00:00 When you request a taxi or a Y-Share in China these days, you are likely to be picked up
00:06 by an electric vehicle or EV with a distinctive green license plate.
00:15 When you get in one, you see all sorts of fancy gadgets.
00:18 This one has a small AI robot on the dashboard that responds to your commands and sits to
00:25 massage your back.
00:27 And when you are running low on charge, you don't have to plug in and wait.
00:32 Many stations can swap out batteries in a few minutes.
00:57 Over the past decade, the number of EVs in China has grown to more than 20 million.
01:05 And now, the carmaker selling the most EV globally is not Tesla, it's China's BYD.
01:12 So how did China make that happen in such a short time?
01:17 Is China in the fast lane to dominate the global EV market?
01:21 And most importantly, can the Chinese industry keep up the pace of rapid growth?
01:33 The phrase "one dollar超车" meaning to overtake on a ban is commonly used in Chinese
01:40 media to describe how the country's carmakers achieve dominance in the EV market.
01:47 But while that sounds like sudden acceleration, China's EV boom was many years in the making.
02:00 In the late 20th century, the country's auto industry was dominated by cars designed by
02:07 foreign brands and manufactured through domestic joint ventures.
02:11 By the early 2000s, it was clear that even after a decade of trying to catch up, developed
02:17 countries still had a major lead over China when it came to internal combustion engines.
02:24 Leaders in Beijing realized that they need a completely new approach to bypass the West's
02:30 lead in legacy technology.
02:33 In 2001, the government included the development of new energy vehicles in its five-year plan.
02:41 The government's primary national planning document.
02:45 Authorities gave 880 million yuan to universities and domestic carmakers to support the development
02:53 of EV technologies.
02:56 Then starting from 2009, the Chinese government set up 25 pilot cities to subsidize new energy
03:03 vehicles.
03:05 The following year, China also started subsidizing the production of private passenger electric
03:11 vehicles, sometime by as much as one-third of the cost.
03:17 Its goal was for each city to have 1,000 electric vehicles in operation by the end of 2012.
03:24 But the results of the program were disappointing.
03:28 By 2013, the nation only had 27,000 new EVs on its roads.
03:35 Most of them were buses, taxis, and other public vehicles.
03:40 Only about 4,400 were private passenger cars.
03:44 Even with subsidies, some cities only had 150 EVs running by the time the program ended.
03:52 The dismal outcome was linked to a limited range of vehicle models and early technologies
03:58 that were not able to satisfy real-world operating needs.
04:04 There is no breakthrough in the sense that it's very expensive at that time.
04:09 It's around two to three times higher than the conventional vehicles because you see
04:15 batteries are very expensive.
04:17 And the infrastructure needed to charge EVs was minimal.
04:22 Still, authorities continued to double down on EV development, only with more refined
04:28 and targeted strategies.
04:31 Additional advancements allowed the government to narrow its focus on plug-in vehicles and
04:36 ditch conventional hybrids.
04:39 The central government's 12-5-year plan included an increased research budget for
04:44 EVs and a vow to build and sell half a million plug-in EVs by 2015 and two million by 2020.
04:54 The government also committed an additional 4 billion yuan in special funding to develop
05:00 new vehicle models and key components such as batteries.
05:05 Authorities also expanded the number of cities taking part in the New Energy Vehicle Pilot
05:10 Program from 25 to 88.
05:13 But China's EV strategies were not just about subsidies and favorable government policies.
05:20 In 2015, several carmakers were found to have cheated the government out of some 1 billion
05:27 yuan worth of subsidies.
05:30 Authorities also began to realize that subsidies alone would not be enough.
05:36 Officials decided that they needed a foreign catfish to push local carmakers to swim faster.
05:46 In 2017, Shanghai's municipal government started providing numerous incentives for
05:53 US EV maker Tesla to build a factory in the city.
05:58 It was a win-win arrangement.
05:59 The Shanghai factory is now Tesla's most productive plant.
06:03 It also put the American company's Chinese competitors under pressure to catch up with
06:09 Tesla in everything from affordability to technology.
06:14 But now, Tesla is trying to keep up with its Chinese counterparts such as BYD and Li Auto.
06:21 Beijing also managed to refine its subsidization program.
06:25 EV subsidies were linked to vehicle performance, so manufacturers got more money for cars that
06:31 could travel further with less electricity.
