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Will China Become the New EV Powerhouse?

Daniel Kim Views  

Electric cars (including hybrids) accounted for 50.4% of new vehicles sold in China from the 1st to the 14th of this month, outselling diesel and gasoline cars. This shift towards electric vehicles as the mainstream in the car market is attributed to the government’s active support for the electric vehicle industry through subsidies and the lower prices of electric cars produced in developed countries. This trend has intensified competition among electric vehicle companies worldwide, prompting U.S. electric vehicle company Tesla to lower the domestic sales prices of its main products in China.

According to the China Automobile Dealers Association, the number of passenger cars sold in China from the 1st to the 14th of this month was 516,000, with electric vehicles accounting for 260,000 units (50.4%). This means that more than half of the new cars sold in China during this period were electric. While China’s total passenger car sales decreased by 11% compared to the same period last year, the sale of electric cars surged by 32%, contributing significantly to the overall sales.

The authorities are encouraging the expansion of the electric car market by providing substantial subsidies. Different local governments across China offer varying subsidies for those who purchase pure electric cars. For instance, in Shanghai, the economic capital, the government subsidizes 10,000 yuan (approximately $1,570) per person until the end of this year.

The proportion of electric cars in the Chinese car market has also rapidly increased, from only 14% in 2021 to 27% in 2022 and 33% in 2023. If the current trend continues, it is predicted that the electric car adoption rate of 50% will be achieved much earlier than the original 2035 target set by the authorities.

As the market grows, competition among companies is becoming fierce. Once famous as an electronics company, Xiaomi has aggressively invested in the electric car business. Its SU7, launched on the 28th of last month, has already exceeded 100,000 pre-orders. Huawei, also known for its telecommunications equipment, is competing by offering discounts of up to 20,000 yuan (approximately $3,140) on its electric car, Aito M7.

Even Tesla, which had not participated in Chinese companies’ price reduction policy, has changed its stance. Tesla cut the prices of its main models, including Model 3 and Model Y, by 14,000 yuan (approximately $2,200) each. Initially, Tesla announced earlier this month that it would raise the price of its Model Y by 5,000 yuan, but it changed its stance due to sluggish sales.

Daniel Kim
content@viewusglobal.com

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