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Future of transport
Opinion
SCMP Editorial
SCMP Editorial

EditorialBeijing acts smart as electric vehicle giants help drive innovation

  • Tesla, BMW and Daimler operations in China have spurred competition and raised standards among local firms that generous government subsidies failed to achieve

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New cars manufactured by Xpeng motors arrived in Norway. Photo: Xpeng
SCMP Editorial

The trade and technology disputes China is involved in with several Western countries belie the fact that it has some of the world’s biggest tech players on its side. Apple, Microsoft and Tesla have a considerable domestic presence, all welcome for the products, expertise and competition they provide. The latter firm is especially feted as Beijing pushes to improve standards in the highly competitive Chinese electric vehicle (EV) industry. That more foreign firms are now establishing plants locally and local manufacturers striking overseas deals show how important the nation is likely to be in global smart-car production and getting greenhouse gas-emitting, fossil fuel-powered transport off roads.

Guangzhou-based Xpeng Motors recently announced the handing over of 100 smart SUVs to customers in Norway, the first time such Chinese-made vehicles have been directly delivered to individual buyers in Europe. China is hoping to take advantage of its expertise in artificial intelligence to catch up with the global leader, Tesla, in producing smart EVs, which are battery powered and use technology to enhance navigation and digitally link with other cars and mobile devices. The home market is driving innovation, but also prompting firms to look overseas for niche regions to improve sales and profitability. That is to be expected for the world’s leading EV industry; of the 10.5 million such vehicles estimated to be on the world’s roads, about 47 per cent are in China.

Giving Tesla, BMW, Daimler and other major foreign firms incentives to establish operations for local and overseas production was part of the strategy. Tesla’s US$2 billion plant in Shanghai opened last October and the US company, which plans to export vehicles to 10 European countries, has captured about 30 per cent of sales in China. That spurred competition and innovation among local vehicle makers that generous government subsidies failed to achieve. Important changes were made to trade and ownership models, lowering imports and revamping shareholding rules so that foreign car makers could have more than a 50 per cent holding in China-based businesses.

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Beijing hopes one in five of Chinese vehicle sales will be EVs by 2025, a desire spurred by the need to improve air quality, meet promised goals of the Paris climate change accord and become a world leader in technology. Policies have ensured the nation is a leading player in lithium-ion battery development and production and that there are abundant recharging facilities. Forcing local EV firms to play catch-up has had a positive impact. Supply chains have been boosted and competition prompted by cutting-edge technology and ever-lowering prices. That has raised standards and enabled an edge in global markets.

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