06:35 Officials also kept rising the minimum driving range that all electric vehicles had to provide
06:41 before carmakers could get subsidies.
06:43 Meanwhile, the overall amount of subsidies offered kept shrinking year after year.
06:50 The incentives are not limited to domestic carmakers.
06:54 Foreign players like Tesla also benefit.
06:57 The Chinese subsidies get cleared relatively early.
07:01 It kick off relatively early.
07:04 And it adjusted into the latest trends to promote the technology evolution.
07:10 Instead just focus on the volume.
07:12 And of course some other benefits including the waive of the purchase tax, which is still
07:17 levied at 10% on the ICE cars and on the EV that is zero.
07:23 There are also favorable licensing and road access policies for EVs in cities like Beijing
07:28 and Shanghai.
07:29 EVs can get a registration number right away, while traditional petrol cars must enter a
07:36 lottery to get new plates.
07:39 After the foundations were laid, production and sales of EVs took off in China.
07:46 The rapid growth of EV production also helped turn around China's slowing auto sector.
07:52 In 2023, its automobile exports surpassed Japan, making China the world's largest automobile
08:00 exporter.
08:01 I think China realized that rather than continuing to put money in an old industry, maybe it
08:06 was worth putting money in a new industry.
08:09 China's EV sales figures were below 1 million in 2017.
08:14 By 2023, sales volume has surged to 9.5 million, with more than 70% of the vehicles made by
08:22 Chinese car makers.
08:24 But selling more cars does not mean making more profit.
08:28 China's BYD is currently the world's largest EV maker, but its profitability remains far
08:34 behind rival Tesla because of the American giant's bigger profit margins.
08:39 As of the third quarter of 2023, Tesla's per car profit was $5,330.
08:48 For BYD, the figure at the time was only $1,460.
08:55 And the post-COVID economic slump in China has not made things easier for car makers.
09:01 Multiple Chinese auto manufacturers have been reporting plunging delivery numbers.
09:06 Then in January 2023, Tesla started slashing prices in the Chinese market.
09:13 Other Chinese EV makers such as BYD soon followed suit, and it quickly turned into a price war.
09:21 The acceleration performance is different.
09:23 And also the, say, the electronic auto driving autonomous is different.
09:33 But the basic performance, that means the driving range, right now the commercial electric
09:39 vehicle is more or less the same.
09:41 It's around 400 kilometers per charge.
09:43 That is sufficient, actually.
09:45 It's sufficient.
09:46 So, right now, they compete one another based on price.
09:51 For the domestic one, it is always a competition.
09:55 It is so easy to have so many entrepreneurs that are willing to explore the opportunities.
10:03 So the competition is always fierce.
10:06 That has prevented some car makers from profiting, for sure.
10:11 Only a handful of domestic market leaders like BYD and Ni Auto have been profitable
10:18 enough to further cut prices to squeeze out competitors.
10:23 So where do Chinese car makers look for more sales and profit?
10:27 Overseas.
10:28 And tapping foreign markets tops the to-do list of many Chinese car makers as they fight
10:34 for their survival.
10:35 However, is it that easy to sell EVs to other countries?
10:40 Manufacturers are experiencing the need of going overseas because otherwise prices will
10:47 continue to come down.
10:48 To me, it's about realizing that they need to increase their production overseas.
10:54 And they are already on this mindset.
10:57 But I think this mindset will accelerate.
10:59 But there are already many hurdles on the way.
11:03 Last year, the US passed a climate bill putting a focus on breaking the Chinese supply chain
11:09 for electric vehicles.
11:10 The European Union also opened a year-long subsidies probe into EVs made in China last
11:17 October.
11:18 Actually, China's EV exports previously was mainly driven by the large demand in European
11:27 markets.
11:28 But since last year, we've seen a lot of Chinese brands trying to expand in emerging markets
11:36 such as Southeast Asia and Middle East and South America.
11:44 In March 2024, Premier Li Chang offered strong support for China to stay on course to an
11:51 EV future.
11:52 He told the political elites and lawmakers at the annual two sessions that Chinese firms
11:58 now account for more than 60% of the world's electric vehicle output and sales.
12:05 And he vowed to boost consumption of new energy vehicles.
12:10 After more than 20 years of overtaking on the band, China's car makers are once again
12:16 trying to steer their way through a critical time.
12:19 It remains to be seen whether they will be able to keep up the momentum needed to keep
12:24 thriving on the global stage.
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