Key points:
- While California-based Tesla captured popular attention for electric cars, national politics in Beijing encouraged the launch of several rivals in China, the world’s largest auto market.
- Once a fringe element in an oil-focused global energy market, electric vehicles are part of a potential new ecosystem that includes autonomous cars and transportation services, says Daniel Yergin, vice president of IHS Markit.
As reported by CNBC, While California-based Tesla captured popular attention for electric cars, national politics in Beijing encouraged the launch of several rivals in China, the world’s largest auto market. Sales of electric cars and other new energy vehicles already hit a record in September in China. Even Tesla started a factory there last year and plans to sell China-made cars to Europe.
The researchers expect China based, CATL to increase its ex-China market share from 2% in 2019 to 14% in 2025, helped by the “hyperbolic” growth of electric vehicles in Europe. CATL shares listed in Shenzhen are up more than 110% this year. ByD’s Warren Buffett-invested shares listed in Hong Kong have soared more than 250% to all-time highs after the launch of its internal blade battery technology, which is used primarily in the recently popular Han luxury sedan of the company.
Once a fringe element in an oil-centric global energy market, electric vehicles are part of a potential new ecosystem that includes autonomous cars and private travel. Daniel Yergin, author of the 1992 Pulitzer Prize-winning book “The Prize: The Epic Quest for Oil, Money & Power,” laid out the implications of electric vehicles for geopolitics in his latest book published in September: “The New Map: Energy, The climate and the clash of nations “.
“China’s leadership in electric vehicles could give it global leadership in electric vehicles in the global market,” Yergin, vice president of IHS Markit, told CNBC in a telephone interview last month. “Obviously, electric vehicles are important to China not only because of the demand for oil, not only because of the pollution, but also because of the competitive strength.”
“A lot of things are beginning to be seen through this new competition lens,” Yergin said. “And if the US really goes big with EVs, there will inevitably be more push to have the supply chain in the US. But it is not separate from the general trade tensions between the world’s two largest economies. “.
Electric Cars and GDP growth
The United States and China have been caught in trade tensions for more than two years, which have spilled over into technology and, to some extent, finance. As the world struggles to emerge from the coronavirus pandemic, ensuring the future of the local auto industry is even more critical for both economies.
In the United States, the industry supports 10 million jobs and contributes almost 3.5% of the national GDP, according to the Report of the China Task Force of the Republican Foreign Affairs Committee of the House of Representatives published on September 29. .
In China, the automotive sector accounts for about a sixth of jobs and about 10% of retail sales, according to official 2018 figures compiled by the Ministry of Commerce.
China’s push towards electric vehicles began just over a decade ago, spearheaded by a former Audi engineer named Wan Gang. While more than 30 billion yuan ($ 4.54 billion) in subsidies attracted many worthless startups, some survived. Nio was listed in New York in 2018 and has risen more than 340% since then. Li Auto and Xpeng went public in the United States this year and their shares are up more than 65% and 35%, respectively.
″ (US) dependence on OPEC at its peak – at the 40% that OPEC produced of world (oil) – was never as high as it is today and is likely to be (in China) if we do nothing in China with EV and its components, ”SAFE president and CEO Robbie Diamond told CNBC in a telephone interview last month. “As an organization we don’t want to go from, dependent on and (facing a) national security, economic security risk based on the Middle East and OPEC, to a problem, I depend on batteries and transportation technology from China. “
In just a sign of how far China has come in electric vehicle development, of the 142 mega-factories of lithium-ion batteries under construction worldwide, 107 are established for China, up from nine in the US. , According to the report “The Commands Heights of Global Transportation,” released last month by Washington-based advocacy group Securing America’s Future Energy (SAFE).
“Almost all the big automakers are taking electrification of transportation seriously and are investing heavily in the technology,” the report says. “Across the industry, automakers will invest $ 300 billion over the next five to 10 years in the development and production of electric vehicles. It is telling that almost half of this investment spending will occur in China, an indicator of where the industry believes demand will be. “