State of China’s Electric Car Industry amid COVID-19 Storm
China is globally known for its pursuit of technological and manufacturing prowess, and the Beijing government has made the electric vehicle industry a top priority. But with the coronavirus pandemic hitting China hard with lockdown and partially closed economy, the state of the electric vehicle industry in china hangs on a balance. Tesla, a dominant electric car giant in the world and also in China, plays a crucial role in the Chinese electric car industry. Having built a two billion dollars factory in shanghai back in 2018, Tesla has announced that it plans to up production by 4,000 a week of its Model 3 sedans, following stiff competition from the china-made Model Y compact SUV.
Although Tesla is a global electric car giant, it is not the only electric car industry in China. The Chinese market has an estimate of 450 manufacturers of electric cars, also known as new energy vehicles. They include the likes of Geely and Saic at a state-owned enterprise. Renowned automakers such as General Motors, Audi, Ford, and Volkswagen are also partnering with Chinese counterparts to manufacture electric cars. The rise in interest can be attributed to the Chinese massive potential market, as some cities are shifting to electric buses for their transit system. Many taxi fleets are adapting to electric cars and also the government’s commitment to improving the quality of air and conserving the environment in the country.
According to projections on the current market, china expects to have sold a total unit of 7 million electric vehicles by 2025. These figures have motivated the Beijing administration into further developing the industry and have pumped into the industry nearly 60 billion dollars. With this, the government aims at becoming a global technology leader in the automobile sector and also reduces oil importation. To further its support for the industry, the government has provided significant tax cuts and subsidies to manufactures and buyers of electric cars in the past while also funding research and development for the industry.
However, in the recent past, the New Energy Vehicle market has not been that promising, especially in the wake of COVID-19. Auto sales have continuously declined due to economic slowdown as a result of the coronavirus pandemic and lockdown, as well as design issues of the cars such as battery reliability. The promising market has also been struck by a reduction in subsidies for the program by the government, citing concerns such as cost reduction, economies of scale, and open, equal market. These new developments have significantly influenced consumer preference as the price for electric vehicles is higher than similar conventional cars, leading to more supply than demand.