Why China Is Leading The Electric Car Revolution, As India And Other Countries Lag Far Behind

There is a reason why China is currently leading the global race to mass adoption of electric vehicles. And with the recent legislation around EVs, it looks like the country is extremely adamant to stay in the lead.

While it already enjoys being the world¡¯s largest market of EVs, the country has now directed all the auto makers operating on its turf to meet the minimum requirements for producing new-energy vehicles or NEVs (plug-in hybrids, all electrics, and fuel-cell autos). A target they have to achieve starting January next year.

Reuters

The mandate translates more into an ultimatum, as the failure to meet the set standards by the early deadline would result in penalties to the companies, foreign and domestic alike, which in a worst case scenario might lead to the shut down of the assembly lines, as per a Bloomberg report.

In essence, the mandate requires the auto makers to involve clean energy components as a considerable portion of their production or imports to China. This will be regulated by a credit system which will also allow the transfer of credit among all the players, meaning those not meeting their quota might borrow credit from their rivals.

China is zooming ahead, car makers following behind

The ultimatum has left the auto companies scrambling for a major shift in their operations. After all, none of them would like to leave a share in the world¡¯s largest automobile market for EVs and others alike. As a result, companies have employed varying solutions to stay in the game.

Volkswagen, for instance, has promised at least 40 new NEV models in China within the next decade. BMW plans to introduce two pure electrics in the country by 2020, in addition to the two existing plug-in hybrids. Others, who have not, to date, reached the stage to meet the mandate, have found a more temporary solution. As the report mentions, ¡®Toyota, Fiat Chrysler Automobiles, Honda Motor, and Mitsubishi Motors all plan to sell the same electric SUV, developed by Guangzhou Automobile Group.¡¯

That¡¯s how disruptive the new EV legislation has proved to be for an industry that mostly relied on cut-throat competition across all segments. With such mandates, which are only poised to grow more stringent with time, China has managed to make the (near) zero-emission vehicles a steadfast priority for the entire industry, forgetting anything and everything about any competition or profits.

Reuters

This replicates on the consumer end as well, as heavy subsidies are granted to those opting for electric vehicles over their IC engine counterparts in China.

This is a stark contrast from most of the other countries, which still appoint a laid back attitude on the push of electric vehicles. Citing the example of India, while the government has put in perks for EV owners and manufacturers alike and is also pushing for green mass transport concepts, most of these are still in a planning phase. Meanwhile, many parts of the country suffer from hazardous levels of air pollution and the country as a whole riles under the pressure of fluctuating oil prices due to its high dependence on fossil fuels.

The death of internal combustion engine?

With such a legislation in place, China has pretty much put the final nail in the coffin for IC engine vehicles, at least within the country. This will also act as a significant transition for the automobile industry, which was to date looking at EVs as a thing of the near future. The mandate now clears it up for those wanting to operate in China ¡®NEVs are here and they are the only way to go forward¡¯, meanwhile propelling the country¡¯s dominance in the sector.

Another way how the revolution helps China, the country is the largest producer of Lithium-ion batteries in the world and correspondingly, the largest procurer of Cobalt and Lithium used in them. So once the shift towards EVs is completed, China is poised to enjoy a position as a world power, having a dominant hold on the next-generation 'fuel'.