Going green: BYD EVs are seen at the port of Lianyungang in Jiangsu province. China’s need to bring down heavy pollution in cities played a crucial role in its EV policy. — China Daily
SHANGHAI: China became a world leader in electric vehicles (EVs) by showering companies with public cash. It’s a charge increasingly heard in the United States and Europe, and a refrain that’s central to the escalating trade war.
If it were only that simple, China would have champions in every industry, from aircraft to semiconductors.
The unique rise of China’s EV makers, which are rapidly taking over the world despite Western politicians’ efforts to block them, holds lessons for other countries about how industrial policy can succeed.
While Beijing plowed in plenty of money after identifying EVs as crucial for the environment and the economy, to a large degree it was a foreign company that kickstarted the domestic industry – an argument against the protectionism that China has insisted on in many other sectors.
Although former government minister Wan Gang pushed the country early on to leapfrog the dominance of foreign brands by investing in electric cars, when Tesla Inc started manufacturing locally in China in 2019, it sparked genuine enthusiasm among consumers and fuelled the build-out of an entire EV supply chain.
Innovation became the catch cry and scores of EV makers blossomed, each trying to outdo the other on design, software and other high-tech features. Many fell by the wayside, leaving survivors leaner and hungrier.
In 2024, China’s EV market is characterised by bruising price wars and intense competition.
The policies employed by China’s leaders are now being emulated by Western governments, which are trying to make their own EV makers more competitive, including with subsidies.
Yet it’s clear that Beijing’s willingness to let companies fail while boosting the overall new-energy vehicle sector is what’s made a difference.
In contrast, its decades-long commitment to manufacturing homegrown aircraft to take on Boeing Co and Airbus SE hasn’t seen Commercial Aircraft Corp of China Ltd make many viable inroads into that global duopoly.
In EVs, China hasn’t sought to “create specific national champions,” said Gerard DiPippo, a senior geo-economics analyst at Bloomberg Economics. “It wanted winners but didn’t want to pick them. It was more of a ‘let one hundred EV makers bloom’ approach.”
That strategy has seen carmakers like BYD Co offer electric hatchbacks that have rotating touchscreens from just 73,800 yuan (US$10,200). Li Auto Inc’s L-Series has rocketed to the top of electric sport-utility vehicle charts thanks to its spacious interiors and top notch in-car entertainment.
While Apple Inc gave up on its EV project, Xiaomi Corp founder Lei Jun has fans queuing up to buy the smartphone maker’s recently released SU7 EV. — Bloomberg
