China EV car - The Future of Electric Vehicles Depends on the Chinese Market

China is the world’s largest auto market and also a leader in the electric vehicle (EV) business.

There are about 3 million electric vehicles in the world, and two-thirds of them are produced and sold in China. The development of electric vehicle sales in China is even more remarkable. In 2011, China sold only 8,159 electric vehicles, but in 2015 this figure soared to 331,092. The production of electric vehicles and other non-petrol vehicles in the Chinese market increased to 500,000 in the first half of this year. The International Energy Agency predicts that by 2040, China will account for more than 40% of global electric vehicle sales. But as of now, this is only a small part of the global market for the automotive and light truck.

Also Read: Ford CEO: China Will Take the Lead in Electric Vehicle Area

With the continuous development, the car purchases in China is rising sharply. It is also sufficient for middle-income residents to purchase, with ownership rising from 20 per 1,000 of the population at the beginning of this century to more than 100 per 1,000. The number of new licenses issued per month is also over 1.5 million. This has exacerbated environmental pollution and increased the growing volumes of oil imports, and daily imports have grown to almost 9 million barrels.

Electric vehicles are a practical option. Although 80% of China’s electricity still comes from coal, electric vehicles are relatively clean, while reducing the demand for oil. More importantly, electric vehicles also have the potential to become a new source of employment and export earnings.

Some large cities in China are implementing subsidies and restrictions to promote the development of electric vehicles. EVs were exempted from purchase tax from 2014 to 2017, and the government has extended the tax exemption to 2020. In addition, the central government has launched a consumer subsidy program.

The limited battery capacity and corresponding range of travel remain an obstacle to electric vehicles, requiring additional charging stations and support infrastructure. China plans to build 12,000 charging stations by 2020 to accommodate 5 million electric vehicles.

Meanwhile, the strength of China’s battery sector will further consolidate this industry. In fact, the country is already the world’s largest producer of electric vehicle batteries. It also controls a significant portion of the supply chain, such as raw materials, chemical processing and other parts. Caspar Rawles, an analyst at Benchmark Mineral Intelligence said, “The largest risk/concern to the supply chain is the control of the raw materials, particularly cobalt, lithium and graphite. China controls vast sections of much of the battery supply chain, from mining the raw materials through to processing and finally to cathode/cell production.”

There is no doubt that the energy transformation with Chinese characteristics is already underway.

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