In 2021, Biden signed a new order to increase the share of electric vehicles such as pure electric vehicles in new car sales in United States to 50% by 2030. By 2024, China has successfully achieved this milestone. So why is China's new energy electric vehicles developing so rapidly? In the video, Vox, a YouTuber, explains how China was able to quickly roll out electric vehicles and develop EV batteries that rival any other country to date. Vox is a news commentary website owned by the media with a liberal stance. With 12.3 million subscribers on YouTube, the video content is mainly about seeing the essence through the phenomenon and understanding the real drivers behind hot news events. In this article, we will focus on the content of this video.
In 2024, Ford will slash production plans for the electric F-150 Lightning pickup truck by about half. The electric F-150 Lightning is the company's more popular pickup truck. It is reported that part of the reason for the sharp decline in Lightning sales is that the car costs more than the gasoline car. However, this is not only a problem for Ford, according to surveys, the average price of a new energy electric vehicle United States about $55,000. The high cost makes it difficult for most United States consumers to accept electric vehicles. 40% of the production cost of an electric car is on the battery, so in 2023 there are also reports that Ford Motor plans to build a battery plant in Virginia or Michigan in order to reduce production costs. But there's a key issue – if Ford builds a battery plant, then the battery technology it will use is a company from China. This company is CATL, the world's largest battery manufacturer. Affected by geopolitics and the trade war between China and the United States, the governor of Virginia vetoed Ford's proposal to build a battery plant.
At the same time, China's EV market is growing rapidly, with China accounting for more than half of global EV sales and bringing affordable EVs to the market in just a few years. EV batteries are a key factor in this growth, and battery technology is China's know-how to truly dominate the global market. So how do Chinese companies create world-leading EV batteries? Without it, can United States make an electric car that is equally economical?
Figure: Why China is dominating the global electric vehicle market
One of the main reasons why Chinese companies are able to develop EV battery technology is because of strong government support. About 20 years ago, China was expected to become the world's largest oil importer, therefore. Electrifying vehicles can help make energy more independent. At that time, China was condemned by the West for its air pollution problems, so the Chinese government introduced a series of policies for new energy vehicles, and companies that produced cars could get subsidies, cheap factory rents and low-interest loans. According to statistics, from 2009 to 2022, the Chinese government issued $29 billion in subsidies to the electric vehicle industry in the form of subsidies, research funding, and tax breaks. Since 2009, the government has also signed contracts with local companies to provide electrification services for buses and taxis, thus driving the market. In order to boost consumption, the Chinese government has also introduced a series of preferential policies for consumers, such as charging discounts and parking discounts.
But in the early days, the battery quality of electric vehicles was not perfect, so the government began to introduce stricter battery standards and required manufacturers to meet the standards to receive discounts. When the sales of electric vehicles soared, the government introduced policies to protect the domestic battery industry, such as when foreign cars such as Tesla wanted to sell their electric vehicles in China, the government required them to use domestically produced batteries in order to receive consumer subsidies. By 2022, the Chinese government began phasing out consumer subsidies, but by this time a huge consumer market had already formed.
The second reason for the global dominance of Chinese battery companies is the well-established battery module supply chain. In the past few years, Chinese companies have acquired stakes in mines around the world where minerals needed for lithium-ion batteries exist in order to control production prices. With battery dominance, China is also leading the way in battery innovation, and over the past two years, China has found battery production technologies that can avoid the most expensive minerals nickel and cobalt. In 2023, CATL announced the launch of a lithium iron phosphate (LFP) battery, which can provide a car with 370 miles of range on a ten-minute charge. In addition, LFP batteries are also known as "blade batteries". In fact, using LFP batteries allows you to cram more batteries in the same space, which allows a car of the same size to travel farther. Today, lithium iron phosphate batteries account for an increasing share of all EV batteries, and almost all products are made in China. At present, LFP battery technology is very developed, and there is no other feasible alternative.
The United States government is also increasing its investment in the battery industry, with Bloomberg estimating that the United States will invest $82 billion by 2030 to meet the demand for electric vehicles in the United States market. The need for electric vehicles is becoming more and more urgent to wean itself off fossil fuels. Automakers in United States are struggling.
Original video：https://www.youtube.com/watch?v=rkxMdmipYqM&t=304s
