China vs. USA – The EV Race

 

After decades of false starts and infuriating delays, the electric vehicle age is finally upon us. Well, it’s at least visible, on the horizon. And of the two greatest economies on earth, which will emerge supreme as the true driving force – the 21st century EV superpower?

 

At stake is prestige, soft-power bragging rights and potentially multi-trillion dollar industrial windfalls. So join Advanced Tech World today for a track side seat. As we examine China vs. USA – the EV Race. In case you haven’t been paying attention, China has been positively motoring ahead in the EV stakes of late. Last year alone for instance, Chinese consumers purchased over a million more EV’s than the US’s comparatively lame 328,000. Moreover it’s reported that 86% of Chinese drivers realistically see themselves buying an EV, compared with a paltry 44% of Americans. The People’s Republic already has a network of 500,000 charging points, a figure which is growing rapidly and absolutely dwarfs America’s puny 100,000 stations.

 

So how did China get ahead by so much?

 

For the better part of a decade now, China has set itself the noble target of becoming the world leader in EV take-up, investing as much as $100 billion in the effort, part of a wider initiative to make the nation entirely carbon neutral by the year 2060. Among the drivers of this herculean effort is the fact China has, or at least had, some of the poorest air quality on earth. Despite making big strides already in tackling this problem, it’s reckoned that 1.25 million people still die early every year from poor air quality in China.

 

Part of its solution has been heavy restrictions of access to urban centers for old school gas guzzling cars. In Beijing, for instance, motorists are forbidden from driving into the city centre unless their vehicle is electric. In Shanghai, ICE or Internal Combustion Engine vehicles need to show a license plate that costs an eye-watering $12000. That’s a pretty hefty deterrent when you consider EV drivers get the same license plate for free. Elsewhere in the country internal combustion vehicles are only permitted to drive at certain times. This not only cleans up the air, but goes some way to reducing the country’s awkward dependence on foreign oil imports. 

 

 

Electric Vehicle

On the other side of the ledger, the Chinese government is compelling manufacturers to produce a certain proportion of electric vehicles as part of their vast industrial output. It also heavily subsidizes electric vehicle uptake among consumers, offering drivers attractive comparative purchase prices for clean-energy cars. These subsidies almost certainly won’t last forever though, as EVs become main stream. These initiatives working in concert should help the country meet its ambitious target of becoming an all EV, including the odd hybrid, motoring nation by the year 2035. But it isn’t just heavy-handed government economic intervention driving the change.

 

A radical flowering of new-minted car companies has emerged to meet booming demand, with some 400 startups jostling for market share. The most striking among them is NIO also known as the ‘Chinese Tesla’, whose ETZ electric vehicle boasts some pretty impressive specs. Not least the fact that, in terms of range, it can go fully 621 miles on a single charge. That’s about 200 miles further than you’d get in a Tesla ModelS, although we probably should note that NIO nearly went bankrupt, and was only saved by a whopping $1.4billion investment from the Chinese government, yet another reason why muscular state intervention is helping China stay squarely in the driving seat.

 

Quite literally in the case of NIO, as leaders in Beijing now have a seat on the board. The People’s Republic is finding it easier to sell its population on EVs than the United States in part due to the fact it’s only been a developed industrial nation for a relatively short period of time. So there’s less of a stubborn legacy of old school fossil fuel dependent industries, and clunky incumbent manufacturing giants, to overcome. So in contrast to the US, where the transition to electric requires a vast wholesale retooling of a vast lumbering industry, China can just train its autoworkers to make electric vehicles from the get go. 

 

 

Similarly, China won’t be disrupting decades-established supply chains – they’ll just be starting new ones from scratch. And it’s less hassle convincing many consumers of the benefits of EVs over old school cars, because it’s very possible that a Chinese family’s first car today will be an EV. Despite the impressive range of that NIO model, we mentioned being touted as world beating; range isn’t actually that big of a concern for Chinese drivers. According to analysts, less than 1% of all passenger vehicle journeys in China exceed 75 miles, meaning the age-old problem of charging isn’t such a deal breaker there. Typically, it’s reported, a Chinese driver will cover just 697 miles in a year, compared to their American counterparts who typically drive a far more demanding 13,747 miles per year.

