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AUTOS IN CHINA Electric is present, not just the future

By Daisuke Wakabayashi and Claire Fu

© The New York Times Co.

Zhang Youping, a Chinese retiree, purchased an all-electric, small SUV from BYD — China’s largest electric vehicle maker — at an auto show for around $20,000 in August, Her family has bought three gas-powered cars in the last decade, but she recently grew concerned about gas prices and decided to go electric “to save money.” A few months earlier, her son had also bought an EV. It was a $10,000 hatchback from Leapmotor, another Chinese manufacturer.

This year, one-quarter of all new cars purchased in China will be an all-electric vehicle or a plug-in hybrid. There are, by some estimates, more than 300 Chinese companies making EVs, ranging from discount offerings below $5,000 to high-end models that rival Tesla and German automakers. There are roughly 4 million charging units in the country, double the number from a year ago, with more coming.

While other EV markets are still heavily dependent on subsidies and financial incentives, China has entered a new phase: Consumers are weighing the merits of electric vehicles against gas-powered cars based on features and price without much consideration of state support. By comparison, the United States is far behind. This year, the country passed a key threshold of EVs accounting for 5% of new car sales. China passed that level in 2018.

China’s top leader, Xi Jinping, declared in 2014 that development of electric vehicles was the only way that his country could transform “from a big automobile country to an automobile power.” Underscoring its ambitions, China set an aggressive goal: 20% of new car sales would be electric vehicles by 2025. China will most likely fly by that target this year, three years ahead of schedule. Already the biggest EV market, China also has one of the fastest growing, with sales expected to double this year to about 6 million vehicles — more than the rest of the world combined.

Of the world’s top-10 bestselling EV brands, half are Chinese, led by BYD, which lags only Tesla in global market share and is starting to ship its electric cars abroad. And it’s not just the car sales that are thriving in China. Chinese battery manufacturers CATL and BYD are the biggest players in the industry, while Beijing holds a tight grip on access to critical raw materials.

The strong demand for electric cars is a bright spot in an otherwise sluggish Chinese economy, which is coping with a property market in crisis and crippling COVID-19 policies. As part of its economic stimulus plan, China said it would continue to plow money into electric cars. Beijing said in August that it was extending a tax waiver for new energy vehicles until 2023.

Gou Chaobo, a 27-yearold employee at a construction firm who recently decided to trade in his gaspowered sedan for an EV, said financial incentives did not weigh on his decision to go electric. In Chengdu, the megacity in southwestern China where Gou lives and works, traditional cars are restricted from being on the road certain days of the week to help reduce congestion and pollution. Electric vehicles, however, are free to come and go. For electric cars, parking is free for the first two hours at public parking lots.

Gou said the cost of operating an electric vehicle, by his calculation, is less than one-tenth that of a gaspowered car. Once he settles on a specific automobile, he will also benefit from a government subsidy that can knock nearly $2,000 off the sticker price, depending on the EV. Also, the government will waive a 10% car purchase tax on “new energy” vehicles.

Gou, who was checking out a midsize sedan from the Chinese brand XPeng at the Chengdu auto show, said he decided to go electric “because new energy is where the future is headed.” In other markets, electric vehicles from traditional automakers are often considered luxury vehicles, whereas Chinese brands are also competing with inexpensive models like the Wuling Hongguang Mini — a $4,500 four-seat hatchback that was China’s bestselling EV in 2021. It is made by a joint venture of General Motors and the Chinese automakers SAIC and Wuling.

The domestic competition is cutthroat, with new entrants emerging constantly, leaving most of the Chinese companies swimming in losses and many almost certain to fail from the challenges of manufacturing electric vehicles at the scale needed to drive down costs. But moving from selling cars at home to selling them abroad comes with complications, such as disputes over warranties. Yet as sales of gas-powered cars slump, Chinese automakers increasingly have little choice but to go all in on electric.

 

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