This article talks about how successful the Chinese EV market has been compared to the markets in the US and Europe. China has become the world's largest manufacturer and producer of Electric Vehicles, and this has gotten some western governments worried. In China, domestic EV sales are expected to reach about eight to ten million in 2023, an increase from the previous record sale of 6.5 million in 2022. This far exceeds the sales of nearly three million EVs in Europe and two million in the US. At a global level, 7/10 of EVs are sold in China. In the first half of 2022, EV sales accounted for 21% of total car sales in China, compared to just 18% in Europe and only 6.5% in the US. The article states that, "It is estimated that about half of all cars sold in China would be EVs by the end of 2025." Chinese EV manufacturers have outperformed global automakers, and have now started targeting international markets. In addition to producing more, EVs from China, "enjoy both affordable prices and good quality." At this point, the article starts to give reasons for why the Chinese market has outperformed the US and Europe. While many analysts will point to massive subsidies given to the EV market by the Chinese government as the recipe for their success, this article takes the contrasting view that private innovation is driving most of the progress. There is no denying that the Chinese government initially handed out massive subsidies, with $60 billion being spent between 2009 and 2017 to jumpstart the car sector and "Almost $37 billion [going] toward consumer subsidies, representing a whopping 25 percent of total EV sales over the period." However, the EV market that was created from these subsidies differs remarkably from the current Chinese EV market. As the article states, "Although EV firms mushroomed to more than three hundred, only about 15 percent of them were actually manufacturing high-quality cars," and "The majority could not reach the production stage and probably entered the market mostly to benefit from generous subsidies." Of these EV firms, "independent producers, such as BYD, Geely, Chery, Xiaopeng, and NIO, emerged as the most successful EV carmakers and not the pampered state-owned enterprises." Changes began to be made in Beijing in 2016, when they "moved away from the subsidies regime to a more market-based one in order to stimulate competition," and "direct price subsidies were phased out and the government support shifted to building charging infrastructure." In addition, Beijing introduced a new "credit-based mechanism, similar to the carbon market, which allows carmakers to sell surplus EV credits to other companies." This is largely how companies such as Tesla were able to become profitable. In addition to the new mechanism, the Chinese government has also allowed foreign producers to enter the market, such as Tesla, which has had the effect of, "push[ing] the Chinese manufacturers to design EVs with smart driving features from scratch." The point of the article seems to be to push back on the popular claims that, in order for the US to catch up to China in EV production, we need a similar increase of gov spending and subsidies. The article is quick to point out that the US, and other western worlds, have already attempted to spur EV innovation through subsidies, "Western governments’ support to EV producers in terms of loans, grants, tax rebates, and generous consumer subsidies has been as comprehensive as China’s. They even went further by setting targets for phasing out IC cars. The only difference is the scale of government funding which set China apart." The conclusion of the article states that, despite popular claims, the booming EV market in China is more due to market forces, as opposed to government intervention, and therefore it is inappropriate to propose similar government spending proposals here in the US, "It is hypocritical to blame the current splurge of subsidies to the EV sector on China. The West has driven the green global agenda, and the development of the electric car sector is not hampered by unfair competition from China but by insufficient market demand for EVs. For a vast majority of consumers (more than 90 percent in the US), electric cars remain less attractive than traditional cars, not least because of their high prices and other practical inconveniences."
https://mises.org/wire/chinas-emerging-global-leadership-isnt-just-result-subsidies-entrepreneurship-still-matters
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