China’s All In On Electric Vehicles: Here’s How That Will Accelerate Sales In Other Nations.
Chinese consumers are on track to buy more than 1 million electric vehicles (EVs) this year after sales grew 53% in 2017. And China’s leadership is charting a course to an all-electric future, targeting 2 million annual EV sales by 2020 and a complete ban on internal-combustion engines, which officials predicts will happen before 2040.
China’s EVs enthusiasm is driven by domestic considerations, but by committing to electric transportation, the world’s largest vehicle market will accelerate global EV adoption.
As China’s manufacturing prowess grows, technology costs will fall as has occurred with solar power. As a result, more affordable EVs will be more widely available, sooner than expected for consumers.
This trend is already taking shape. While China’s EV sales growth is impressive, a global view reveals strong expansion in other countries, with global sales consistently rising in multiple nations to their highest levels in 2017.
Strategic Imperatives for China’s Electric Vehicle Commitment
China’s leadership sees three domestic benefits in EV expansion: economic opportunity, energy security, and cleaner air.
China sees a strategic economic opportunity in EVs, and wants to lead in a new technology that most analysts expect will dominate the global transportation market. Bloomberg New Energy Finance (BNEF) forecasts EV sales will increase to 11 million EVs sold worldwide in 2025, 30 million in 2030, and 60 million in 2040 as manufacturing costs fall below those of internal combustion engine vehicles.
China surpassed the United States as the world’s largest oil importer in 2017, so electrifying transportation also improves energy security. Dependence on imported fuel with prices set in a global market creates security and economic risks for China’s government and consumers. China is the world’s largest market with 30% of global sales, up from 10% in 2007 – so energy demands due to vehicles will not decline anytime soon. Shifting to electricity, which is almost entirely domestically sourced, reduces oil price spike exposure.
Finally, electrifying transportation is a key to solving China’s environmental concerns. Vehicle emissions are one of the fastest-growing sources of pollution in China and more cars are sold there than anywhere else. A radical reduction in tailpipe emissions is essential for China’s government to address discontent caused by urban smog levels.
China’s citizenry is demanding cleaner air, and EVs provide zero tailpipe emissions. China will need to continue building up its renewable energy to ensure these cars are cleaner when electricity grid emissions are factored in, and they have made clear their plans to do so. EVs are an asset in modern, clean electricity grids, increasing their reliability and efficiency.
The Power of Learning Curves
As China’s EV demand and…
