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How China is dominating the Electric vehicle segment

The United States of America is where a million new dreams are brewed daily with a cup of coffee. The third most popular travel destination after France and Spain, the U.S. is not only globally renowned for the famous Status of Liberty and the grand canyons but also for the den of fun-Disney land, the home to the most genius minds in the world-NASA, the over-worked Silicon valley and most importantly, U.S. is famous for its culture of mass acceptance. It is one of the most open social structures in the world. New York City is the most linguistically diverse city in the world, where people in 800+ languages converse daily on Times Square, dancing their feet off. Do you know that Times Square in Manhattan has been a world-famous entertainment destination for decades?

How China is dominating the Electric vehicle segment

In 2021, over 20 million tourists flocked to the U.S. to witness the beauty of this nation with their own eyes. But, other than skyrocketing numbers of tourists, what is also unique about the United States is that Americans love their own country the most, unlike any other country. However, they are not best known for their global intellect; they are overwhelmingly positive towards America's ranking on the global map. As per a survey report by the Pew research centre, 85% of Americans believe that America is the greatest country in the world and stands above all other nations. Only 14% believed otherwise.

Well, the U.S. dominates the global market in many avenues. In 2022, the U.S. contributed 24.7% of the global economy in nominal GDP terms. In addition, the US is the world's most significant military weapon supplier. It is also near the forefront in the medical, aeronautical, and I.T. industries, laying the foundation for a healthy and tech-savvy future for the generations to come. However, despite America's heavy investments in Technological advancements, it is lagging in innovation for Electric mobility.

Although the number of sales of electric vehicles in the U.S. was at record-breaking levels in 2021, 83 per cent more sales than in 2018, the country is still struggling to find a firm ground for innovation in the E.V. arena.

But one country that is outperforming in Electromobility is China, which despite being paralyzed by the pandemic for more than three years, has held the top position in the Electric vehicle index of 2021.

 The most populous country in the world and rapidly growing economy, China not only leads in technology but has also mastered sales in the E.V. industry. Around 58 per cent of global E.V.s are manufactured in China, bagging the title for the world's most significant global E.V. market. In 2022, China built 650,000 public E.V. chargers, ten folds to the charging stations built in the U.S., which clearly shows that China is here to rule the future of the Automobile industry: Electric vehicles.

In this case study, we will map the journey of E.V.s in the Chinese market and how it domesticated the E.V. industry. So, fasten your seatbelts as we take you on a ride through the past, present, and future of the E.V. market in China.

The Past:

It was in the early 1990s when China began its dominance in the automotive sector, which acted as the catalyst for building a stable economy in china.

By the early 2000s, China was supplying over two million vehicles. Then, in 2001, China entered the WTO (World Trade Organization), which further snowballed the growth of the automotive industry in china. Post that, China kept on compounding its Car manufacturing capacity by adding an average of 2 million new vehicle manufacturing capacity every year.

Even during the great recession (Dec 2007-June 2009), the Chinese auto market marked a growth rate of 7.27 per cent in 2008. The U.S. was the worst hit by the recession. Chrysler and General Motors filed for bankruptcy in the U.S.; the auto industry faced harsh cold winters between 2008 and 2009. As a result, new vehicle sales fell by forty per cent, and forty-five per cent of staff lost their automotive industry jobs.

During that time, U.S. automakers were held responsible for the automotive crisis in 2008. Indian and Chinese firms saw this as an opportunity to become global leaders and penetrate the U.S. market. That is when China began the journey towards reining the global automotive industry, and by 2009, China surpassed The United States and became the largest automotive market in the world. It was all possible due to the rigorous push of the Chinese government and automobile companies.

It began not by choice but by compulsion:

However, the story is a bit different, particularly dE.V.ving into the EV industry's growth in Mainland China. In China, electric vehicle growth was driven not by technology but by governmental policies. For Chinese citizens, switching to energy-efficient and electric vehicles was not a matter of choice but was more of a compulsion.

In the 1990s, the Chinese government began to ban motorbikes in major cities such as Beijing to popularise electric bicycles. Another infamous scheme was creating a scarcity of number plates for motor vehicles in cities such as Hangzhou to later auction the limited license plates at pocket-denting costs, which at times were costlier than the cost of the car.

