Around the globe, automakers and governments are making big plans for electric vehicles, lining up billions of dollars for the investments needed to replace the world’s carbon-burning cars and trucks. But there’s one place that stands out for the number of EVs actually hitting the road: China, where the government has put its might behind establishing the country as a leader in this revolution. The result might not only be cleaner air, but a reshaped global auto industry.
Sales of new energy vehicles (NEVs), a broader category that includes plug-in hybrids, rose by about half in 2017, while electric-only sales roughly doubled. And for the first time, electric-only global car sales exceeded 1 million; China accounted for more than half and is targeting sales of 7 million by 2025. Local brands include Geely and BYD, which is backed by U.S. billionaire investor Warren Buffett. Startup NIO is positioning itself as a top-end challenger to technology entrepreneur Elon Musk’s Tesla Inc. It’s a key part of China’s plans to cut the air pollution that chokes many of its cities, and to meet the carbon reductions it pledged as part of the 2015 Paris accord to tackle climate change. China’s electricity grid still derives two-thirds of its power from coal, which itself pollutes and emits carbon. China’s leaders also aim to reduce the country’s heavy dependence on imported oil, which they view as a strategic vulnerability. A government plan released last year envisages NEVs making up all the future sales growth in China.
They all have plans for non-gasoline cars. Volkswagen AG intends to spend 70 billion euros ($81 billion), most of which is the cost of batteries, to offer electric versions of all its models by 2030. General Motors Co. plans 20 all-electric models by 2023. Volvo Cars will begin phasing out automobiles that run just on fossil fuels in 2019. Tesla delivered the first of its mid-market Model 3 sedans in mid-2017, although it’s struggled to meet production goals. Thanks to its sheer size and accumulating wealth, China looks certain to be the world’s 21st century automotive hub. (Vehicle sales there outstripped the U.S. by 68 percent in 2017.) The question is whether its companies will dominate in the way that Detroit’s Big 3 did for much of the last century. China may have more success than it did developing gasoline cars since the EV industry’s youthfulness presents more of an even playing field. And South Korean manufacturers have shown how it’s possible to shake up car markets with high-quality, well-priced products.