Will China's electric car industry be able to withstand the challenges it faces?
Will China's electric car industry be able to withstand the challenges it faces?
Green technologies have become an area of competition among countries looking for new areas of economic growth and building low-carbon economies. China's electric car industry has been Beijing's top priority in recent years, but it faces many challenges in its proliferation by the various actors embedded in the innovation network.
The electric car sector is witnessing a global recovery, led by Tesla, which is experiencing significant growth in the stock market and companies in China are following Tesla's approach, where they are recovering after a long period of low sales volumes and yet volatility persists, as the country faced a major challenge this year to reopen the Chinese economy after months of closure caused by the CORONA virus pandemic.
Recovery after nearly a year of stagnation
Since mid-2020, China's electric car market has emerged from a near-year recession, resulting from a continued decline in car sales caused by reduced government subsidies and exacerbated by the effects of CORONA virus, consumer confidence has returned as the latest sales figures show that by August, total sales of electric vehicles had increased year-on-year for the second month in a row.
This growth was generally consistent across all segments of electric vehicles, and in July, China-based BYD, which competes for small and medium-sized vehicles, achieved its first year-on-year sales increase for 2020, ending a 10-month decline.
Similarly, NEO, a 6-year-old electric car maker focused on the luxury products sector, saw sales rebound in early April and by June recorded new monthly sales of 3,740 vehicles.
Earlier this year, Tesla introduced its first Chinese-made car to consumers as three sedans exited its Shanghai plant production line, and by August the company had sold more than 65,000 cars this year, making it the country's leading manufacturer of electric vehicles.
This recovery is the latest development in a sector that has experienced impressive growth over the past decade, in 2011 China accounted for just over 5% of global electric car sales, by the beginning of this year even during the economic downturn this share jumped to more than 50% making China the largest market for electric cars.
But while the sales recovery is undoubtedly good news for electric car manufacturers, it highlights the amount of volatility and uncertainty in the sector.
Electric car racing
The electric car industry has gained rapid growth and a certain level of regulatory legitimacy from china's central state and some local countries, but because of the power struggle between stakeholders, it has not achieved much normative or cultural cognitive legitimacy.
Sales of electric cars have grown very quickly, but they still represent only a small part of the target cars, and this may soon change so you should pay attention to the global electric car landscape, barriers to accreditation and brands to see.
Since the launch of Tesla Roadster in 2008, the first legal highway electric car produced in large quantities powered by a lithium-ion battery, General Motors to Toyota automakers have been rushing to launch their own electric vehicles.
Technical constraints, production challenges and consumer uncertainty have played an important role in hindering industry development, but with improved technical capabilities, declining production costs and community-wide demand for sustainable solutions, the moment for electric cars may have come.
Modification of the electric vehicle sector
China has more than 400 registered electric car companies, reflecting China's heavy investment in the electric car sector since 2009, which has effectively helped build an industry from scratch, generous support for consumers from both the central and local governments has helped stimulate the market, but as evidenced by the decline in sales after the subsidy cut, competition for price cuts alone will not be enough to maintain the market.
NIO founder and CEO William Lee says the new energy car industry is at a turning point, as it is usually driven by favorable policies and sales and heavily subsidized, but with low subsidies, electric car companies now need to gain more users with products and services, he said, adding that given the number of companies operating in the electric car sector, some levels of consolidation seem inevitable.
Even if government support is withdrawn from China, foreign investment growth is a strong signal of rapid market maturity, as evidenced by the recent byd-Toyota deal to develop electric vehicles in China.
Shipping issues
More urgently, how the sector matures, becomes less manufacturing-focused and does more in the customer experience, one of the main battlegrounds will be the ability to build and maintain a wider electric vehicle charging infrastructure.