China is driving the electric car revolution, not Tesla

Shifting to electric vehicles is an essential part of tackling climate change and China is doing far better than the West

By Donna Lu

FORGET Tesla – the world’s biggest electric car manufacturer is a Chinese company you have probably never heard of. With the age of the fossil-fuel car drawing to an end, electric vehicles (EVs) from China could be on track for global dominance – assuming that the hundreds of start-ups in the sector don’t skid out and crash.

BYD Auto sells more electric cars than any other firm in the world
Chen Wen/China News Service/VCG/Getty

China buys more EVs than any other nation. Last year, 1.25 million electric cars – 984,000 of which were solely battery-powered – were sold in the country, accounting for more than half of all EVs sold globally. A significant proportion of them were made by BYD Auto, a firm headquartered in Xi’an, China.

In 2018, BYD sold nearly 248,000 zero-emissions vehicles globally, outpacing Tesla’s sales of roughly 245,000. The company began in 1995 as a manufacturer of batteries for mobile phones and digital cameras, and has since expanded to produce battery-powered cars, buses and trucks. Last week, it launched a fleet of 37 fully electric double decker buses as part of London’s public transport system.

Other Chinese companies with international reach include Chery and the Zhejiang Geely Holding Group, which is the behemoth that now owns Volvo, Lotus and the London Taxi Company.

Sam Korus, an analyst at investment firm ARK, estimates that there are nearly 500 EV companies in China, many of which are yet to produce their first vehicle. Recent reports suggest that 330 firms are registered for government subsidies encouraging investment in EVs.

Electric cars sold in China last year, more than half of global sales”

All this means that despite an overall decline in car sales – the number of Chinese-produced cars sold last year dropped nearly 8 per cent from 2017 – the EV industry is booming. Battery electric vehicle sales rose by more than 50 per cent in 2018.

“We are witnessing a transition from internal combustion engine vehicles to zero-emission vehicles,” says Yunshi Wang, director of the China Center for Energy and Transportation at the University of California, Davis.

The shift has been driven by a Chinese government goal of reaching 5 million “new-energy” vehicles – including battery electrics, hybrid cars and fuel-cell cars – on China’s roads by 2020, when yearly sales of these cars should hit 2 million.

Energy security is also a concern. About 70 per cent of China’s crude oil is imported. “China wants to rely mostly on electricity, which it can produce domestically,” says Wang.

The Chinese government has been subsidising electric car designs for a decade and has given financial backing to many EV manufacturers. It has also invested in infrastructure for charging the vehicles. By the end of last year, China had an estimated 342,000 public charging points – and new residential buildings are required to have somewhere to plug in. In comparison, there are about 67,000 public chargers in the US.

Climate change and the quality of the air are also important factors. China has pledged to reduce its carbon emissions in line with its commitment to the Paris climate agreement, and in June 2018, the government launched a three-year action plan to fight air pollution in its cities.

Under the plan, which covers regions home to around one-third of China’s population, heavy logistics vehicles with internal combustion engines will be banned from entering cities.

“China is kind of a poster child for incentives in that it is subsidising both the supply and demand,” says Jack Barkenbus at the Vanderbilt Institute for Energy and the Environment in Tennessee.

For example, zero-emissions licence plates have been introduced in cities including Shanghai and Beijing, where there are restrictions on the number of new car registrations each year.

In Shanghai, new licence plates are sold for around 90,000 yuan ($13,000), says Wang. “If you buy a zero-emission vehicle, you can waive it and get the licence plate right away,” he says. The wait for a licence plate for an internal combustion car is about two years.

Shen, an EV owner who lives in Beijing, says he bought his first electric car – a Geely DiHao – in 2016 because it was more difficult to obtain a licence plate for a fossil-fuel car. “In Beijing, if you have an internal combustion car, there’s one day a week you can’t drive it, whereas there are no restrictions on electric cars,” he says.

The switch to EVs has been easier in China because private car ownership is a relatively new phenomenon, says Isbrand Ho at BYD Europe in the Netherlands, so there is little brand loyalty. “Whatever will work efficiently, effectively and comfortably for the consumer, they are most likely to adopt,” he says.

“By the early 2020s, an electric vehicle will be priced cheaper than a fossil-fuel counterpart”

Barkenbus says peak car ownership in places like the US and UK means that such countries have been slower to adapt to EVs than China. “It’s doubtful that we will sell more cars [in these countries] in the future than we have been able to sell in the last few years,” he says. “That’s not the case in China where the per capita ownership is much lower.”

And there is still a lot of room to grow. Even though the Chinese EV market is already the biggest in the world, EVs still only make up an estimated 4 per cent of total car sales there. The world leader is Norway, where last year 46 per cent of cars sold were EVs.

The transition will take time, says Wang. He calculates that even if close to 100 per cent of Chinese car sales are EVs by 2031, they will still only number around 30 per cent of all cars on roads. And government subsidies to manufacturers, which peaked in 2014 at 100,000 yuan per car, are on track to be phased out by 2020, sparking concerns that sales will plummet.

Korus says it may lead to a reduction in the number of Chinese EV firms. He compares it to the US auto industry in the early 1900s, which shrunk from 250 manufacturers to less than 50 in about a decade. “This is a good thing for the market,” he says.

Image result for China's electric vehicle market is growing much faster than those anywhere else
Electric car sales world wide. 2017 = blue, 2018 = red.

International firms are also competing for a share of the Chinese market: Volkswagen announced plans in April to produce 11.6 million EVs in China by 2028, and Tesla is building a massive factory in Shanghai.

But why aren’t overseas consumers driving Chinese-made EVs yet? To date, Chinese vehicle companies have been more comfortable exporting commercial logistics vehicles than passenger cars, says Wang, because they prefer to avoid the vagaries of consumer demand.

There are also questions over privacy. For example, it was claimed last year that electric car-makers in China give the government data from their cars, and more than a million cars are being tracked in real time.

Claims that companies such as BYD will produce a car that rivals Tesla are overblown, says Barkenbus. “I think it’d be pretty hard to match Tesla in terms of its performance.” Where Chinese vehicles may be successful, he says, is in making mid-range vehicles for the global market. Although Tesla’s goal is to make affordable EVs, the price of its current cheapest model is close to that of other luxury car brands.

The background in battery manufacturing of BYD – and another Chinese firm, CATL – may be a boon for the Chinese industry. Battery costs account for about a quarter of an EV’s price, and are consistently becoming cheaper to make, says Korus.

“Our research suggests that by the early 2020s, you’re going to have an electric vehicle that is sticker-priced cheaper than a gas counterpart,” he says, at which point he foresees a swing in demand. For the sake of the planet, that can’t come soon enough.

Originally published at New Scientist – 10 July 2019. See:

One Comment

  1. Thanks for this interesting article. I believe MG are producing an EV next year. Wonder if it will come here?
    Just think about the global strategic implications as current oil rich mid east power wanes? Who will the US and western powers sell their arms to now?

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