Automakers and governments are afraid of Chinese EVs, and they have 230 billion reasons why
- China has reportedly spent over $230 billion supporting electric vehicle firms.
- Spending has jumped significantly in the past few years and reportedly hit $45.2 billion in 2023.
- The government supports automakers in a variety of ways including funding R&D programs.
A new analysis by the Center for Strategic and International Studies has revealed the Chinese government has spent a staggering $230.8 billion to help support electric vehicle firms between 2009 and 2023. That’s a massive number and it dwarfs the $1 billion that the US government has provided in upfront clean vehicle tax credits this year.
Unsurprisingly, most of the spending is relatively recent. The think tank estimates that only $6.74 billion was spent between 2009 and 2017. However, that number “roughly tripled during 2018-2020, and then has risen again sharply since 2021.”
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While the numbers are estimates, the Center for Strategic and International Studies noted the Chinese government supports EVs in a variety of ways. This includes rebates and a sales tax exemption as well as funding for infrastructure. On top of that, the government buys EVs for itself and supports automaker research and development programs.
The level of support varies, but the government has significantly increased spending on research and development programs in the past few years. Between 2009 and 2017, only $2 billion was spent. That jumped to $3.6 billion in 2018 and climbed to $4.3 billion last year.
The Center for Strategic and International Studies said their estimates are “highly conservative” and don’t even factor in all levels of government support. This includes local incentives, land gifts, discounts on electricity, and supplier subsidies.
Speaking of the latter, battery giant CATL reportedly got a whopping $809.2 million in subsidies last year. That’s more than ten times what they got in 2018 and almost twice as much as they received in 2022.
The organization says the impacts are substantial as the playing field has been “fundamentally altered.” This will make it “much harder for others to compete in China or anywhere else where Chinese EVs are sold.” While China is far from the only country to support automakers and electric vehicles, the amount of government support is truly massive.
This has created problems of its own as the country is said to be home to more than 200 EV firms, with few said to be profitable. There’s also an oversupply of EVs, which helps to explain the price war at home as well as a growing focus on international markets.
While the Center for Strategic and International Studies believes a number of Chinese automakers will eventually collapse, it says some will “assuredly be mainstays in the global industry.”
H/T to CNBC
