Notes

BYD Car, a Chinese Electric Automaker, Will Lead the Way if the EU Enforces Tariffs on EVs

EVs are not only knocking sales of combustion engine automobiles, but they're upending accepted positions, hierarchies, listings and notions of what makes a terrific vehicle. And at the leading edge of this paradigm shift are Chinese companies, consisting of some that were as soon as dismissed as rip-off brand names by multinationals with decades of internal combustion engine knowledge. This supremacy is no accident: Extensive federal government efforts targeting the market throughout the previous 15 years enabled Chinese automakers to leapfrog their foreign rivals and make the most of rapid technological advances in battery technology and customer acceptance of EVs.
The result: By 2022, China will offer more EVs than any other country, including the United States. Which dominance might get even stronger if the European Union is successful in enforcing tariffs on Chinese subsidies for its own EV producers, which Beijing firmly insists are a naked protectionist move that will disrupt the global supply chain and harm EU-China trade relations.
In China, where license plates are allocated for those who do not own their own cars, the federal government made it easy to purchase an EV by giving tax breaks, financial rewards and slashed lorry prices. And when those subsidies expired this fall, many Chinese car manufacturers slashed their own rates again to keep selling.
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A few years ago, when EV production was still in its infancy, China also motivated city governments to equip their taxi and bus fleets with them by providing big subsidies for companies that did so. BYD Auto, a maker of electric cars and buses that is now the world's largest manufacturer, was among the huge winners in this strategy. The company was able to rapidly grow its production capacity, which has actually now reached 55 million lorries each year, and broaden its footprint beyond China's borders.
However, in addition to using carrots, the Chinese federal government has actually also known when to use a stick. To avoid the flourishing EV market from becoming too oversupplied, it set quotas for the percentage of electric vehicles that need to be produced by both domestic and foreign companies. Companies that fulfilled or went beyond the quotas were rewarded, and those that failed were fined.
Then, to more increase EV sales, it cut the cost of lithium batteries and promoted their adoption by requiring that all cars sold in the country be geared up with them. It was a win-win policy that has assisted to push the nation from a low- to mid-market position in EV sales worldwide.
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But while China is an international leader in EV production and consumption, it's still not as proficient at offering them abroad. And that might be the biggest challenge to its future growth. The current geopolitical environment in numerous nations where Washington and Beijing have a frosty relationship means that they hesitate to welcome Chinese companies with showrooms, dealers and charging networks. This makes it difficult for business like BYD Auto to develop a substantial existence in the United States, where it currently sells only a handful of its SUVs.


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