Ann Arbor (Informed Commentary) – In July, China reached an unprecedented tipping point for an industrial society, as it sold more electric cars than internal combustion engine (ICE) vehicles. William Gavin of Quartz points out that 3 years ago, only 7% of cars sold in China were electric.
This year alone, sales of electric vehicles have increased by 37%. This statistic includes both pure electric vehicles and plug-in hybrids.
It is true that the Chinese government offers a $2,785 bonus for purchasing an electric car. However, that is less than the $7,500 tax credit Americans can receive under the Inflation Reduction Act for certain electric car models.
The key difference, Gavin argues, is that “China has invested at least $230.8 billion between 2009 and 2023 in developing its NEV industry,” and $121 billion of that in the last three years. This research and development program has allowed the Chinese to make advances in battery technology unmatched by American engineers, which is one reason Ford wants to partner with a Chinese company for its planned major battery plant.
America’s capitalist model has so far been unable to keep pace with China’s demand-driven economy in this sector. Only in recent years has the Biden administration pursued an industrial policy that offers any hope of catching up.
Whatever the case, the Chinese are currently outselling America when it comes to electric cars. Thanks to their advanced batteries and other technological breakthroughs, Chinese companies can offer electric cars at an average price of $34,400, while in the United States, the average price of an electric car is $55,242.
In fact, BYD, the largest electric vehicle manufacturer, plans to launch a $15,000 electric vehicle in 2024. The plug-in hybrid version of the new platform is even cheaper at $11,000. This platform is a destroyer of internal combustion engines.
BYD hopes to reach an agreement with Mexico by the end of the year to open a manufacturing plant in Mexico. Cars made in that country would be entitled to special access to the U.S. market under NAFTA unless Congress passes a law curtailing that one operation. The big three U.S. automakers are terrified of the plan because BYD’s low-cost electric cars have a long range.
This means that Chinese advances in green mobility could give the country the opportunity to dominate the global auto market and deindustrialize its competitors. For this reason, Europe has imposed high tariffs on Chinese electric cars, but Beijing is appealing the move to the World Trade Organization.
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Bonus video:
Vox video: “Why China is winning the electric vehicle war”
