KARACHI:
Chinese electric vehicles (EVs) are gaining huge popularity around the world due to their cheaper prices and fun features, flooding and surprising the US and European markets despite stiff competition from local industries in the West.
China has retreated to do much more work in research and development in order to have full dominance of technologies, manufacture new products, upgrade cutting-edge technologies and provide the world with cheap and attractive goods.
EVs are becoming cheaper and more abundant, and as people look to meet global climate goals, climate-friendly technologies like EVs are becoming the future of global industry. A deluge of cheap Chinese electric vehicles could cut into sales of US auto giants, including Ford and General Motors in a big way.
US President Joe Biden took action and issued directives to the US Commerce Department to investigate potential national security risks from imported Chinese vehicles and address concerns about reliance on foreign supply chains, particularly in critical industries such as the auto industry.
This research aims to assess any risks posed by Chinese vehicles, including potential threats related to technology, cyber security and intellectual property infringement.
US Commerce Secretary Gina Raimondo said growing sales of Chinese electric vehicles in the West posed a national security risk to the US and the European Union.
“A sophisticated EV, and then an autonomous vehicle, is packed with thousands of semiconductors and sensors. It collects a huge amount of information about the driver, the location of the vehicle and the environment of the vehicle,” Raimondo said at an event organized by the US think tank Atlantic Council, according to a report.
Earlier, he noted how Beijing had banned vehicles made by US EV giant Tesla from passing through some parts of the country, citing national security concerns.
About 70% of China’s electric cars and over 95% of EV motorcycles dominate the international market, while the US, Europe, Canada, Japan and other countries have lagged behind on cheaper technology.
Although the US and Europe have much better and expensive technologies, China’s sales volumes are so high that the West cannot compete on price.
China is fully capable of covering production costs due to large volumes, but car volumes in the US and Europe are falling fast and their industries could face the specter of shutdowns.
A decade ago, China was notorious for making a copy of everything, but it is for the first time that it is making good quality, cheaper products in competition with market leaders including the US, Germany, South Korea and others. “Therefore, the West is forced to take some initiatives while hindering the progress of China’s growing economy,” said auto sector analyst Muhammad Sabir Sheikh.
According to media reports, BYD sold 3 million electric vehicles in one year, more than any other company, and now has the production capacity to build 4 million cars. China’s state-owned shipping giant Cosco [China Ocean Shipping (Group) Company] has ordered 24 major vehicle transport companies.
“I think we should not look at the perspective that the US is narrow-minded towards other countries, but look at the cost of such policies to the consumers themselves. The average price of an EV in the US has risen significantly in recent years, making it out of reach for many. Political representatives are more likely to introduce policies that benefit their own constituents and lobby groups rather than foreign producers and consumers,” he said.
Chinese automakers, especially BYD, are now the world’s largest producers of electric vehicles. Although their access to the US market is limited, they may channel their production through other countries such as Mexico.
One advantage of globalization is that it provides innovative companies with different ways to access their target markets and grow. “We see a potential increase in foreign direct investment in third markets with better connections to the US,” Sheikh said.
“A key factor in the development of EVs is the evolution of battery technology. We also see cars becoming more autonomous over time. With net zero emissions targets, investment in EVs is likely to increase,” said auto maven and IBA assistant professor Aadil Nakhoda.
Furthermore, “as the technology for EVs improves, it is likely that consumers will be more attracted to it as an alternative, even in the developing world. The idea is to make it more accessible and cheaper.”
Concerns about economic competition, national security and regulatory disparities contribute to the perception that the US and Europe are resisting China’s progress in the electric vehicle industry. Protectionist measures, trade tensions and intellectual property issues may reflect a desire to safeguard domestic interests.
Critics argue that such policies prevent global cooperation and potential consumers benefit from cheaper and better EVs. However, perspectives can vary widely and decisions are often influenced by complex geopolitical and economic considerations.
If the US actively blocks Chinese companies due to perceived competition, China may face challenges in expanding its global market share.
“Determining the superiority of EV technology between China and the US/Europe is nuanced. China has made rapid progress in EV production and battery technology, while the US and Europe have made significant contributions to innovation,” said EV expert and Mehran University Engineering and Technology Professor Dr Qasim Arain.
“Each region has unique strengths, with China excelling in production scale and affordability, and the US/Europe focusing on high performance and cutting edge technology. Comparisons should take into account factors such as battery performance, charging infrastructure and regulatory environments. Essentially, the question has no definitive answer, as both regions contribute valuable elements to the evolving landscape of EV technology.”
The future of electric vehicles looks promising worldwide. Growing environmental concerns and advances in technology are driving a shift towards sustainable transportation.
Governments around the world are driving EV adoption through incentives and infrastructure development as battery technology improves, offering longer ranges and faster charging.
The automaker is investing heavily in EV development, indicating a long-term commitment to this transformative change. Electric vehicles are likely to play an important role in the future of global transportation.
The author is a staff correspondent
Published in The Express Tribune, March 11u2024.
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