China has numerous reasons for hating the combustion engine, and a huge incentive to hasten its demise. They are dirty, accounting for what the government says is about 30 per cent of the country』s choking air pollution
; contribute massively to its oil imports, which Beijing sees as a major strategic vulnerability; and highlight a shortcoming that has been a chronic flaw in the domestic car industry — China is bad at manufacturing them.
Last month Beijing gave the global movement to eradicate the combustion engine a sizeable boost. Alongside a number of European countries that have proposed bans on traditional fuel vehicles to be brought in between 2025 and 2040, Beijing has said it is studying the timing of a similar move against petrol and diesel cars.
Welcomed by environmentalists, the move also plays into the vision of state planners who see the
electric vehicle market as an industry it can compete in, or even dominate globally.
The government reinforced its position in September when it announced a system of steadily increasing quotas that will reward carmakers for producing ever more battery-powered vehicles starting in 2019, while forcing them to buy EV 「credits」 from other producers for every conventional car they make.
As the world』s largest and most profitable auto market, China has huge leverage over the industry and is not afraid to use it. It boasts a central planning mechanism designed to subordinate all other considerations — like profitability and consumer tastes — to government fiat. It has poured billions of dollars into subsidies and state investment in the sector.
Those interventions mean China is already the world』s largest maker of electric vehicles. Last year it sold 507,000, including buses and commercial vehicles, according to the China Association of Automobile Manufacturers, around 45 per cent of the world』s total. Yet Beijing has set a target to manufacture 7m battery cars and hybrid vehicles by 2025.
「They can order charging stations set up all over China, dictate driving and licence plate restrictions in major cities,」 says one western car industry executive in Beijing adding that these are measures western governments would be hard pressed to emulate.
Picking winning industries has been a tried and tested strategy for rising Asian economies since the 1960s, and China』s efforts to jump ahead in electric vehicles resonate with the policy successes of Japan and South Korea. Electric vehicles are just one plank of Beijing』s ambitious policy known as 「Made In China 2025」, which seeks to transform the country from a low-cost manufacturer to a high-tech power dominant in 10 advanced industries by the middle of the next decade — including robotics, semiconductors, and electric vehicles.
If the environmental and economic motivations are clear, Beijing also sees a competitive edge to exploit: while it has long lagged behind in the technology of combustion engines, it boasts two of the top-five lithium battery makers in the world, CATL and BYD.
「If the engine and power train of the car is replaced with a simple battery, the global car majors could lose control of car [production],」 says Yale Zhang of Automotive Foresight, a Shanghai consultancy. 「It becomes a bunch of parts that can be sourced from anyone.」