Chinese car brands are staking a leadership claim in the global race to dominate electric vehicles, unveiling and promoting more than 100 new models at the country’s annual auto show.
More than two-thirds of the hybrid and fully electric plug-in cars on display in Beijing are from Chinese brands, despite international car giants trying hard to court the huge local market with the unveiling of several new electric SUVs.
New energy vehicles (NEVs) aren’t just fashionable in China’s big cities — they are also being actively pushed by China’s government through subsidies for manufacturers and a planned cap-and-trade quota system that will force car companies to make at least 10 per cent of their output NEVs or face fines.
“China is already a powerhouse of advanced alternative propulsion systems and that will be the market of the future where winners and losers of the automotive industry will be decided,” said Ralf Speth, CEO of Jaguar Land Rover, which is promoting a fully electric SUV to be manufactured in China called the I-Pace.
Last year 24.7 million passenger cars were sold in China, of which 777,000 of them were electric or hybrid vehicles.
While the overall growth of the world’s biggest auto market has slowed substantially, electric vehicle sales are rising faster than in Western markets.
“The volumes are going to be so high here that it changes global automakers’ productions plans — so if they produce a significant number of electric vehicles in China, they’ll potentially have to do the same in other countries,” said analyst James Chao from IHS Markit.
Major industry overhaul
The shift to battery and fuel cell-powered engines comes as trade tensions between China and the US play out in a major industry overhaul.
For two decades American, European and Japanese automakers have been granted significant access to China’s market by agreeing to joint ventures with local companies.
The partnerships have been hugely profitable for companies like Volkswagen and GM, but they have come at a cost — having to split ownership and profits from their brands, having to set up assembly plants in China and requirements to transfer technological know-how to the Chinese side.
“The joint venture partner of the foreign brand is really a ‘frenemy’ — it’s a friend you do business with as a necessity of the rules, but they’re also a competitor, and lately they’ve been getting much better”, Mr Chao said.
As US President Donald Trump increasingly cited auto market access restrictions as talk of a trade war increased, China moved to announce it would lift the foreign ownership cap over the next five years.
In March Premier Li Keqiang also pledged to end forced transfers of technology.
The changes mean international car giants could for the first time take full ownership of their operations in China.
But already Volkswagen has said the changes would not affect its joint-venture partnerships, which other car giants have responded cautiously.