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China goes all out to become a global leader of Electric Cars

China goes all out to become a global leader of Electric Cars

26 March 2019

China is determined to dominate electric vehicles. With the same force it showed in industries from steel to solar, China is backing electric vehicle manufacturers and battery producers with huge subsidies. Already the world's largest electric vehicle market - there were about 1 million battery-powered passenger cars sold in the country last year - China is now determined to challenge competitors from Japan, USA to Germany.

It is moving to build a network of up to 800,000 charging stations, while also changing the rules for automakers to encourage them into building more electric vehicles in the country. Beijing's massive push ultimately could have far greater impact on whether the global market really takes off than similar efforts in other countries.

New rules of the road

To speed up this process, two years ago, Beijing announced one of the toughest regulations on new-energy vehicles on the globe. Starting in 2019, car companies are measured against a credit-score program tied to the production of NEVs (New Energy Vehicles) - comprising electric cars and plug-in hybrids. To gain a positive NEV score, car manufacturers must make enough new-energy cars to accumulate credits higher than 10% of their traditional vehicle output by 2019. The proportion will be 12% in 2020.


If top car brands, who each sell about 4 million vehicles a year in China, are to meet the quota with electric vehicles only, they will have to produce around 100,000 cars a year. Will they opt to produce plug-in hybrids, they will have to manufacture even more cars to meet the credit requirements.
China overtook the U.S. to become the world's largest automobile market in 2009 and has kept the title ever since.


To further pursue the focus on NEVs, China has changed its rules for foreign automakers wanting to establish in the country. Under the new scheme, foreign automakers are allowed to increase the number of local partnerships they can have from two to three - as long as the resulting joint venture produces and sells electric vehicles and other eco-cars under a new Chinese brand. Additionally, the previous 50% cap on foreign ownership of joint ventures has been removed.


In another sign of its ambition, the Chinese government last year announced plans to eventually end sales of gasoline and diesel cars, following decisions by UK and France to end sales of internal combustion engines starting in 2040.

Chinese NEV market in 2018

China’s New Energy Vehicle market thrived in 2018. It is estimated that total output and sales exceeded 1 million units. These figures – which encompass battery electric vehicles (BEVs), plug-in hybrid vehicles (PHEVs) and extended range electric vehicles (EREVs) – equate to robust year-on-year (YoY) growth of 84% (production) and 88% (sales).


There are several factors behind the NEV market’s strong performance last year, key amongst them being the ongoing generous subsidies for plug-in vehicles, as well as the dual-credit policy, which came into effect last April. Ultimately, it is expected the NEV industry to be driven more by competition than by policy.


China’s prospects to lead the future electric car industry seem to look bright!


Sources: Nikkei, LMC Automotive, Automotive News

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Teresa Lehovd is the Head of Market Intelligence at Höegh Autoliners. She holds over 30 years of experience in the RoRo shipping industry, whereof 20 years in various market research positions where she is specialised in the research of global automotive and heavy equipment industries. Teresa is also a guest lecturer at the Norwegian School of Management in the area of Competitive Intelligence and Shipping, and frequent speaker at various industry conferences.

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