Workers assemble the Wuling Hongguang Mini EV, an all-electric mini car made by SAIC-GM-Wuling, at a joint venture automaker’s factory in Qingdao, east China’s Shandong province, Tuesday, Nov. 30, 2021.
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Beijing – According to statistics, China has spent US$230.8 billion developing the electric vehicle industry over the past decade. Analysis released Thursday Responsible for the Center for Strategic and International Studies.
Scott Kennedy, CSIS China Business and Economic Trustee Chairman, said that between 2009 and 2023, government support accounted for 18.8% of total electric vehicle sales. He noted that the ratio of such spending to electric vehicle sales has dropped from more than 40% before 2017 to more than 11% in 2023.
The findings come as the European Union plans to impose tariffs on Chinese electric vehicle imports due to the use of subsidies in the production process.
Last month, the United States announced that it would increase import tariffs on Chinese electric vehicles to 100%.
There are some exceptions, but by and large, Western automakers and governments are dragging their feet and not moving aggressively enough.
Scott Kennedy
CSIS China Business and Economics Trustee Chair
Kennedy noted that Beijing’s support for electric vehicles includes non-monetary policies that favor domestic automakers over foreign ones. But he also pointed out that the United States has not yet created as attractive conditions as China for developing its own electric vehicle industry.
“There are some exceptions, but in general Western automakers and governments have been dragging their feet and not being aggressive enough,” he said. Four years ago, Kennedy proposed seven policy measures in a report regarding potential trade tensions over electric vehicles in China.
Government subsidies do not necessarily go directly to vehicle development. The Ministry of Finance said it found at least five companies defrauding the government of more than 1 billion yuan ($140 million) in the early stages of China’s electric vehicle development.
Chinese-made cars have also benefited from the growing popularity of electric vehicles in the country, tapping into the once-lucrative gas-powered market for foreign automakers. Competition is so fierce that analysts at Bank of America said this week that major U.S. automakers should leave China and focus their resources elsewhere.
“Independent auto analysts and Western automakers I’ve spoken to agree that Chinese electric carmakers and battery producers have made tremendous progress and must be taken seriously,” Kennedy said.
But he noted that broad government support for Chinese EV companies and market growth have yet to significantly boost profits.
“In a well-functioning market economy,” he said, “companies would weigh investments in new capacity more carefully, and the emergence of such a large gap between supply and demand could lead to industry consolidation.”
BYDNet profit per vehicle has fallen to $739 over the past 12 months, according to CLSA analysis through the first quarter. TeslaData shows that it has fallen to $2,919.
The electric vehicle industry faced a fierce price war last year, with car companies either slashing prices or launching low-priced product lines.
Chinese electric vehicle startups NiohThe automakers, which are still losing money, said last month they expected about 10 automakers to lose out in the Chinese market, leaving 20 to 30 manufacturers.
The United States has been increasing its support for electric vehicles. this Inflation reduction methodsigned into law in August 2022, allocates $370 billion Promote clean technology.
Kennedy noted that the bill provides a $7,500 credit for the purchase of qualifying electric vehicles. This contrasts with China’s average support for each electric vehicle purchase of $4,600 in 2023, down from $13,860 in 2018.
—CNBC Dylan Butts contributed to this report.
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