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At pole position, China vrooms EVs for global lead

By Ma Si | China Daily | Updated: 2020-09-21 09:34
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An aerial view of Tesla's Giga factory in Shanghai. [Photo by Ji Haixin/For China Daily]

China will become the world's largest market for autonomous vehicles, with revenue from sales of such new cars and mobility services expected to exceed $500 billion by 2030, McKinsey & Co has forecast.

Thomas Fang, a partner in the China office of Roland Berger, a global consulting firm, also said that from now on, Chinese consumers are more likely to choose electric cars as their first cars than those in other markets.

China's favorable government policies have also contributed to electric vehicles being seen as the future of the domestic auto market, displacing traditional cars powered by carbon-based fuels.

For instance, the central government has recently extended subsidies to eligible new energy vehicles, both foreign and domestic ones, until 2022. As well, such vehicles will remain exempt from purchase taxes for another two years.

Xin Guobin, vice-minister of industry and information technology, said in July that China is speeding up the promulgation of the sector's development plan, which will span the period from 2021 to 2035.

Xin said the plan has been submitted to the State Council, China's Cabinet, for approval. According to a draft plan released in 2019, China aims to be a globally leading country in terms of new energy vehicle-related technologies. New energy vehicles are expected to account for 25 percent of vehicle sales by 2025.

The lack of long history in making combustion engines, once considered a big obstacle to the development of the domestic automobile industry, could well prove a blessing in disguise as China seeks to wrest lead in the global electric vehicle industry.

Kurt Sievers, CEO of NXP Semiconductors, the world's top chip manufacturer for the auto industry, said in an earlier interview with China Daily that "without a legacy of combustion engines, China will be at the forefront of electrification of the car.

"The number of electronics per car, for instance, the use of radar technologies, is growing rapidly. China is going to see strong growth (in this aspect) in the next few years.

"Chinese companies have a head start in electric cars. Automakers with high-value brands and Chinese flavors will conquer the world."

Chinese electric car brands are also constantly experimenting with new technological solutions to boost the development of electric vehicles. One example is the battery swap mode, which was promoted by Chinese carmakers including BJEV and Nio.

Data from the Ministry of Industry and Information Technology showed that China had 449 battery swap stations by the end of June. Battery swapping will help extend the life of batteries, enhance safety and lower costs for electric car buyers, the companies said.

At BJEV's battery swap stations, vehicles can get their empty batteries replaced by fully-charged ones within 90 seconds.

As this year marks a watershed for the country's electric car startups established in the past five years, some Chinese electric car players stand out from a crowd of competitors. Some have managed to mass-produce electric cars; others, despite much hype, have been squeezed out of the fiercely competitive market.

For instance, Nio, established in 2014, saw its first-ever positive cash flow from operations in the second quarter this year, said William Li, its founder and CEO.

According to Nio's financial statements, its gross margin was 8.4 percent in the quarter, and gross profit was $44.3 million. In the same period last year, Nio recorded a loss of $72.5 million.

"The opportunity for China to grow from a big car market into an automotive power lies in the new energy vehicle segment," said Freeman Shen, founder and CEO of WM Motor.

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