 

So, what is the USA up to?

 

From a policy point of view, it’s no secret the election of Joe Biden drastically improved the prospects of America’s EV scene, in stark contrast to the cavalier attitude on environmental concerns exhibited by his predecessor Donald Trump at least. On day one of his presidency, Biden signed his country back up to the Paris Climate Agreement, after stated on the campaign trail that climate change is the ‘number one issue facing humanity’. His stated goal is to make the US a net zero emitter by the year 2050.

 

Other policy initiatives include a 10% tax credit offered to employers for creating American jobs in the automotive sector, with specific provision for retooling car factories that move to manufacturing EVs, and federal cash to install half a million EV charging stations. A Californian pilot scheme, which mandates that manufacturers increase fuel efficiency 3.7% year on year, seems likely to be rolled out across much of the US, which will force manufacturers to take EV development seriously. The Biden administration has also announced plans to make the US Postal service van fleet 10% electric, and to convert every last one of the county’s 500,000 school buses to electric by the end of this decade.

 

Still, that figure we mentioned earlier – the mere 44% of Americans who can see they driving an EV in future, compared with the 50% who can’t – is stubbornly high and with the public divided like never before on political and ideological grounds it’s hard to imagine Biden’s high ideals cutting much ice in the so-called Red States. Still, at least US manufacturers are taking the issue seriously. General Motors announced in January of this year that it would discontinue production of all conventional gas vehicles, including hybrids, by 2035. This is itself part of GM’s broader commitment two is carbon neutral by 2040.

 

The Detroit giant clearly has a mountain to climb though. Last year GM sold 6.65 million vehicles worldwide, only 49,149 of which were electric. But with their upcoming Electric hummer and Cadillac EV models GM hopes to normalize electric vehicles over the coming years, selling a million a year from the middle of this decade alone. Or at least that’s the plan. Fellow US automotive superpower Ford, whose gas-guzzling F-Series trucks have been the biggest selling American car for 39 straight years, are also taking the challenge seriously with a $29 billion investment in EVs. Ford’s first electric truck is expected to hit showrooms in the middle of next year – partly in response to the challenge to its tough image presented by Tesla’s eye-catching Cyber truck. Ford’s classic muscle car the iconic Mustang is also getting an EV makeover, with the Mach-E Mustang, which can go from 0-60 in 3.5 seconds over a range of 300 miles per charge. And sexy new techs like its Active Drive Assist, allowing drivers to operate the car hand free, make it not only a noble purchase from a sustainability standpoint, but an actively desirable one. All this development of shiny new autos will come to naught, however, if the charging infrastructure isn’t in place.

 

China currently has an enviable unified standard for charging. NIO, the Chinese Tesla rival we mentioned earlier, even has a network of lightning quick battery replacement stations, which can charge in 5-10 minutes. There’s even a fleet of NIO charging vans that can be summoned via smart phone app if you run out of juice in an awkward location. Of course Elon Musk’s Tesla is the gold standard, with a strong presence in both China and America. Its luxury price point might struggle to compete with the raft of budget. Chinese EV models coming on stream soon, not least GM’s Hongguang Mini sold under its Wuling Brand in China, which costs just $4,300 and has a top speed of 62 mph.

 

One area where Tesla’s bleeding-edge innovation may come into its own is in battery building. China currently dominates the battery production market, and with geopolitical tensions with the US rising of late it’s not inconceivable that China could summarily suspend the essential flow of battery tech to the US market. This would naturally be devastating to the sector. Worse, from the US perspective is the fact that China has invested so heavily in the raw materials that are essential for battery production. The People’s Republic has sunk billions into the Democratic Republic of Congo, to the point it now controls eight of the largest 14 cobalt mines in the country.

 

Similarly, China also has say over some 70 percent of the entire world’s supply of lithium. In sum, China’s centralized, state controlled approach to driving the EV revolution puts it in a commanding position, and you wouldn’t bet against them meeting their carbon neutral target date of 2060. The US under Joe Biden is far better placed to make the transition than it has been in years, But if it fails to convince the truck-loving climate skeptic half of its populace it could still run out of road fast. What do you think? Is China’s swift progress on the path to sustainable motoring a good argument for authoritarian Government? 

 

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