The government implemented a license plate restriction policy on every motor vehicle, except electric bikes, because they were considered non-motorized bikes. Hence, the grand scheme in its hay days turned down air pollution levels by 11 per cent and popularized the trend of owning electric bikes. It was all happening in the late 1990s.

By the time new millennia set, the horizon of attention not only included electric bikes and scooters, but not electric cars gained the spotlight. However, by 2004, sixteen distinct state-owned car manufacturers formed an electric vehicle industry association in Beijing called CEVA to invest, research, and develop the green energy automobile sector.

By 2008, EV sales had grown by 107%, and by 2009, the e-vehicle revolution took the automotive industrE.V.sy storm. When the automotive industry was aching in the US, the Chinese government funded the EV revolution with 1.5 billion UU.S. and, later, 3 billion USD additionally fE.V. developing industrial infrastructure. By 2010, electric vehicle purchases subsided to further elate sales numbers.

By 2011, many new players entered the market like Airways, SAIC, FAW, Dongfeng, Chana, BAIC, GAC, Chery, BYD and Geely, and by the next four years, the sales of EVs soared to more than 300%.

In 2016, similar schemes supporting the use of green E.V.sicles, such as green license plates for energy-efficient vehicles, were also launched, domesticating the idea of energy-efficient vehicles in Mainland china.

By 2019, over 3.5 Million sEVs were running on Chinese roads, which comprised just 1% of the Chinese vehicle stock. In two years, the numbers almost doubled to 5 million in mid-2021, which accounted for nearly 2 per cent of the total vehicles available in the Chinese market.

China never looked back. Since then, Germany and France have been fighting neck to neck to stay on top.

The present:

The leader:

While delving into the conversation on EV, the topic of debate has always been "charging". Every country has a vast networE.V.of fuel pumps/gas stations readily available for refilling gasoline-driven vehicles. Decades-long development and n have resulted in widespread motor vehicle fuelling infrastructure development. Alas, the same is not valid for Electric vehicles. Although it might be the truth of tomorrow, it is not true today.

With the rising EV sales, the charging infrastructure must be developed in parallel. And that is one arena we are every nation is experimenting. While Sweden and Germany have been at the top of the game with constructing "self-charging roads" that charge the vehicle as it is driven on the road, Korea was the first to experiment with the idea.

China was a little late to hop on the trend and finally completed the construction of its one-kilometre-long, self-charging road in 2017 (image on the right). However, the road was built with over 10,000 solar panels, which made China the second country to build roads with PV solar cells after France.

However, China was eying for something else; electric charP.V.ng stations. The major credit for the success rate of the Chinese EV sector goes to the uninterruptible electric charging stations (Graph).

Currently, there are 1.15 million charging stations in China, 65 per cent of the total charging stations available for public use worldwide. Out of the total numbers, 41 per cent are fast charging stations, and 650,000 were just added last year.

The U.S. ranks second in the number of charging stations. However, with mere 113,527 chargiU.S.tations, the U.S. lags far behind China and is followed by South Korea and the Netherlands.

With dying conventional fuel sources, the world will indeed cling to electric vehicles in the future. It is not a matter of what; it is a matter of when. By 2030, China wants to make up 40 per cent of its automotive vehicles to be electrically driven.

However, the sales numbers are expected to slow this year for two reasons.

Firstly, since January 1st 2023, the subsidy on EV purchases has been terminated after a 12-year journey to domesticate EVs in China.

Second, amid the recession in the market, consumers are refraining fromE.V.sking out-of-the-pocket expenses. This issue has posed one of the most unpredictable and unexpected issues for the Chinese auto industry: over-capacity.

Slow sale rates can also exacerbate production, leading to over-capacity and risking the employment of every one in six people out of 800 million workforce.

Other than the recession, it hinges on the rising cost of employment in the country, workers seeking salary hikes and, of course, the resurgence of the COVID pandemic in the country. Cui Dongshu, general secretary of the CPCA, believes that "government and automotive companies shall pull up their socks and sell battery-driven vehicles as soon as they are manufactured. To achieve this, employment opportunities and incentives shall be improved countrywide."

Other than that, the aim of achieving carbon neutrality by 2060 is heavily dependent on the success of the EV industry, so China must keep shinning in the EV industry; otherwise, its economy wilE.V.fall off on its knees, robbing China of the tiE.V.e of "the largest automotive market in the world".

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