Climate Conscious
Published in

Climate Conscious

China’s Policies Have Sparked a Global EV Revolution – Biden Should Take Note

BYD is one of two Chinese automakers in the top five for global sales

In the time since Tesla released the Roadster in 2008, the same model that is now orbiting Mars, China has built a world-leading electric vehicle (EV) industry from the ground up. The head-spinning pace and scale of this industrial transformation provides hope that a rapid electrification of the world’s road transport fleet is possible, but China’s recently agreed mid-term EV sales targets are lacking. This provides an opportunity for a newly elected Joe Biden to pick up the baton and lead from the front.

Despite the turmoil COVID-19 has wreaked upon the global economy this year, worldwide EV sales in 2020 are expected to edge above last year’s total; a reflection of the industry’s irrepressible momentum. Such impressive 2020 sales are in no small part due to a strong rebound in Chinese demand, which has shown robust year-on-year growth in recent months. Chinese EV sales have made up roughly half of global demand since 2016, but these world-leading sales figures are no accident. Rather, they are the culmination of a long-standing and comprehensive suite of policies across multiple levels of government.

China’s investment into constructing a comprehensive charging network — an important ingredient for encouraging demand — has been immense. By the end of 2020, almost 2 million public and private charging points are expected to be available, more than an order of magnitude above the number currently found in the US.

China began subsidising public electric vehicle purchases in 2009, expanding this to private passenger vehicles the following year. The initial focus on public EV purchases provided a reliable level of demand, crucial for ensuring the survival of nascent automakers. Sales of electric buses alone increased from 1,000 in 2011, to 132,000 in 2016, and by 2020, more than 400 EV manufacturers were registered in China.

Between 2009 and 2017, total expenditures by the Chinese and local governments on buyer subsidies is calculated at US$36.6 billion, with a further US$11.7 billion invested through other channels. In addition to direct subsidies, however, EVs have been exempted from consumption and vehicle sales taxes, while registration fees were reduced by 50% in 2015. These measures were also complemented with behavioural policies like preferential traffic treatment in many large cities.

After turbocharging demand with subsidies for a decade, China halved them in 2019 and in 2018 implemented a key supply-side measure to further bolster the industry. The New Energy Vehicle Mandate (NEVM) requires car companies to maintain a level of carbon credits gained by selling EVs that most foreign automakers aren’t currently able to meet, as they do not produce enough electric models. This forces them to purchase surplus credits from Chinese automakers, in effect subsidising the domestic industry.

China’s dogged pursuit of a domestic EV industry provides a number of potential lessons for others. As Joe Biden prepares to take office in the US, he may well be considering the success afforded Tesla by long-standing Californian policies, including the Zero Emission Vehicle Program that China’s NEVM is based on, and the Obama-era tax credit ended by President Trump last year. Tesla has recently become the largest producer of EVs in the world and is forcing other US automakers to invest in electric models, but this process could be expedited if federal policy were pushing in the same direction Tesla is pulling.

The arc of the Chinese EV industry certainly has the attention of Tesla and Volkswagen, the world’s top two EV producers, with both constructing large factories in China aimed at capturing the domestic market. Meanwhile, Volkswagen’s 2019 US$66 billion pivot toward EV production coming in the same year that China felt its domestic industry was mature enough to halve subsidies, is conspicuous to say the least. China’s commitment to accelerating the electrification of road transport is a clarion call to the world’s automakers, and Volkswagen’s EV pivot is the first serious demonstration that it is being heeded.

To ensure the 1.5°C long-term temperature goal of the Paris Agreement is achieved, this acceleration will also need to occur well beyond China’s borders. The Climate Action Tracker earlier this year demonstrated that achievement of the 1.5°C goal is contingent on the global share of EVs in total vehicle sales reaching between 75–95% by 2030. The corresponding 2030 range for China is 95–100%.

Despite the plethora of policies China has implemented so far, this year they have taken their foot off the accelerator. A proposal from 2019 targeting a 25% EV share in total sales by 2025 was rejected recently in favour of a less ambitious 20% target, rising to only 50% in 2035.

While China’s EV revolution does not appear to be on track to prevent dangerous levels of global warming, it’s clear they’re setting the pace for the rest of the world. A newly elected Joe Biden now has the opportunity to claim this mantle by leveraging Tesla’s meteoric rise and encouraging growth in the rest of the domestic EV industry. A slew of strong EV policies could help to put the US transport sector on a 1.5°C trajectory, and to blaze a trail for others to follow.

Bringing people together from around the world to discuss solutions to the climate crisis and to build a collective vision for a better tomorrow.

Recommended from Medium

The kingdom of plastics: A dark side of sustainable development

Climate Change Explained: #3 Electrification of Everything

CGE’s Present — Take Two…

A day in a life of Waste Collectors at Lusaka and Ndola dumpsites

What Would Happen If Our Schools Went Vegan?

Fisheries and Fishery Improvement Projects, explained

Parking Demand Management: Triple Helix Solution for Transportation Problems #1

Climate action, global warming conference COP26– success or sham?

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Ryan Wilson

Ryan Wilson

Economist, Climate and Energy Policy Analyst. Pondering the path to a socio-ecological transformation.

More from Medium

The only people who want to save hypersegmented advertising are those who make their living from it

IMAGE: Three bodies with screens as heads and with an ear, an eye and a mouth on each

How Biased Is the New IPCC Report AR6?

The Planet-fixing Population Paradox Theory You Need to Know

The Best Climate Agreement Was the Treaty to Protect the Ozone Layer