Electric vehicles are unstoppable in China

SHANGHAI: This year’s Shanghai auto show marks the end of the era of gasoline engines in China, analysts and industry insiders say, as domestic electric vehicle brands drive change across the industry and leave foreign companies in the dust.

Government support for electric vehicles and growing interest from a broad consumer base have ensured that Chinese companies dominate their domestic market, the world’s largest – and they are now looking overseas.

The Shanghai Auto Show proved that Chinese brands “can compete with all the traditional automakers on every front – performance, quality, comfort, there’s nothing they can’t do”, joked EV expert Elliot Richards, who saw “a lot of full German men with worried faces wandering around.”

“I think this show marks the end of the internal combustion engine and the beginning of the era of electric vehicles,” he added.

Electric car companies are well aware that they are approaching their fossil fuel-fueled predecessors.

“We see high-end gasoline cars such as BMW, Mercedes-Benz and Audi as our main competitors,” William Li, chief executive of “Chinese Tesla” NIO, told AFP.

According to the China Association of Automobile Manufacturers, EVs will account for a quarter of China’s auto sales by 2022, up 94% year-on-year.

Despite the slump in the global auto industry, Li said he thinks EVs’ market share in China could increase to more than 40 percent this year.

In Shanghai, dozens of new models from automakers old and new were on display.

“The future is here,” Mike Johnstone, an executive at British luxury brand Lotus, told AFP.

“(In China) electrification products are flooding and it is changing the whole market.” (Story continues below)

Li Bin, co-founder and CEO of Chinese electric car maker NIO, drives a NIO EC7 at the Shanghai International Automobile Industry Exhibition. “We see high-end petrol cars like BMW, Mercedes and Audi as our main competitors,” he told reporters. (Photo: AFP)

“Headstart”

China has devoted significant resources to the industry.

“They didn’t develop a gasoline engine because they couldn’t compete with the rest of the world,” Richards said.

“So they think: ‘(With electric cars) we can get ahead of everyone else’.”

The country has invested heavily in related technologies since the early 2000s.

“It’s rooted in the nature of the country’s economic system: the Chinese government is very good at focusing resources on the industries it wants to develop,” Zeyi Yang said in MIT Technology Review.

Central and local authorities poured billions into subsidies and tax breaks, and allocated public transport contracts to electric vehicle companies.

The supporting infrastructure has also been built—the government says there are now more than 5.8 million charging points in China.

Guangdong province alone has about three times as many public chargers as the entire United States, according to Bloomberg data.

“In general, there are still many preferential policies for the production and sales of electric vehicles…” Nio’s Li said, citing the exemption of expensive license fees in some cities as an example.

innovation ecosystem

These policies also apply to foreign brands.

The tactic has helped lure industry leader Tesla to Chinese shores, boosting the industry’s reputation and sparking further competition.

Today, more than 94 brands offer more than 300 models in the Chinese market, “the most dynamic in the world”, according to Counterpoint Research.

Some local players are breaking down the cash barrier that keeps ordinary consumers from buying electric vehicles.

In Shanghai, Geely showed boxy Panda Minis — one of which was bright yellow with the words “what the duck” emblazoned on the side.

The less expensive version costs only US$5,800 (200,000 THB).

In the future, home-grown technology may drive down prices even further.

Chinese battery giant CATL has developed a battery that uses sodium ions, which are more abundant and cheaper than lithium ions, instead of lithium ions.

Just before the show opened, CATL announced that the batteries will be integrated into Chery vehicles. (Story continues below)

China-based CATL, the world’s largest maker of electric vehicle batteries, showcased its Evogo battery replacement solution at the Shanghai Auto Show this week. The swap station can accommodate multiple batteries that are constantly being charged. EV owners who subscribe to the exchange program can replace a depleted battery with a charged one and recharge an empty battery. (Photo: Reuters)

overseas ripples

This is all closely watched by foreign competitors.

Brands in the Chinese market are “setting the benchmark” for other brands, says Lotus’ Johnstone.

And China’s electric car companies have begun to enter overseas.

The largest of these, BYD, set up shop in Norway and then continued to expand, with others following suit.

Spiros Fotinos, European chief executive of Geely-owned Zeekr, told AFP that the technological sophistication of electric vehicles made in China was fighting stereotypes foreign consumers might have about quality.

“Consumers are seeing a lot of innovative safety technology, and really advanced driver assistance systems,” he said.

However, Richards said the success of Chinese carmakers in the West was not a “certainty” because they had to adapt to the market.

“For example, karaoke machines in cars — very popular in China, not so popular in Europe,” he said.

Johnstone insisted that automakers with the “tradition and history” that are popular in the electric age will remain competitive.

“Brands that have been around for years … will continue to be around in the future,” he said.

People check out the Geely Panda mini electric car at the Shanghai Auto Show, which starts at the equivalent of 200,000 baht. (Photo: Reuters)