Workers assemble the Wuling Hongguang Mini EV, an all-electric microcar manufactured by SAIC-GM-Wuling, at the joint venture automaker’s Qingdao plant in eastern China’s Shandong province, Tuesday, November 30, 2021.
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BEIJING – China has spent $230.8 billion over more than a decade to develop its electric vehicle industry, according to data analysis published on Thursday American Center for Strategic and International Studies.
The scale of government support represents 18.8% of total EV sales between 2009 and 2023, said Scott Kennedy, trustee of CSIS’s China Business and Economics Division. The ratio of such spending to electric vehicle sales has fallen from more than 40% in the years leading up to 2017 to just over 11% in 2023, he noted.
The findings come as the EU plans to impose tariffs on imports of Chinese electric vehicles due to the use of subsidies in their production.
Last month, the US announced it would increase tariffs on imports of Chinese electric vehicles to 100%.
There are some exceptions, but overall Western automakers and governments have been slow and not aggressive enough.
Scott Kennedy
Chairman of the Board of Trustees for Chinese Business and Economics, CSIS
Kennedy noted that Beijing’s support for electric vehicles includes non-monetary policies that favor domestic automakers over foreign ones. But he also noted that the United States has not created conditions as attractive as China to develop its own electric vehicle industry.
“There are some exceptions, but overall Western automakers and governments have been slow and not aggressive enough,” he said. Four years ago, Kennedy laid out seven policy initiatives in a report on potential trade tensions over Chinese electric vehicles.
Government subsidies were not necessarily directed directly toward automobile development. In the early years of electric vehicle development in China, the Ministry of Finance said it found that at least five companies had defrauded the government of more than 1 billion yuan ($140 million).
Chinese-made vehicles have also benefited from the growing penetration of electric vehicles in the country, resulting in them taking over the once lucrative fuel market for foreign automakers. The competition is so fierce that Bank of America analysts said this week that major U.S. automakers should leave China and focus their resources elsewhere.
“Independent auto analysts and Western automakers I’ve spoken with agree that Chinese electric vehicle and battery makers have made tremendous progress and should be taken seriously,” Kennedy said.
But he noted that extensive government support and market growth for Chinese electric vehicle companies have yet to translate into significant increases in profits.
“In a well-functioning market economy,” he said, “companies will evaluate their investments in new capacity more carefully, and the emergence of such a sharp gap between demand and supply will likely lead to industry consolidation.”
BIDThe company’s net profit per vehicle fell over the past 12 months to the equivalent of $739, according to CLSA analysis as of the first quarter. Teslafell to $2,919, the data showed.
The electric vehicle industry has faced an intense price war over the past year, with car companies either cutting prices or launching cheaper product lines.
Chinese electric vehicle startup Niowhich still operates at a loss, said last month it expects about 10 automakers to lose out in the Chinese market, leaving 20 to 30 players.
The US is stepping up efforts to support electric vehicles. Inflation Reduction Actsigned in August 2022, highlighted $370 billion for promoting clean technologies.
Kennedy noted that the law provides a $7,500 credit toward the purchase of a qualifying electric vehicle. This contrasts with China’s average EV purchase support of $4,600 in 2023, down from $13,860 in 2018.
— CNBC Dylan Butts contributed to this report.