June 23, 2024

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China achieves Xi’s dream of leading the electric car market…

China achieves Xi’s dream of leading the electric car market…

Bloomberg — Nearly a decade ago, while inspecting a lineup of luxury sedans from one of China’s largest automakers, SAIC Motor Corp., President Xi Jinping delivered a pivotal speech that would set China on a path to dominating the electric vehicle industry.

Xi said the path to becoming a strong automobile manufacturing nation lies in developing new energy vehicles, according to a 2014 Xinhua News Agency report. Claiming an advantage or “high ground” in this sector is key to global competition, Xi said.

In 2014, China sold about 75,000 electric and hybrid cars, and exported about 533,000 cars. The local market was dominated by global manufacturers such as Volkswagen AG and General Motors, which were allowed to enter by forming joint ventures with local players in the 1980s and 1990s.

This has helped China transform from a cycling country to a car driving country. Domestic automakers and brands that did not work with foreign partners were viewed as inferior and lagging behind in engines and other automotive technologies.

In order to move forward and confront environmental challenges, Beijing has chosen low-consumption vehicles and alternative energy. The state published guidelines in 2012 outlining ways to develop the industry by setting sales targets, providing subsidies and allocating resources to build charging infrastructure, among other things. Xi’s speech two years later signaled China’s determination to use this as a way to leapfrog traditional Western and Asian auto powers, especially Japan, home of Toyota Motor.

With the stage set, China needed an incentive to stimulate consumer interest in electric vehicles, which in the early 2000s were cheap cars with a limited range.

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It ended with Tesla Inc, which became the first foreign automaker to set up a wholly-owned operation in China. With this special permission, Tesla completed its factory in Shanghai in 2019. Its entry into the market has stimulated local players to create better electric cars with greater autonomy.

Moving forward to 2024, China has become the world’s largest auto market, selling more electric cars than any other country, with 9.5 million delivered last year.

It also controls most of the battery supply chain. Homegrown BYD has displaced Volkswagen as the best-selling brand in China, and in the fourth quarter of 2023, it overtook Tesla as the world’s largest electric vehicle producer.

China also surpassed Japan as the largest exporter of cars, as it shipped 4.14 million units abroad, including 1.55 million electric or hybrid cars.

The achievements show that Beijing’s industrial policy and investments have paid off. But tensions with the West are also rising. China’s success in the electric vehicle sector, which could disrupt traditional auto supply chains that employ millions of people, has become a major source of unrest in Washington and Brussels.

As price wars at home and slowing growth push Chinese automakers to look elsewhere for buyers for their affordable, tech-laden electric vehicles, they face trade barriers, especially in the European Union and the United States, which are meanwhile trying to develop auto supply chains. Their electric. Both accused China of exporting its excess capacity.

The United States has quadrupled import tariffs on Chinese cars to more than 100%, while the European Union is investigating Chinese electric vehicles to see if there is an unfair advantage due to government subsidies.

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Brazil recently scrapped a tax break on imported electric cars, and even Russia, arguably Beijing’s strongest ally and the biggest destination for Chinese auto exports since the war with Ukraine, has asked Chinese manufacturers to consider localizing production.

Beijing threatened to retaliate, and on May 22, the China-Europe Chamber of Commerce said that tariffs on imports of large-engined vehicles could rise from 15% to 25%. The European Union has until June 5 to inform Chinese electric vehicle exporters of its initial conclusions and whether tariffs will be imposed.

SAIC, the state-owned manufacturer whose facilities Xi Jinping visited ten years ago, happens to be one of three Chinese automakers, along with BYD and Zhejiang Geely Holding Group Co, that has been selected for further scrutiny by the EU in its investigations. Related to anti-subsidy. SAIC owns the British brand MG, which is one of the best-selling electric cars in Europe.

At an event on Friday marking the 10th anniversary of Xi’s speech, SAIC officials, including chief engineer Zhou Sijie, said they remember the president’s instructions well and that the company is constantly innovating in technologies such as intelligent driving and connected cars.

Li Cheng, co-founder of SAIC Qingtao New Energy Technology Co., a battery startup backed by SAIC, took the opportunity to promise executives that they will not rest on their laurels as competition in the electric vehicle sector increases, noting that progress in the electric vehicle sector will be battery Solid state, which has higher energy density and lower risk of fire, is a way for China to maintain its advantage.

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“New energy vehicles have become a strategic industry, highly competitive by countries all over the world,” Li said. “They are a major supporting force to revitalize green sectors in our country.”

A lot can happen in 10 years, but with SAIC investing nearly 150 billion yuan ($21 billion) in R&D in the past decade alone, even despite the trade wars, 2034 looks bright.

Read more at bloomberg.com