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China Could Dominate World’s New Energy Vehicle Industry

In the past 30 years, China had a tough time overcoming core technical difficulties in the domestic auto industry using the traditional internal combustion engines technology. However, with the rise of new energy led by electric vehicles, it might enable China to realize its dream to lead new energy vehicle manufacturing and the supply chain in the world.

China has become the world’s largest market for car sales. According to statistics from data service agency Statista, China registered 21.05 million new motor vehicles in 2019, followed by the United States, with 16.97 million new vehicles sold in 2019.

According to statistics from the China Association of Automobile Manufacturers and the International Energy Agency, China’s new energy vehicle sales in 2019 were 1.206 million, accounting for 55 percent of the total global sales of 2.21 million. By the end of 2019, China’s cumulative sales of electric passenger vehicles reached 3.66 million, accounting for 48 percent of the global total. In 2019, the number of electric vehicles in China was 2.58 million, compared with 970,000 in Europe and 880,000 in the United States.

In October of this year, the State Council issued a new energy vehicle industry development plan for 2021-2035, setting the new energy vehicle sales target for 2025 at 20 percent of total vehicle sales. The Plan also included a “full value chain” proposition in the battery industry while encouraging companies to gain access to key mineral resources such as lithium, nickel, cobalt, and platinum. Currently China has 80 percent of the market share in the cobalt refining industry. Among the top six global cobalt refining companies, five of those are Chinese companies. Of the 14 largest cobalt mines in the Congo, eight are owned by Chinese companies.

To reach the new energy vehicle development plan, the Chinese government has given hundreds of billions in subsidies to the electric vehicle industry.

According to CSIS (the Center for Strategic and International Studies) statistics, in the past 10 years, the Chinese government has subsidized the new energy vehicle industry in various forms equivalent to 676 billion yuan (approximately US$100.9 billion). Although government subsidies were reduced in 2019, 30.7 percent of China’s new energy vehicle sales revenue still comes from government subsidies. In 2019, there were 119 active new energy vehicle manufacturers in China.

China’s electric vehicle industry is also alleged to have engaged in technology theft. In February 2020, William Evanina, director of the National Counterintelligence and Security Center, singled out two fields where China is putting a priority on technology theft: electric vehicles and aircraft. Evanina was one of many American officials speaking at a conference on “Chinese economic espionage” hosted by Washington’s Center for Strategic and International Studies. In a lawsuit Tesla filed in California in 2019, it claimed that a former engineer who worked at the company copied more than 300,000 files related to the source code of the autopilot before joining Xiaopeng Motors.

Facing the rise of China’s electric vehicle industry, improving the competitiveness of the United States in this field is a national security concern. In a recently published report, the organization “Protect the Future of America” recommended that the U.S. government restore subsidies for consumers to purchase electric vehicles, develop a mineral supply chain that does not rely on China, and encourage U.S. auto companies to cooperate with each other to resist China. Experts, however, also warn that since the United States has a solid foundation in the traditional automobile manufacturing industry and employs a large number of workers, the US automobile industry cannot rush to transition to new energy vehicles too quickly.

Source: Voice of America, December 28, 2020