Electric vehicles, or EVs, from China are the focus of a global debate. On the one hand, they are affordable, climate-friendly, and advancing technology at a breakneck pace. On the other, the U.S. has already slapped a 100 percent tariff on them and the European Union is moving towards tariffs up to 36.3 percent on the grounds that they harm local carmakers. During a climate crisis, how can necessary technology like EVs be so wrapped up in controversy?

Innovation, subsidies and batteries

Fossil fuel-burning cars produce about 10 percent of the world's CO2 emissions. Replacing these with EVs powered via clean energy is paramount and very feasible. In the United States, for example, the average 2023 EV model's range per charge was 270 miles (434km) – over triple where it was just a decade ago. And China's average is slightly ahead, at 285 miles, with the longest-range cars exceeding 600 miles – hundreds of miles further than the longest-range Tesla.

So in the EV sector, rapid improvement has become the norm. Since 2010, China has accounted for about half of the world's total EV sales and today 60 percent of all new EVs sold globally are from China.

China's leading role in EVs originates in how behind it was 20 years ago in innovating combustion engine and hybrid cars. China realized that chasing German or Japanese automakers in the traditional car-making space was a dead end, so they turned onto a new road: innovating completely battery-powered cars. Plus, more EVs on the streets meant less air pollution. 

So as early as 2001, EVs were included as a priority technology in China's Five Year Plan - the state's central economic guiding document. And, by 2009, the state began to support both domestic and foreign EV companies with subsidies and tax breaks - totaling up to $21 billion by the time such policies stopped in 2022.

But we have to mention batteries as well. They make up about 40 percent of an EV's cost and China also went from being behind to inventing an entirely new standard at a 30 percent cost advantage over the U.S. and Europe. To do this, early on China tied its subsidies to a minimum quality of battery, incentivizing companies to meet it or go beyond. It also invested in becoming the world's leading refiner of essential battery minerals like lithium, cobalt and graphite. 

And finally, years of Chinese R&D into battery tech transformed the once dismissed LFP-type battery - combining Lithium with Iron Phosphate -into a cheap and efficient option. CATL, one of the Chinese companies that led the development of LFPs, now claims 37 percent of the EV battery market and announced an LFP battery that can charge 370 miles in just 10 minutes this year.

So when you consider China's early policy decision to pursue EVs rather than fossil-fuel vehicles; the years of financial support given to developing the industry; and the battery and supply chain factor, it explains why China's EVs are so competitive and popular.

Pushback?

So if we are trying to cut greenhouse gas emissions and electrify, all of this is good news, right? Well, not for many politicians who see China's EVs as a threat to political power and their local economies. In a neck-and-neck election year, U.S. President Joe Biden's new 100 percent tariff on Chinese EVs is no coincidence - many of the swing states where the election will be decided, like Michigan, Wisconsin and Pennsylvania, are centers of the U.S. auto industry.

Politicians are concerned that Chinese EVs will damage competing businesses and take away jobs. And the swift sales increase of Chinese EVs in Europe, from less than 1 percent of the market in 2019 to over 9 percent last year, helps drive this fear. There are also worries about overreliance on China for key products like EVs and the components like batteries and rare earth minerals that go into making them.

But for regular Europeans, Chinese EVs are on average 24 percent cheaper than European brands. In addition, CATL's new $7.3 billion battery production plant in Hungary will create 9,000 jobs. Other joint ventures and manufacturing sites are bringing more jobs to Europe, such as a new site between China's Chery Auto and Spain's Ebro-EV Motors in Barcelona.

With regard to the new tariffs, some are concerned that they may do more harm than good. Germany, in particular, is against tariffs on Chinese EVs, arguing that the tariffs will also impact European companies that manufacture cars in China, risk escalation of trade conflict with - and countermeasures - from China. Perhaps most seriously they could also slow down Europe's decarbonization and technological competitiveness.

 

Is the future of EVs Chinese?

So where is all this going? In China, over 50 percent of consumers are considering buying an EV as their next car - the highest proportion for any nation in the world. Low prices have attracted domestic and foreign consumers, but the cars also rank high in safety ratings and are pushing the integration of software to create intelligent EVs with "Vehicle-to-Everything" capability, meaning a vehicle's ability to wirelessly communicate with other cars and traffic infrastructure. And we haven't even mentioned China's development of new sodium-ion batteries which could be 20-30 percent cheaper than the lithium ones we use today.

So for the consumer, the appeal of a Chinese EV is likely not to lessen - that is, unless tariffs inflate prices to make them prohibitively expensive. But for the climate, the need for fleet electrification is only getting more urgent. 

So, world leaders are going to have to decide between short-term protectionist policies that may or may not work and long-term initiatives that deliver for the climate and the consumer.

Credit:

Presenter: Kyle Obermann

Producer: Du Yubin

Designer: Angela Martin, Ilze Juhnevica

Creative Director: Alexander Shields

Chief Editors: Guo Chun, Qian Fang, Duncan Hooper

Executive Producer: Mei Yan

Elean Yin contributed to the research.

Next Episode: Is China's tree planting a greenwashing project?