Last month, a Chinese retiree by the name of Zhang Youping spent close to $20,000 purchasing an all-electric, compact sport-utility vehicle from BYD, the leading electric car manufacturer in China. Zhang made his purchase during an auto exhibition. Her family has invested in three vehicles powered by gasoline over the last decade; nevertheless, she has lately been worried about the rising cost of gasoline and has made the decision to switch to an electric vehicle “to save money.” A few of months before, her son had also purchased an electric vehicle (EV). It was a hatchback from Leapmotor, another Chinese manufacturer, that cost ten thousand dollars.
In China, the purchase of one-fourth of all new automobiles in 2018 will be either a fully electric vehicle or a plug-in hybrid vehicle. Some estimates place the number of Chinese businesses producing electric vehicles (EVs) at over 300, with prices ranging from around $5,000 for entry-level versions to high-end ones that compete with Tesla and German manufacturers. In the United States, there are around four million charging units, which is almost twice the amount from only one year ago, and more are on the way.
While other electric vehicle markets are still heavily dependent on subsidies and financial incentives, China’s market has entered a new phase in which consumers are weighing the merits of electric vehicles in comparison to gas-powered cars based on features and price without much consideration of state support. The United States ranks quite low when compared to other countries. This year, the United States reached a significant milestone by surpassing the barrier of 5 percent of new automobile sales being accounted for by electric vehicles (EVs). In 2018, China achieved this level of success.
Even brand new incentives in the United States have sparked debate about whether or not they would be helpful in addressing the mitigating factors for electric automobiles, such as lengthy wait lists, limited supply, and high pricing. A tax credit of $7,500 has been made available for the purchase of electric vehicles as part of the Inflation Reduction Act that was passed in the United States last month. However, there are requirements regarding the location of the factory that produces the vehicles and the supplier of the batteries. Automakers have voiced their displeasure over the fact that the credit does not apply to a significant number of currently available EV models and that the sourcing criteria may cause an increase in the price of constructing an EV.
To establish the groundwork for its electric car industry and get it to the point where it can start standing on its own, it took China more than a decade of government subsidies, long-term investments, and expenditure on infrastructure. According to Tu Le, general director of the consultancy Sino Auto Insights, located in Beijing, competitiveness and dynamism are now the primary factors driving the Chinese industry. Government subsidies are no longer a factor. “We have arrived at a stage in China where we are competing with other businesses on pricing. We are competing with regard to the characteristics. Therefore, it is not a matter of a subsidy,” Mr. Le said. “The market is exerting its dominance.”
In 2014, the current President of China, Xi Jinping, made the statement that the development of electric cars was the only way that China could transition “from a huge automotive nation to an automobile power.” As a means of underscoring its aspirations, China has established a challenging objective: by the year 2025, electric cars will account for 20 percent of all new automobile sales. It is quite possible that China will accomplish that goal this year, which is three years earlier than was originally planned. China is not only the largest market for electric cars (EVs), but it is also one of the fastest growing. Sales are anticipated to more than quadruple this year, reaching almost six million vehicles, which is more than the rest of the world combined.
Among the top-10 best-selling electric vehicle brands in the world, half are Chinese. Leading the pack is BYD, which is second only to Tesla in terms of worldwide market share and has just begun exporting its electric vehicles. Additionally, the success of businesses in China is not limited to the selling of automobiles. The Chinese battery makers CATL and BYD are the most significant participants in the market, and Beijing maintains a firm grasp on the availability of essential raw materials.
One of China’s most prominent automakers, Geely Automobile Holdings, which has investments in Volvo Cars and Mercedes-Benz, announced its intention to sell as many electric and hybrid vehicles as conventional models with internal combustion engines in the upcoming year. This announcement was made in the previous month. According to Jason Low, a principal analyst for the research firm Canalys based in Shanghai, Chinese electric vehicle brands have been more aggressive than foreign automakers in integrating new technologies into their vehicles. These technologies include entertainment features and voice-activated controls.