil import and carbon emissions.
Taking advantage of the Government’s initiatives as well as subsidies, several Chinese auto-making companies have entered the EV segment. For instance, BYD (Build Your Dreams), a Shenzhen-headquartered company partially owned by billionaire investor Warren Buffett, is developing electric cars for the Chinese auto market.
The Chinese Government is not only ensuring EV manufacturers have lots of customers, but is also introducing new government regulations that require automakers who sell in China to make at least 7 percent of their sales electric by 2025.
Foreign car manufacturers cannot afford to leave given their considerable investment in China as well as the sales they generate in the market. Volkswagen sells 40% of its output in China and this is driving the company’s efforts to develop electric vehicles.
However, the Chinese market is big enough to absorb their current production; Chinese car manufacturers remain unknown in the West; while lacking compliance with the strict safety regulations in the U.S. and Europe.
Sustained efforts from Chinese electric car companies can remove these barriers, leading to greater adoption of their EVs in the West.