It has been revealed that China has invested a staggering $230.8 billion over the past decade to cultivate its electric car industry. These findings come at a time when the U.S. has already imposed tariffs on Chinese EVs, while the EU and Canada are considering similar moves.
What Happened: The Chinese government’s financial backing accounts for nearly 19% of the total electric car sales from 2009 to 2023, as per the findings by the Center for Strategic and International Studies. This represents a significant decline from over 40% in the years leading up to 2017 to just above 11% in 2023.
Scott Kennedy, the trustee chair in Chinese Business and Economics at CSIS, highlighted that China’s support for electric cars also includes non-monetary policies favoring domestic automakers over foreign ones. He noted that the U.S. has not created conditions as favorable as China’s for developing its electric car industry.
The findings come at a time when the EU is planning to impose tariffs on Chinese electric car imports due to the use of subsidies in their production. Last month, the U.S. also announced a hike in duties on Chinese electric vehicle imports to 100%.
"Independent auto analysts and Western automakers with whom I've spoken all agree that Chinese EV makers and battery producers have made tremendous progress and must be taken seriously," Kennedy said.
Over the past year, the electric vehicle sector has been embroiled in fierce price competition, as automakers have either reduced prices significantly or introduced more affordable product ranges.
As the global EV market becomes increasingly competitive, the U.S. has also been ramping up its efforts to support its own electric car industry. The Inflation Reduction Act, signed into law in August 2022, allocated $370 billion for promoting clean technologies, including a $7,500 credit for qualifying electric car purchases, according to a report by CNBC.
Why It Matters: The significant investment by China in its electric vehicle sector comes amid escalating trade tensions with the West. Last week, China vowed to “firmly safeguard” its interests against new EU tariffs, which are set to impose duties of up to 25% on Chinese EV imports starting next month. This move is aimed at countering the subsidies provided by the Chinese government to its manufacturers.
Adding to the tension, on Wednesday, Chinese carmakers reportedly urged Beijing to increase tariffs on European gasoline cars in response to the EU’s restrictions on Chinese electric vehicles.
This appeal was made during a closed-door meeting organized by China’s Ministry of Commerce, attended by both Chinese and European car companies.
Furthermore, the U.S. has also been active in this economic battle. In May, President Joe Biden announced a significant increase in tariffs on a range of Chinese goods to protect American industries and jobs. This move was intended to counteract China’s heavily subsidized production.
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Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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