China's new energy vehicle industry: an important force driving the green transformation of global automobiles and transportation

Recently, some Western politicians and media have continued to hype up the so-called "theory of China's overcapacity", claiming that the Chinese government "vigorously subsidizes its priority industries", resulting in overcapacity in new energy fields such as electric vehicles, triggering the dumping of Chinese products overseas at low prices, and harming the interests of enterprises and workers in other countries. An in-depth analysis of this argument reveals the essence of trade protectionism and concerns about the rapid development of China's industry. The success of China's new energy vehicle industry is the common embodiment of the national strategic guidance, the continuous struggle of enterprises, the cultivation of the consumer market and the continuous improvement of the infrastructure and other related guarantee systems, and is the inevitable result of open competition. In the future, China's new energy vehicle industry will be more open and cooperative, more mutually beneficial and win-win attitude, so that the achievements of green development will spread all over the world.

There is no "overcapacity" problem in the new energy vehicle industry

First of all, from the perspective of the development law of emerging industries, before the total demand peaks, there is no problem of overcapacity, and more is the replacement of production capacity. Especially in the field of new energy vehicles, which is an emerging industry, the iteration speed of technology and products is very fast, and a large number of enterprises and investments will pour in at each iteration, thus forming new production capacity, while some of the old production capacity that is not suitable for competition will be cleared. The formation of new production capacity and the clearing of old production capacity are the normal state of the development of emerging industries.

Secondly, from the perspective of global supply and demand for new energy vehicles, insufficient production capacity is the main contradiction at present. New energy vehicles have become a common choice for countries around the world to promote the low-carbon development of automobiles and transportation, and the global sales of new energy vehicles will reach 14.65 million units in 2023, an increase of about 42 times compared with 2014. According to the International Energy Agency, in order to achieve the goal of carbon neutrality, the global sales of new energy vehicles need to reach 45 million in 2030. In the context of the great development of globalization, how to combine the global division of labor to give full play to the comparative advantages of various countries, improve the performance, quality and cost economy of new energy products through open cooperation, and continue to increase the supply of cost-effective products is the key to achieving global production capacity balance and promoting green development in the future.

A clear understanding of the essence of trade protectionism behind "overcapacity".

Some Western politicians have put forward the arguments that "China's overcapacity distorts global prices and production patterns" and "China's electric vehicles benefit from government subsidies, and product prices are more competitive in the market", which is actually an excuse for Western countries to turn to trade protection without respecting market and economic rules. In recent years, on the one hand, Europe and the United States have implemented the principles of "de-risking" and "localization", and directly adopted high subsidies, tax incentives and other means to promote the return of the industrial chain. For example, the U.S. Inflation Reduction Act provides about $370 billion in subsidies to support the production and investment of electric vehicles, critical minerals, clean energy and power generation facilities, with the electric vehicle tax credit directly excluding China. On the other hand, Europe and the United States wield the stick of trade protectionism and hindered global free trade by setting up trade, low-carbon, and compliance barriers. This is exactly the same as the trade friction between the United States and Japan in the textile fiber, automobile and other industries in the 20th century, when the United States suppressed trade on the grounds of "overproduction". This kind of behavior that attempts to disrupt the global economic and trade order and the stability of industrial and supply chains runs counter to the laws of the market economy and will have a serious impact on the global economy and the process of climate cooperation.

Objectively look at the development and advantages of China's new energy vehicle industry

The development of new energy vehicles in China is based on the strategic vision of responding to climate change and promoting global low-carbon development. It is based on this original intention and purpose that China has judged the situation in the subversive change of automobile energy conversion to traditional industries, and decisively made major decisions and arrangements for the development of new energy vehicles. Therefore, from the very beginning, China's industrial development has never had the intention of treating other countries as rivals and intending to destroy other countries' industries.

The development of new energy vehicles in China is the result of the joint promotion of domestic and international forces in the context of globalization and open cooperation. In the process of developing the industry from scratch and from small to large, China adheres to openness and cooperation, and constantly expands the level of openness. As the first wholly foreign-owned car company, Tesla's Shanghai factory started construction, completed construction in the same year, put into production in the same year, and went public in the same year, and its production will account for about 50% of Tesla's global production in 2023. Volkswagen, BMW, Bosch, Infineon and other companies from various countries have deeply participated in the development of the industry, which has become a model for the development of industrial globalization.

The advantages of China's new energy vehicle development are based on the drive of technological innovation, and are by no means the result of low-level repeated construction. The state has set up major scientific and technological projects for electric vehicles, established a "three vertical and three horizontal" R&D layout, industry enterprises have accelerated the pace of innovation, and continuous breakthroughs in power batteries, new charging, efficient drives and other technologies have driven the improvement of product performance and economic accessibility. For example, in the field of batteries, the energy density of mass-produced power battery cells has increased from 130 Wh/kg in 2012 to 300 Wh/kg at present, and technological progress has provided the core impetus for the development of the industry.

China's new energy vehicle industry will contribute more to the global green transformation of automobiles and transportation

The uneven global development of new energy vehicles is becoming increasingly apparent, such as China, Europe and the United States accounted for 94% of the total global share of new energy vehicles, of which China accounted for more than 60%, and the penetration rate of each country showed a higher and lower differentiation. Some first-mover countries have encountered barriers in terms of industry, capital, and technology in the process of advancing electrification. More emerging countries have begun to promote vehicle electrification based on the demand for green development, but they are facing problems such as weak promotion foundation, lack of experience, and insufficient industrial and technical capabilities.

Win-win cooperation is an important choice to solve the problem of imbalance and achieve global synergy, and it is also attracting the attention of more countries. For example, an important way to promote electrification in Thailand is to open up and cooperate, hoping to attract more foreign investors, and its goal is to introduce investment of 1 trillion baht in the automobile industry within 4 years; As a traditional automotive powerhouse, Germany hopes to further promote cooperation and standards harmonization in automotive data flow and technological innovation. Australia, New Zealand want to increase the import of more electric vehicles globally; Spain, Hungary and other countries are actively improving their business environment to attract more cooperation from multinational car companies.

China's active role in promoting the transformation of new energy vehicles and transportation around the world is becoming prominent. On the one hand, China's auto industry continues to improve the level of opening up to the outside world, is an important market and supply chain center of the global auto industry, Volkswagen, BMW, Tesla and other multinational giants are closely linked to China's new energy vehicle industry chain system, making full use of China's market, technology, supply chain advantages, is realizing the transformation to "in China, for the world". On the other hand, China's new energy vehicle companies have accelerated their integration into the world through export, investment, technology, and talent cooperation, supported the transformation of the global automotive industry through diversified cooperation methods, continuously strengthened global industrial collaboration capabilities, and contributed more to the green transformation of global automobiles and transportation.

(Author: Zhang Yongwei, Executive Vice President of the 21st Century Development Research Institute of Tsinghua University, Vice Chairman and Secretary-General of the China Electric Vehicle 100 Association)

Source: Guangming Daily