It may seem shocking, but China is the world’s leading consumer in electric powered vehicles. In fact, the Chinese drive more electric cars than “the rest of the world combined.” The fast-growing industry, like many in China, is held up by government funding and subsidies. The Chinese want to lower their fossil fuel usage and output, and more importantly they want to severely cut down on the public-health crisis that is Beijing’s air quality.
The Chinese government is spending over a billion dollars to replace the 70,000 gas powered taxis that run daily in Beijing. These taxis are responsible for a large amount of the pollution that now regularly results in road blockages and airport closures. The government is buying electric taxis, at approximately $20,000 each. Critics note that this would only result in a dent in the problem, and wouldn’t affect the smog that drifts north to Beijing from steel factories.
Even without government purchases, the electric car market is huge in China. The market is growing each year; one estimate pegged last year’s market growth at 27%, and many expect this number to keep growing. Chinese automakers like Chery and Geely are cashing in on the trend and heavily investing in newer and more affordable electric models. These cars aren’t comparable to the luxurious and speedy Tesla models available in the US. Analysts say that these Chinese EVs “sell on price.”
These endeavors are finally becoming profitable, and government subsidies will be reduced to zero by 2020. So it appears the investment on behalf of the government is a success. Investors around the world, including Warren Buffett, are taking notice in the massive market growth and the potential for the Chinese automakers to expand to the international market. GAC Motors brought one of their electric vehicles to the Detroit Auto Show in January, and announced plans to enter the American market as soon as 2019. The American electric car market has been seeing weak growth and investment, especially as a result of the oil supply glut that has bottomed out energy prices. So it will be interesting to see if American consumers embrace Chinese vehicles, or electric ones at all for that matter. One survey (accuracy debatable) suggested that as high as 60% of Americans were not aware of the consumer availability of electric vehicles at all.