China’s Dominance in the Electric Vehicle Market: Implications for Global Economies and Innovation

An Analysis by David Tyfield, Professor of Political Economy at Lancaster University

The Chinese Presence: A Key Factor for the Future of Electric Vehicles

In his book Liberalism 2.0 and the rise of China, David Tyfield, a professor of political economy at Lancaster University, emphasizes the crucial role China plays in the electric vehicle industry. According to Tyfield, a significant, if not disproportionate, Chinese presence is vital for the future of electric vehicles. Chinese companies have established a dominant position across the entire electric vehicle supply chain, ranging from minerals to batteries to car construction. Without Chinese involvement, the global electric vehicle market would struggle to thrive and evolve.

China’s Ambition to Control Supply Chains: Concerns and Implications

The growing ambition of China to control entire supply chains, such as the minerals used in electric vehicle batteries, has sparked concerns among policymakers worldwide. China’s dominance in key areas of the electric vehicle industry raises questions about the impact on individual economies and the global innovation system, which has traditionally been Western-led.

Challenges for Global Markets: State Subsidies and Competition

One of the major challenges faced by global markets is the influx of cheaper electric cars, with price levels artificially lowered by enormous state subsidies. The president of the European Commission, Ursula von der Leyen, expressed her concerns about the situation, stating that the flood of cheap electric cars threatens fair competition. The European Union launched an anti-subsidy investigation against China, aiming to assess the level of state support for Chinese electric vehicles and ensure fair competition in the market.

The EU’s Stance on Fair Competition

While the EU Trade Commissioner Valdis Dombrovskis acknowledged the trading bloc’s openness to competition in the electric vehicle sector, he stressed the importance of fair competition. Speaking in Beijing, shortly after the EU’s anti-subsidy investigation was initiated, Dombrovskis highlighted the need to level the playing field for all market participants.

China’s Response: Objective Evaluation and Strong Competitiveness

Cui Dongshu, the secretary-general of the China Passenger Vehicle Association, responded to the EU’s investigation by urging the EU to approach the matter objectively and put an end to economic tensions. Cui argued that China’s new energy vehicle exports should not be solely attributed to domestic subsidies but rather to the strong competitiveness of China’s industrial chain in full market competition. With this perspective, he emphasized the importance of fair evaluation and recognition of Chinese efforts in the global electric vehicle market.

The Rise of Made-in-China Electric Vehicles

In a Chinese language blog post, Cui Dongshu’s insights provide essential reading for observers of the automotive industry. The post regularly publishes sales figures, shedding light on China’s electric vehicle market. According to Cui, from January to August 2023, China’s cumulative automobile exports (including both electric and internal combustion engine vehicles) reached a staggering 3.22 million units, surpassing Japan as the world leader in automobile exports. Furthermore, in the same period, China’s new energy vehicle exports experienced a year-on-year increase of 82 percent, with the majority being passenger vehicles.

China’s Global Expansion: BYD’s Success Story

BYD, a Chinese electric vehicle manufacturer, has expanded its market reach globally, with cars being shipped to countries such as Thailand, the United Arab Emirates, Japan, Australia, Norway, the United Kingdom, Germany, Brazil, Costa Rica, and Mexico. BYD has already become the best-selling electric vehicle brand in Singapore. However, BYD does not currently have an official sales channel for its cars in the United States.

Stella Li, the senior vice president at BYD, stated that the US market is not currently being considered, attributing this decision to concerns over President Joe Biden’s “green new deal” Inflation Reduction Act. Li believes that this legislation may hinder the adoption of electric vehicles in the United States by making them less accessible to American consumers in terms of affordability.

Implications and Future Outlook

The dominance of Chinese companies in the electric vehicle industry raises several key implications for global economies and innovation. Below are some key points to consider:

• China’s strong presence in the electric vehicle supply chain gives the country significant leverage and control over future developments in the industry.
• State subsidies artificially lower the price of Chinese electric vehicles, posing a challenge to fair competition in the global market.
• Global economies need to adopt fair evaluation criteria to accurately assess Chinese electric vehicle exports and avoid any bias or protectionist behavior.
• China’s success in expanding its market reach globally highlights the potential for other Chinese electric vehicle manufacturers to establish a strong presence in various countries.
• The US market’s current lack of consideration by Chinese electric vehicle manufacturers showcases the potential impact of legislation and government policies on market dynamics.

