The Rise of China’s Automobile Industry
Over the past five years, China’s automobile industry has entered the market with remarkable momentum. Backed by comprehensive planning and incentives from the central government, the key players in the automotive market have started to shift. According to a report [1] released by the Chinese Ministry of Finance on June 8, 2024, a total of 6.44 billion yuan (more than $900 million) was allocated under the “Bring Your Old Car, Get a New One” subsidy program. In the first half of 2022 alone, subsidies for electric vehicles exceeded[2] 15 billion yuan ($2.083 billion). BYD led the pack, receiving over $1 billion among the recipients of these subsidies.
However, can the success of Chinese automobiles be attributed solely to subsidies? Certainly not. China’s automotive industry development has been meticulously planned with a long-term perspective. The country has three key objectives: reducing dependency on oil in the automotive sector, achieving net-zero carbon emissions by 2060, and becoming a global leader in the automotive industry.
Energy Independence and Tackling the Climate Crisis
China’s commitment to its “Green Transformation” initiatives is no small feat. When I arrived in Beijing in 2017, I rarely witnessed clear blue skies during my first year. Fast forward eight years, and the visible transformation continues. Although air pollution in Beijing remains twice as severe as Istanbul’s on some days, China’s goal to peak carbon emissions by 2030 and achieve net-zero emissions by 2060[3] seems attainable, given its significant investments in renewable energy.
China is currently the world’s largest carbon emitter, accounting for 31.8% of global emissions, followed by the United States at 14.4%. However, these figures alone are meaningless without considering China’s role as the “world’s factory.” On a per capita basis, China’s carbon emissions are more revealing. Electric vehicles align with China’s environmental policies and efforts to combat air pollution.
Figure 1: Carbon Emissions by Country [4]
Oil Dependency and Renewable Energy Investments
China is also known for its dependency on oil. In 2023, reports indicated[5] that China’s total oil consumption reached 756 million tons, with approximately 563 million tons imported—a dependency rate of 73%. China has been investing heavily in renewable energy to reduce its reliance on foreign oil, projecting that over 60% of primary energy production will come from solar and wind sources by 2050[6]. By focusing on energy independence and combating the climate crisis, China has tied its electric vehicle incentives to these two major challenges while also pursuing a market leadership goal.
Figure 2: China’s Primary Energy Production Share by Year [5]
The Future of Next-Generation Automobiles: Electric and Hybrid Vehicles
Before emerging as a leader in the automotive industry, China posed a critical question: “Will the automotive sector remain dependent on internal combustion engines over the next 50 years?” To explore the answer, let us examine Figure 3. Many of China’s investments have been directed toward BEVs or battery electric vehicles. While hybrid electric vehicles hold substantial potential for the future, this article will focus on explaining advancements through the lens of fully electric vehicles.
Figure 3: Passenger Cars by Fuel Type (ICE: Internal Combustion Engines, HEV: Hybrid Electric Vehicles, PHEV: Plug-in Hybrid Electric Vehicles, BEV: Battery Electric Vehicles) [7]
As seen in Figure 3, the share of electric vehicles in China nearly doubled from 2021 to 2023, rising from 12% to 23%. This trend is mirrored in Europe and the Americas, where the market share of electric vehicles continues to grow steadily. Five years ago, BYD was hardly a known brand; yet, in 2024, it secured its position as the 8th best-selling vehicle brand in the global automotive market (Figure 4). Interestingly, BYD entered the industry not by producing passenger cars but as a battery manufacturer. It is rumored that BYD will introduce lithium batteries with a range of 1,000 kilometers by 2025[8].
The concept of 1,000-kilometer-range electric vehicles is not mere speculation. During one of my courses in 2024, titled “The Future of Passenger Cars,” this topic was extensively discussed and elaborated upon. Thanks to advancements in high-density lithium battery technology, the primary limitation of electric vehicles—short driving range—has been effectively addressed.
Figure 4: 2024 Automobile Sales Volumes (Toyota ranks 1st with 4.278 million sales, while BYD ranks 8th with 1.491 million sales.)
China’s greatest advantage lies in domestically manufactured electric vehicle batteries. Focusing on NCM-type lithium batteries with high energy density and even high safety problems, China has published thousands of articles on lithium battery technology, making it the leading country in academic output in this field. Companies like BYD and CATL (Contemporary Amperex Technology Co., Limited) have filed thousands of battery-related patents.
Attributing China’s success in electric vehicles solely to government incentives or cheap labor—which, notably, is no longer inexpensive in China—would be a significant oversight. Through comprehensive state planning, China has developed its manufacturing capabilities, trained its workforce and engineers, and provided substantial incentives for university-led research. Chinese universities and professors lead global research on the thermal runaway, one of the most critical challenges for lithium batteries [9].
Can the West Halt China’s Automotive Industry?
In Europe, power battery manufacturer Northvolt recently announced the layoff of 1,600 employees and admitted to a lack of funds to pay salaries【10】. The company has also decided to delay its investments in Germany and Canada. Northvolt’s CEO, Peter Carlsson, stated, “Given the challenging headwinds in the automotive market and the broader sector, the company must ensure it takes appropriate measures in response.” Furthermore, a report in the region’s leading economic newspaper, Daily Industry, published in mid-September, revealed that Northvolt is facing a dire cash flow crisis, requiring an urgent 7.5 billion SEK (equivalent to $720 million) to meet its September payroll. However, Sweden’s Prime Minister has made it clear that there are no plans to bail out the company[10].
This raises a fundamental question: “Can the West halt China’s automotive industry?” Alternatively, it could be reframed as: “Can the West halt the rise of Western China?” The reality is that China has already decided on its electric vehicle industry and has implemented it decisively. Backed by a skilled workforce, engineers, and scientists, alongside significant state support, China has achieved two critical milestones in electric vehicles: affordable and high-quality production.
While achieving these feats, Chinese companies have built a sophisticated technological infrastructure in battery technology, filing thousands of patents in the process. It is also worth noting that the automotive industry does not solely rely on advancements in battery technology. Innovations in artificial intelligence and autonomous driving have become integral to modern vehicles, and China has also emerged as a leader in these domains. In light of these developments, it seems unlikely that anyone can halt the progress of China’s automotive industry.
References
[1] https://www.gov.cn/lianbo/bumen/202406/content_6956361.htm
[2] https://news.yiche.com/hao/wenzhang/93508691/
[3] https://www.gov.cn/zhengce/202408/content_6967673.htm
[4] Sigma Earth
[5] https://www.163.com/dy/article/JCH3TO3505567K3S.html
[6] Matthias Thewes. FEV. 2022
[7] Akıllı Yeşil Araçlar ve Ulusal Ulaşım Laboratuvarı, Taşıtlar ve Ulaşım Okulu/Aeromotor Araştırma Enstitüsü, Prof. Shuai shikin Tsinghua Üniversitesi ders notları
[8] https://baijiahao.baidu.com/s?id=1812627270657605816&wfr=spider&for=pc
[10] mp.weixin.qq.com/s/6UMJL1IIT6QF6MufcsYj8w
This article is retrieved from Aydinlik Newspaper
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