The People’s Republic’s Quest for Electric Domination
With more than 20% of the world’s population and about 25% of the world’s demand for new cars, China has a problem, and that is an almost total dependency on imported oil. But the centralised economy run by the Chinese Communist party is not deterred and has been investing very heavily in renewable energy. All you have to do is fly across the semi-arid hinterland that is western China and you will notice that the desert is covered in black squares of industrial solar farms, busily generating megawatts of electricity to power the next wave of industrialisation in the middle kingdom.
China is already the world’s largest manufacturer of solar panels which, if you believe the Trump administration, has been done by ‘borrowing’ trade secrets and subsidising the manufacturing process. Now, the People’s Republic has clearly set its sights on becoming the world’s leader in electric car manufacturing and hopes to steal a march on the established bricks and mortar producers in the ‘old’ economies.
Of course if you listen to the Chinese government, you will believe that the drive to electrification is more about reduction of the choking smog that kills thousands every winter in the larger industrialised cities, but as we have previously written on this matter, cars are responsible for less than a quarter of this and the large community coal-fired central heating plants and consumption of meat play a far larger role.
No, geopolitics and lack of oil are really the primary movers on this, but also the simple fact that the local homegrown car manufacturers have simply been unable to take on their rivals from America, Japan and Europe.
To persuade the Chinese population that electrification is a good idea, the central government has been ploughing billions of dollars into research and development of New Energy Vehicles, or NEVs as they are called in China. They have also pledged to build the most extensive network of charging stations with at least 4,000 new sites being brought on stream per year, which may not seem like a lot in a country the size of China but then the manufacturers of the cars are also being ‘encouraged’ to build a similar network privately.
It is not just the generating and delivery of the power where China has made noticeable gains. The country is already the largest manufacturer of Lithium-ion batteries, an advantage that may grow further if Tesla really does place its second Giga Factory in China, as is being rumoured right now. Europe on the other hand currently does not have one Li-ion factory, which may well come back and bite them in the not too distant future.
Of course, public sentiment is still not wholly in favour of EVs, with range anxiety and cost of purchase being two of the key sticking points that to-date has restricted market growth. Undeterred, the Chinese government has in part made them more attractive by restricting the registration of new internal combustion cars in most cities, which has meant that the waiting time for a new car has made the NEV option highly attractive.
NEVs in China are being made, it would seem, by everyone and not just the big established auto-manufacturers. As of last count, there are at least 300 NEV start-up companies vying for a slice of the action. These companies do have an advantage over the more traditional bricks and mortar manufacturers in that they are not restricted by the need to utilise existing plant or manufacturing on a certain platform, but are free to go the place that has the component they are looking for, at the price they want – sort of a kit-car approach, really.