EV Market: Is It China's Supremecy Or US' Miscalculations?

EV Market: Is It China's Supremecy Or US' Miscalculations?

The global electric vehicle (EV) market has become intense and China wants to lead it. Many analysts believe that it is going to be the next global automaker leader for electric vehicles in the world, partly because the Chinese government and policymakers have put EVs collocated to the vision of lowering carbon emissions since the country is drowning in its own fumes. 

In April last year, China’s Ministry of Finance announced the support for EVs in the form of subsidies that can be availed until the end of 2022 for new energy passenger vehicles below the price of $45,700. The Chinese Government, in the subsequent efforts to cater to the ever-expanding electric vehicle infrastructure of the country, undertook the construction of more battery swapping centres. So, whatever car you are purchasing, you know there’s a centre to get it charged up! So far, the only American company – Tesla Inc (NASDAQ: TSLA) has been able to establish a foothold in the Chinese market; without affiliating its business to a local firm. 

Sadly, Elon Musk’s Tesla is under media scrutiny back in China for the allegations related to quality problems, and the government is also sceptical of the vehicles’ onboard cameras that can hurt data privacy and national security.

At the same time, the local EV startups including Nio Inc. , Xpeng Inc. and Li Auto Inc., have outgunned Tesla. In July,  Li Auto delivered 8,589 cars,  Xpeng had sales of 8,040 vehicles whereas Nio delivered 7,931 cars. Chinese EV players have made their mood to capture the world’s biggest EV market and oust Tesla by introducing new models at cheaper rates. Recently, Nio announced the launch of inexpensive EVs for the mass market. They will be rolling out three models by next year in the hope to capture a major chunk of customers in its favour.

Here companies are rolling up their sleeves to face the cut-throat competition and on the other side of the shore, Chinese electric vehicle (EV) battery suppliers are struggling to meet the demand for cars in the domestic and foreign territories. Companies are in a catch-22 situation where production and logistics are disrupting the overseas supplies for raw materials. The shortage is forcing companies to place orders in advance.

Electric cars

Despite such shortcomings, the sales are going through the roof as a consequence of the rising demand for Chinese EV batteries. 

Amid the massive shortfall, Chinese EV battery factories are running at full capacity. Japan, Korea And China, the East Asian nations, dominate the world market and produce almost 95% of the batteries for cars, out of which China constitutes a major chunk of 60%. 

“The global car market is characterized by two bottleneck factors up to the year 2030. On the one hand, there is a shortage of semiconductors which will have an impact until the beginning of 2023, and then an important battery cell availability problem,” said Professor Ferdinand Dudenhoeffer, director of Germany-based Center for Automotive Research, or CAR.

CAR said global sales will rebound to 2018’s record high of 84.4 million in 2025. But, after 2023, the risk for battery shortages may develop.

“With the U.S. plan to expand electromobility on a very large scale, the European CO2 (carbon dioxide) regulations and the transition to electric cars in China, the demand for electric cars and thus lithium-ion batteries is increasing significantly,” the  CAR report suggested.

According to a new study by the International Council on Clean Transportation, with regards to production and uptaking of electric vehicles domestically, the U.S. stands third in the line behind China and Europe. In fact, that gap has widened from 2017 to 2020. 

In the US, Electric vehicles accounted for less than 2% of all car sales last year, with many Americans still fascinated by giant, carbon-intensive SUVs. However, electric vehicle sales are getting traction expeditiously and manufacturers have got the ball rolling by introducing a range of new models. 

Earlier in May, Ford announced that  40% of its sales would be from electric cars by 2030. It launched a battery-driven version of its F-150 model, America’s best selling vehicle since the 1980s.

According to the International Energy Agency’s (IEA) data, the U.S. constitutes a mere 17% of the world’s total stock of 10.2 million EVs. Whereas China represents 44% and almost 31% of the world’s stock comes from Europe. From 2016 to 2020, Europe experienced the fastest growth in EV sales, accounting for 60% of the total, compared to 36% in China and 17% in the United States. 

This step is an incentive for US car-making companies to invest in research and development for EVs. In A joint statement, Ford, GM and Stellantis announced that they aspire to achieve  40% to 50% of electric sales by 2030. In a joint statement, automakers- Honda, BMW, Ford,  Volkswagen , and Volvo, said, “We were proud to stand with California to establish progressive new greenhouse gas regulations, and we remain committed to leading the industry in fighting against climate change.” 

The point here to notice is whether the move has come to fight against the environmental damages or to stay relevant in the race of EV manufacturing. There is no doubt that European market leaders and China sensed the need for EVs early, and they should be benefited from acting first. But, in the context of China, what’s apropos here is, will China be able to shed its infamous image for quality of production? Will it be able to remain a big market globally?

But, in the context of China, what’s apropos here is, will China be able to shed its infamous image for quality of production? Will it be able to remain a big market globally? Though the answer lies in the womb of the future, for now, for the US to lead the world, their car making companies must set up high standards in terms of designing and manufacturing. The only thing they could face difficulty in competing against is providing pocket-friendly cars like China does. Otherwise, the US has the potential to surpass any nation in innovation.