Workers assemble the Wuling Hongguang Mini EV, a small all-electric vehicle manufactured by SAIC-GM-Wuling, at the joint automaker's factory in Qingdao, east China's Shandong Province on Tuesday, November 30, 2021.
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BEIJING – China has spent $230.8 billion over more than a decade to develop its electric vehicle industry, according to an analysis published Thursday by the US-based Center for Strategic and International Studies.
The amount of government support represents 18.8% of total electric vehicle sales between 2009 and 2023, said Scott Kennedy, chief curator of China Business and Economy at CSIS. He noted that the ratio of this spending to electric vehicle sales has decreased from more than 40% in the years prior to 2017, to just over 11% in 2023.
These results come at a time when the European Union plans to impose customs duties on imports of Chinese electric cars due to the use of subsidies in their production.
Last month, the United States announced that it would raise tariffs on Chinese electric vehicle imports to 100%.
There are some exceptions, but overall, Western automakers and governments have dragged their feet and not been aggressive enough.
Scott Kennedy
Trustee Chair in Chinese Business and Economics, CSIS
Kennedy noted that Beijing's support for electric vehicles included cashless policies that favored domestic automakers over foreign companies. But he also noted that the United States has not created as attractive conditions as China for developing its own electric vehicle industry.
“There are some exceptions, but overall, Western automakers and governments have been slow and not aggressive enough,” he said. Kennedy laid out seven policy initiatives in a report four years ago on potential trade tensions from Chinese electric vehicles.
Government support did not necessarily go directly to automobile development. In the early years of electric vehicle development in China, the Ministry of Finance said it found that at least five companies defrauded the government of more than 1 billion yuan ($140 million).
Made-in-China cars have also benefited from the growing penetration of electric vehicles in the country, carving out a gas-powered market that was previously lucrative for foreign automakers. Competition is so fierce that Bank of America analysts said this week that major U.S. automakers should leave China and focus their resources elsewhere.
“The independent auto analysts and Western automakers I spoke with all agree that Chinese electric vehicle makers and battery producers have made tremendous progress and should be taken seriously,” Kennedy said.
But he noted that extensive government support and market growth for Chinese electric car companies have not yet significantly boosted profits.
“In a well-functioning market economy, companies will measure their investments in new capacities more carefully, and the emergence of such a sharp gap between supply and demand is likely to lead to industry consolidation,” he said.
BYDNet profit per car fell over the past 12 months to the equivalent of $739, according to an analysis by CLSA as of the first quarter. TeslaThe data showed that the price of gold fell to $2,919.
Last year, the electric vehicle industry faced an intense price war, with auto companies either cutting prices or launching lower-priced production lines.
Chinese electric car startup NewThe Chinese automaker, which is still operating at a loss, said last month that it expects to lose about 10 automakers in the Chinese market, leaving 20 to 30 companies.
The United States is intensifying its efforts to support electric cars. The Inflation Reduction Act, which was signed into law in August 2022, allocated $370 billion to promote clean technologies.
Kennedy noted that the legislation provides a $7,500 credit for the purchase of qualifying electric vehicles. This is in contrast to China's average subsidy per electric vehicle purchase of $4,600 in 2023, which is less than $13,860 in 2018.
— CNBC's Dylan Potts contributed to this report.
