Five reasons why China is leading the EV race
In 2022, more than a quarter of all car sales in China were EVs and hybrids, a 94 percent gain from the previous year. This year it is already looking favourable to beat that number. Experts from the Shanghai motor show predict that China will have more than 155 all-electric cars on the market next year. Carmakers from around the world are trying to catch up to Chinese EV manufacturers and their outstanding technical features as well as competitive pricing. We take a look at how China managed to gain such a lead.
A good reason for this lead is the head-start Chinese EV makers had in this sector. China in the 2000s realised that it is almost impossible for them to beat the European car makers when it comes to internal-combustion engines. So they shifted their focus to EVs and continued to develop technologies that will help them stay ahead of other car manufacturers. The Chinese government also played a supporting role in the form of subsidies and tax breaks for the EV industry. As part of the industry's support, EV makers were also awarded public transportation contracts. Infrastructure was built to sustain such progress. China has over 5.8 million charging stations across the country. Chinese consumers also deserve credit as there’s a growing interest and a good percentage of them are actively looking for electric substitutes for their vehicles. Last year EV sales accounted for 25 percent of the total car sales in China. Experts claim that that number can reach 40 per cent as soon as next year.
As mentioned above, the Chinese government put various methods in place to help this sector grow and this shows up in how various players are coming up with impressive tech to attract potential buyers. CATL, a Chinese battery giant, recently introduced a new battery using sodium, which is abundant and cheaper than lithium-ion. CATL also showcased its battery-swap centre where one can exchange their discharged battery for a fully-charged one. A new suspension tech comes from the world’s biggest EV maker BYD, which was also showcased recently. In that, the car can intelligently adjust suspension settings to help during hard cornering and acceleration. This tech was shown in the recently unveiled BYD Yangwang U9 where the supercar was seen doing a crabwalk and even jumping off the ground with all four wheels in the air. This shows that Chinese automakers can compete on technology with other established manufacturers.
A major point of focus in today’s cars is the infotainment system. People actively seek convenience and luxury features that make their rides as comfortable as possible. Much more emphasis is placed on this when it comes to EVs due to various companies integrating driverless tech, connected technologies, and ADAS features in their new electric cars. These features also suit Chinese consumers who want social media apps and other video-sharing apps in their cars. Innovative safety tech and driver assist systems are features that attract customers from all over the world. China’s manufacturers focus extensively on this part to attract young buyers who also happen to be the majority of EV buyers.
China’s ability to manufacture low-priced products can be seen here as well. Launched at the Shanghai motor show the Geely Panda Mini starts at CNY 39,900 (Rs 4.72 lakh). And BYD’s seagull hatchback starts at CNY 78,800 (Rs 9.33 lakh). In the future, prices are expected to go down further. Compared to this, the most affordable Indian-made EV is the Tiago EV which starts at Rs 8.69 lakh and goes up to Rs 12.04 lakh. Chinese EVs cost almost a quarter when compared to their European counterparts. This extensively low pricing puts Chinese automakers at an advantage and it seems like a long wait before we see such low-priced offerings from other countries. The Shanghai motor show had over 1500 various vehicles on display and experts predict that Chinese automakers can sell more than a million electric vehicles this year in Europe.
Economical manufacturing and robust supply chain
The manufacturing capabilities and cheap commodities that sustained China’s gas-powered car factories also supported a budding EV industry in its early days. This coupled with competitive export rates meant that the EV industry could grow relatively less restricted. The strong supply chain also meant that there was always a strong network of countries that wanted China’s products. This led to several manufacturers from different countries shifting their plants to China and exporting from there. For example, Tesla and Renault both manufacture their cars in China and export them to Europe. Bosch set up its MEA production line in Wuxi.
How can India catch up?
We have the world's largest two-wheeler market, which gives us an advantage. Incentives for consumers to switch to EVs and investments in charging infrastructure development are good first steps. FAME II (or Faster Adoption and Manufacturing of Electric Vehicles in India Phase II) initiative launched by the government in 2019 to promote EV adoption in the country is a good step towards transitioning to a cleaner and more sustainable transportation system. This policy offers incentives to manufacturers and buyers, developing charging infrastructure and raising awareness about the benefits of EVs.
Under FAME II, the government provides subsidies on the purchase of electric vehicles depending upon battery capacity for different vehicle segments. The scheme aims to support the adoption of 7,000 e-buses, five lakh e-three-wheelers, 55,000 e-four-wheeler passenger cars (including strong hybrid), and 10 lakh e-two-wheelers. The initiative also supports establishing charging infrastructure across the country, with a target of setting up at least one charging station in a grid of three km x three km in cities and 50km x 25km on highways. Through this, the government has set a target of achieving 30% electric vehicles by 2030 and has taken several measures to encourage EV adoption, including reducing taxes on EVs and setting up a National Electric Mobility Mission Plan.
This policy, however, does not apply to EVs with a range under 80km, nor to e-bikes. This hurts new small-scale EV makers who also need government assistance. Another place where we see this policy not doing enough is related to infrastructure. More frequently than not, we hear the public complain about the lack of charging stations rather than the lack of electric vehicles. Subsidies are not a sustainable model and the infrastructure needs to be focused on if we want to reach the target set by the government.
Learning from China, the Indian government can also prioritise EV manufacturers when considering public transport contracts. Regarding infrastructure, the government should take an active interest in building charging stations and not just rely on private firms for the same. The government can also leverage partnerships with global EV players to bring advanced technology and manufacturing expertise to the country. Although we are not yet at the level of progress required to achieve the goal, the right initiatives from the government and the public will surely help India become a leader in the EV market.