China's NEV industry speeds ahead in global electrification race
China's new energy vehicle sector has turbocharged growth in recent years, getting a head start in the global race to electrify cars and fostering competitive edges in its domestic auto brands.
In its latest move to boost NEV development, China said it aims to bring this year's NEV sales to 9 million units, an increase of 30 percent year-on-year, according a work plan unveiled last week.
In the first seven months of this year, China saw its NEV sales surge 41.7 percent from a year ago to 4.53 million units, official data shows. Globally, the country has ranked first in terms of production and sales for eight straight years since 2015.
Zhu Yifang, a researcher with the China Automotive Technology and Research Center Co Ltd, said that policy support has been an "accelerator" for the development of China's NEV industry over the years.
China rolled out its first NEV development plan in 2008. The country's policymakers, at both central and local levels, have since provided consistent and solid support for the development of the sector.
East China's Anhui province is a typical example. It was among the first provinces to develop NEVs in China, and has long leveraged policy stimulus to spur the growth of the industry. Anhui is now home to carmakers such as Chery and Nio.
On the consumption front, preferential policies have encouraged people to choose new energy cars over fossil-fueled ones, facilitating the expansion of the NEV market and powering firms along the industrial chain to step up innovation.
The fast-growing market has prompted battery producers to dig deeper into materials and structures, pushing China's power battery sector to the forefront globally, said Wu Kai, chief scientist with Chinese battery producer Contemporary Amperex Technology Co Ltd.
With policy support and market-driven innovation, China has put in place a relatively complete NEV industrial chain, covering batteries, motors, electronic controls, and vehicle manufacturing and sales.
In the Yangtze River Delta, where industrial clusters are well-developed, a new energy car manufacturer can basically find all the components it needs within a four-hour drive.
Shanghai supplies chips and software, while the cities of Changzhou and Ningbo, both of which are about 200 kilometers away from Shanghai, provide power batteries and die-casting machines, respectively.
In the past, competition in the sector was mainly about special technologies, but nowadays what matters more is the industrial chain, said Xu Jun, vice-president of Chinese car manufacturer Leapmotor.
Official data shows that China's NEV exports totaled 636,000 units in the first seven months of this year, an increase of more than 1.5 fold from the previous year, a sign of the increasing global recognition of made-in-China NEVs.
As China's growing NEV manufacturing has grown stronger, the competition landscape of the global auto industry has also been reshaped, prompting overseas auto behemoths to expand their market presence and roll out more electric fleets.
Tesla was quick in establishing itself within China's NEV market. After building a Gigafactory in Shanghai -- its first outside the United States -- the automaker announced in April that it would build a new mega factory in the metropolis.
Carmakers from other auto manufacturing powerhouses have also jumped on the bandwagon. Japan's Toyota has teamed up with Chinese automaker Guangzhou Automobile Group Co Ltd to develop new energy models, and German car manufacturer Volkswagen Group has set up its global new energy car R&D center in Anhui province.
Doubling down on NEVs, Volkswagen reached an agreement in July to buy a 4.99-percent stake in the Chinese electric vehicle startup Xpeng and co-develop two NEV models for the Chinese market.
Back in the era of petrol vehicles, cooperation between multinationals and China's local automakers was usually made because China traded its vast market for technologies. In the Volkswagen-Xpeng deal, however, the German carmaker's primary purpose is to access Xpeng's technologies, according to industry insiders.
This turnaround in the form of cooperation is evidence that China has become a stronger force in the transformation of the global auto industry, said Cui Dongshu, secretary general of the China Passenger Car Association.
According to Zhu Yifang, if China's new energy carmakers want to benefit from the current momentum, they should consolidate their advantages and catch up with their overseas peers in such areas as brand value, technology R&D and global layout.
Fu Bingfeng, executive vice-president of the China Association of Automobile Manufacturers, called for sustained efforts to improve the development of chips, basic software, key materials and other weak links in the industrial chain.
Amid the global wave of electrification and intelligent transformation, China's carmakers must step up technological innovation and make car manufacturing more digitalized and intelligent, Zhu said.