The Chinese government is supporting EV companies that are committed to producing new vehicles by giving them an additional 10% on top of the funding they already receive from the government.
While Tesla is largely uncontested in America as an electric car manufacturer, China is encouraging its own companies to start producing electric vehicles (EV).
Why are there so many EV companies in China compared to other countries?
The most obvious reason why China has so many EV companies is because the country has been largely supportive of EV and other companies that it hopes will help contribute to lessening the country’s carbon footprint.
Late last year, a new national policy was adopted in Beijing that encouraged the launch of several EV companies in China.
China is incentivizing both companies and consumers to openly embrace electric vehicles by offering substantial tax incentives including decreasing new energy vehicle (NEV) subsidies by 10%.
This basically means that the government is supporting EV companies that are committed to producing new vehicles by giving them an additional 10% on top of the funding they already receive from the government.
How are electric car sales in China?
New energy vehicles like electric and hybrid cars accounted for 11.4% of all car sales in China in May.
While that may already seem like a large amount of sales in a country considered the world’s largest auto market, Wang Chuanfu, the founder of the automobile manufacturing giant BYD, says that new energy vehicles will account for a huge 70% of new car sales in China by 2030.
William Li, founder of electric car startup Nio, is even more optimistic about the future of EV sales in China.
Li predicts that electric vehicles will account for at least 90% of all new vehicle sales in the country by 2030.
With a surge of EV companies being established in China, Li’s belief that China’s automobile market will consist almost entirely of electric vehicles is not unfounded.
Who are Tesla’s competitors in China?
It’s recently been reported that Tesla is just not selling as well as its competitors in China despite being the most well-known EV company in the world.
Since last July, SAIC-GM-Wuling Automobile Co. has been outperforming Tesla in China as customers have flocked to their low-priced electric vehicles.
Compared to the nearly US$40,000 selling price of Tesla’s Model 3, the Hongguang Mini retails for just US$4,500 – nearly 90% less.
On the other hand, Li’s NIO is finally starting to outperform Tesla in the Chinese market after years of struggling to turn a profit.
NIO’s stock has surged an incredible 33% this past month, while Tesla’s stock has been on the decline.
How does the US stack up against China in the EV race?
China’s development of electric vehicles has advanced at a rapid rate, quickly outpacing the United States.
In a report from September of 2020, the Washington, DC-based advocacy group Securing America’s Future Energy (SAFE) found that out of the 142 lithium-ion battery megafactories under construction globally, 107 are being built in China while only nine are being built on US soil.
“Nearly every major automaker is taking transportation electrification seriously, and they are investing heavily in the technology,” the report said. “Across the industry, automakers will invest $300 billion over the next five to 10 years on EV development and production. Tellingly, nearly half of this investment spending will occur in China—an indicator of where the industry believes demand will be.”
Last month, the production of electric vehicles caught the attention of US President Joe Biden as he visited a plant that is about to unveil the electric version of the popular Ford F-150 pickup truck.
While speaking at the plant, Biden pointed out how China is handling the production of electric vehicles. “Right now, China is leading in this race – make no bones about it, it’s a fact,” Biden said. “They think they’re going to win. But I’ve got news for them – they will not win this race.”
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