The electric vehicle market in China is expanding, but will it last?

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By Creative Media News

If you wish to comprehend how governments may promote the development of new technology, you need to go no further than Beijing’s taxi fleets.

Five years ago, the city announced plans to prohibit the deployment of taxis fueled by fossil fuels. Today, thousands of automobiles are powered by batteries. And drivers of these electric cars (EVs) need not be concerned with wasting time at charging stations.

Many electric taxis in Beijing and dozens of other Chinese cities simply visit a battery-swapping facility where a machine removes the drained battery and replaces it with a charged one.

National Taiwan University’s I-Yun Lisa Hsieh explains, “They want to drive out there and make money, therefore they don’t want to wait two hours for EV charging.”

The electric vehicle market in china is expanding, but will it last?
The electric vehicle market in china is expanding, but will it last?

This is just one aspect of China’s rapidly expanding and increasingly diverse electric car market. The general population is also purchasing EVs in historic quantities.

The China Passenger Car Association forecasted in July that 6 million new EVs would be registered in the country in 2022, an increase from its earlier estimate of 5.5 million EVs being sold in China this year.

September was Tesla’s strongest month ever in China, according to its most recent sales numbers, with 83,135 vehicles sold.

Nearly a quarter of newly registered automobiles in China are now electric or plug-in hybrid vehicles, placing China ahead of Europe and far ahead of the United States in terms of the adoption of these technologies. China sells half the world’s electric vehicles.

According to Mr. Hsieh, this is largely the result of government mandates and incentives. The Chinese government has subsidized EV purchases for over a decade. The value of these incentives has decreased over time, and they are set to expire in 2023, but there are still numerous reasons why purchasing an electric vehicle is a sound financial decision.

Market is booming
The electric vehicle market in china is expanding, but will it last?

In China, many buyers of new vehicles powered by fossil fuels must pay for both the vehicle and the license plate. Mr. Hsieh states, “It’s quite costly.” In Shanghai, a new licence plate costs almost 100,000 yuan (£12,500; $14,000).

There are other advantages to choosing an EV, however, they vary from city to city. Authorities in Liuzhou have authorized EV drivers to use bus lanes. Additionally, they have access to free parking places.

The price tag of certain automobiles may also be enticing. The Wuling Hong Guang Mini EV defies the prevalent notion that EVs are a costly choice.

According to Jon Hykawy, president and director of Stormcrow Capital, a consultancy and research organization, the base model of this little, no-frills automobile costs the equivalent of $4,200 and appeals to city-dwellers and first-time car owners.

These are automobiles that may be sold throughout a significant portion of Asia,” he continues.

Currently, the Hong Guang Mini is China’s most popular EV. At the opposite end of the pricing spectrum, there are numerous possibilities, such as Tesla’s Model Y (£49,000) and Xpeng’s P7 (£30,410). Both are among the top ten most popular EVs in China.

The Chinese EV market is extremely competitive, with numerous players fighting for a share. According to a recent report by the Reuters news agency, even an airline, Juneyao, wants to begin producing electric automobiles.

“It’s a very excellent environment for these firms to develop technology,” says Pedro Pacheco, an analyst at Gartner, noting that the range of some battery-powered electric vehicles (EVs) in China is exceptional.

Moreover, manufacturers are equipping luxury EVs with infotainment systems and other gizmos to attract consumers.

China’s electric car craze is, however, clouded by two major problems. First, will it endure? Second, how will it influence the worldwide EV market?

Ana Nicholls, director of industry analysis at the Economist Intelligence Unit, is startled by how quickly EVs have been flying out of dealerships in China recently. However, she predicts that the enthusiasm for EVs may fade as a result of the elimination of subsidies for buyers of new vehicles.

It is difficult to envision the EV market developing at this rate in the future, she says.

Charging infrastructure continues to be unevenly distributed and prone to supply concerns; several charging stations were recently shut down due to a decline in electricity output resulting from the mega-drought afflicting regions of China.

Typically, an increase in the number of EV owners correlates to an increase in the demand for electricity in general, and China has a formidable challenge in supplying all of these new vehicles while also reducing coal consumption at its power plants.

This is one reason why some analysts, such as Mr. Hykawy, claim that hybrid electric vehicles are preferable to battery-only vehicles, as they are less dependent on the grid.

Given their smaller batteries, they also require less lithium, which could be significant given the anticipated lithium shortages in the coming years.

As for how the Chinese EV market might impact the rest of the globe, the verdict is yet out. Chinese companies are already marketing EVs in Latin America, Africa, and other regions. Nio is extending its battery-swapping stations to Norway and has just built its second station of this type in the country.

Mr. Pacheco says that for battery switching to become widespread in Europe, more major automobile manufacturers must adopt the technology. However, he emphasizes the success of ultra-affordable electric vehicles (EVs) in China, such as Wuling and Chery automobiles.

“Affordable EVs are currently available in China,” he claims. In Europe, we are not yet there.

These are precisely the kinds of vehicles that could catch on in emerging markets. It is time to conquer the globe. Maybe. Another school of thought, though, contends that the world can wait.

Ms. Nicholls states, “As long as the Chinese market is thriving, they might as well sell locally.” Why wouldn’t you do it?

Analysts generally concur that it will be fascinating to observe what transpires after the subsidies expire. This could push Chinese EV manufacturers towards other markets, and perhaps we will all fall in love with EVs thanks to the initiatives of the Chinese government. We must watch and wait.

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