The future of the electric vehicle industry undoubtedly hinges on cooperation, fair competition, and efforts to align global standards. Recognizing China’s significant role in the electric vehicle supply chain is crucial for shaping the strategic direction and fostering the growth of this rapidly expanding sector.

Summary

China’s dominance in the electric vehicle market poses important implications for global economies and the innovation landscape. Chinese companies have established a leading position across the entire electric vehicle supply chain, ranging from minerals to batteries to car construction. This dominance has raised concerns among policymakers worldwide, with questions arising about fair competition and the impact on individual economies.

The European Union has initiated an anti-subsidy investigation against China, aiming to ensure fair competition and evaluate the scale of state support for Chinese electric vehicles. However, Chinese industry representatives argue that the success of China’s new energy vehicle exports is not solely driven by domestic subsidies, but rather by the strong competitiveness of China’s industrial chain.

China’s growing influence in the electric vehicle market is evident in both sales figures and the global expansion of Chinese electric vehicle manufacturers. The rise of BYD as a leading electric vehicle brand in various countries showcases China’s potential to establish a dominant presence across different markets.

Looking ahead, it is crucial for global economies to embrace fair evaluation criteria and foster collaboration to shape the future of the electric vehicle industry. Recognizing China’s role and leveraging its strengths can contribute to the growth and development of the electric vehicle sector on a global scale.

David Tyfield, professor of political economy at Lancaster University and author of the 2019 book Liberalism 2.0 and the rise of China, tells me that “there is no future for electric vehicles without a significant, if not disproportionate, Chinese presence.” “Chinese companies are too far ahead in the entire electric vehicle supply chain: from minerals to batteries to car construction.”

Policymakers around the world are concerned about China’s ambition to control entire supply chains, for example, the minerals inside electric vehicle batteries. Such domination by China is claimed to threaten individual economies and the global (Western-led) innovation system.

“Global markets are now flooded with cheaper electric cars. And its price is kept artificially low thanks to enormous state subsidies,” complained the president of the European Commission, Ursula von der Leyen. at the beginning of this year.

Speaking in Beijing last monthShortly after the EU opened an anti-subsidy investigation against China, EU Trade Commissioner Valdis Dombrovskis said the trading bloc was “open to competition” in the electric vehicle sector, but that “competition must be fair.”

In response to the import investigation, Cui Dongshu, secretary-general of the China Passenger Vehicle Association, urged the EU put an end to economic saber rattling. “I firmly oppose the EU’s assessment of China’s new energy vehicle exports, not because of huge domestic subsidies, but because of the strong competitiveness of China’s industrial chain in full market competition,” Cui wrote on his personal WeChat account, almost certainly echoing the official status. points of view.

His Chinese language blog It is essential reading for automotive industry observers. In addition to expert commentary, it regularly publishes sales figures. On September 24, Cui reported that from January to August 2023, China’s cumulative automobile exports (EV and ICE, also including trucks) reached 3.22 million units, and exports expanded at a rate of 65 percent, unseating Japan from its position as a world leader. largest automobile exporter.

“From January to August 2023, 1.08 million new energy vehicles were exported, a year-on-year increase of 82 percent,” Cui wrote. Almost all of them, some 1.04 million, were passenger vehicles, a year-on-year increase of 90 percent.

EU first, US second

BYD now ships cars to Thailand, the United Arab Emirates, Japan, Australia, Norway, the United Kingdom, Germany, Brazil, Costa Rica and Mexico. It is already the best-selling electric vehicle brand in Singapore. The company has an electric bus division in the US but does not have an official sales channel for its cars.

“The US market is not under our current consideration,” said Stella Li, senior vice president at BYD. he told Bloomberg at the beginning of this year. He said President Joe Biden’s “green new deal” Inflation Reduction Act may “slow down the adoption of electric vehicles in the United States” because it will make affordable electric vehicles inaccessible to American consumers.