Briefing: Global automakers rush into China’s EV market as subsidies fall

By Chris Udemans
1 min read

China’s auto show highlights electric ambitions – AP

What happened: Automotive trade show Auto Shanghai, which opens this week, shows that global car makers are increasingly focused on making electric vehicles (EVs) designed for the Chinese market. Well-funded companies including General Motors, Volkswagen, and Nissan, among others, are looking to take on Chinese rivals BYD and BAIC Group, which have more than 10 years of experience in the low-price segment. At the Shanghai event, automakers are set to display dozens of EVs to compete with their gas-driven counterparts, while the Chinese government promotes electric cars as part of its Made in China 2025 Initiative.

Why it’s important: Chinese automakers account for just 10% of global sales of gas-powered vehicles. However, they are responsible for 50% of EV sales worldwide. According to an analyst interviewed by AP, the government’s push to shift to electric cars presents more of an opportunity than a threat to Chinese vehicle manufacturers. However, the country’s supply of close to 500 EV startups could exceed demand for electric cars even if the country is to reach its 2025 goal of these cars making up 20% of all vehicles on China’s roads. Subsidy cuts also represent a significant threat. Although unlikely to affect well-established traditional automakers, smaller technology-driven startups will no doubt suffer as a result of increased prices for consumers.