Over half of new Car sales in China in July were EVs, as America faces threat of Falling Behind

Ann Arbor (Informed Comment) – In July, China reached an unprecedented inflection point for an industrialized society, with more electric cars purchased than internal combustion engine (ICE) vehicles. William Gavin at Quartz points out that 3 years ago, only 7% of cars sold in China were EVs.

Just this year, EV sales are up 37%. These statistics count both pure EVs and plug-in hybrids.

It is true that the Chinese government offers a $2,785 bonus for EV purchases. But that is less than the $7500 federal tax break Americans can receive on some models of EVs because of the Inflation Reduction Act.

The key difference, Gavin argues, is that “China invested at least $230.8 billion to develop its NEV industry between 2009 and 2023,” and $121 billion of that was put in during the past three years. This research and development program allowed the Chinese to make advances in battery technology unmatched by American engineers, which is one reason that Ford wants to partner with a Chinese firm for its planned big battery plant.

America’s capitalist model has so far failed to keep up with China’s demand economy in this sector. Only in the past couple of years has the Biden administration adopted an industrial policy that has any hope of playing catch up.

Anyway,the Chinese are presently eating America’s lunch on the EV front. