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The Rise of Chinese Leadership in the
Plug-in Electric Vehicle Industry


John Paul Helveston

The George Washington University

September 30, 2022

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Half of global PEV sales are in China

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Institutions

Market Conditions

Policies

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Institutions

Market Conditions

Policies


1) The Joint Venture System

2) Local Protectionism

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The Chinese Joint Venture System

1980s: 以市场换技术 = “Exchange market for technology”

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The Chinese Joint Venture System

1980s: 以市场换技术 = “Exchange market for technology”

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Past research suggests system has largely failed to transfer technology

(Brandt & Thun, 2010; Feng, 2010; Howell, 2016; Huang, 2003; Lazonick & Li, 2012; Nam, 2011)

“这就像吸食鸦片一样，一旦你沾染上了就永远也无法戒掉。”

何光远, 中国前机械工业部部长


“It's like opium. Once you've had it you will be addicted forever.”

Guangyuan He, Former Minister of Machinery and Industry (Reuters, 2012)

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JV system creates disincentives for
industry incumbents to innovate


Multinational OEMs lack incentives to bring cutting-edge technologies

Chinese JV partners lack incentives to independently innovate

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While MNEs dominate global vehicle markets,
Chinese firms sell most PEVs in China

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While MNEs dominate global vehicle markets,
Chinese firms sell most PEVs in China

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April 2018: JV requirement dropped for PEVs

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April 2018: JV requirement dropped for PEVs

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Local protectionism incubated early experimentation

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Institutions

Market Conditions

Policies

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Institutions

Market Conditions

Policies


1) Lower bar for selling PEVs

2) Infrastructure

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Chinese buyers are more willing to adopt BEVs






Helveston et al. (2015) "Will subsidies drive electric vehicle adoption? Measuring consumer preferences in the U.S. and China" Transportation Research Part A: Policy and Practice. 73, 96–112. DOI: 10.1016/j.tra.2015.01.002

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Chinese buyers are willing to accept relatively lower BEV driving ranges

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Infrastructure


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Infrastructure


World's largest charging network

  • End of 2020, China had 800,000 chargers installed.
  • 112,000 chargers installed in December 2020 alone.
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Infrastructure


World's largest charging network

  • End of 2020, China had 800,000 chargers installed.
  • 112,000 chargers installed in December 2020 alone.

World's largest HSR network

  • China's high-speed rail network recently surpassed the length of the equator at just over 40,000 km long
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Institutions

Market Conditions

Policies

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Institutions

Market Conditions

Policies



Bigger Sticks & Carrots

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Consumers

  • Purchase Subsidies:
    • RMB 50,000 (USD $8,200) for PHEVs
    • RMB 60,000 (USD $9,800) for BEVs
  • PEV exemptions from restrictions
    • Shanghai license plates auction for ~$15,000 (free for PEVs)
    • Unlimited driving during "Rush Hour" (7am – 8pm)
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Consumers

  • Purchase Subsidies:
    • RMB 50,000 (USD $8,200) for PHEVs
    • RMB 60,000 (USD $9,800) for BEVs
  • PEV exemptions from restrictions
    • Shanghai license plates auction for ~$15,000 (free for PEVs)
    • Unlimited driving during "Rush Hour" (7am – 8pm)

OEMs

  • Dual Credit System: require annual credits for meeting fuel economy standards & selling PEVs.
  • Tesla earned $1.58 billion from credit sales in 2020
    ($721 million profit would have been -$859 million loss).
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Policies that make ICEVs more expensive
than PEVs increase PEV adoption

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The Future of China's PEV Industry


1) What if the JVs break up?

2) Will local protectionism hinder growth?

3) An Emerging PEV Category: The Mini EV

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What if the JVs break up?

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What if the JVs break up?

They probably won't

  • Sunk costs
  • Knowledge / IP sharing not a real threat
  • Chinese partners can help meet dual credit requirements
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What if the JVs break up?

They probably won't

  • Sunk costs
  • Knowledge / IP sharing not a real threat
  • Chinese partners can help meet dual credit requirements

Even if they did,
not much would change

  • Leading Chinese firms don't have JVs (e.g. BYD, Geely, XPeng, NIO)
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Will local protectionism hinder growth?


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Will local protectionism hinder growth?


  • Central government cracking down on protectionism strategies
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Will local protectionism hinder growth?


  • Central government cracking down on protectionism strategies

  • China's PEV market already more competitive than many others.

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  • e-bike comparison: regional clusters supported by local governments were important in the early phases, but establishment of national standards was a critical step for greater industry maturation.
  • central government cracking down on most blunt protectionism strategies
  • With the entry of Tesla and other successful PEV startups, domestic PEV market is arguably already more competitive than other markets.
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An Emerging PEV Category: The Mini EV

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An Emerging PEV Category: The Mini EV

Typical Low-speed EV (LSEV)

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An Emerging PEV Category: The Mini EV

Typical Low-speed EV (LSEV)

The Wuling Hongguang Mini EV

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An Emerging PEV Category: The Mini EV


Feature Low-speed EV Mini EV BEV
Battery Chemistry Lead-acid Lithium-ion Lithium-ion
Driving Range (km) < 120 120 - 200 > 200
Top Speed (kph) < 60 60 - 80 80 - 120
Price (1,000 RMB, after subsidies) < 30 40 - 80 > 80
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Slides available at https://slides.jhelvy.com/

© 2022 John Paul Helveston

@johnhelveston
@jhelvy
@jhelvy
jhelvy.com
jph@gwu.edu

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Extra slides

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Local protectionism incubated early experimentation

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Local protectionism incubated early experimentation

Beijing

Only BEVs exempt from
license plate restrictions

Shanghai

BEVs & PHEVs exempt from
license plate restrictions

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Chinese automakers offer a greater variety of PEVs
at more affordable prices and driving ranges

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China's PEV Ambition


- Energy Security

- Pollution Reduction

- Technology Leadership

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China's PEV Ambition


- Energy Security

- Pollution Reduction

- Technology Leadership

Data source: U.S. EIA: https://www.eia.gov/petroleum/data.phpii

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China's PEV Ambition


- Energy Security

- Pollution Reduction

- Technology Leadership

Data source: https://www.globalcarbonatlas.org

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China's PEV Ambition


- Energy Security

- Pollution Reduction

- Technology Leadership

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Half of global PEV sales are in China

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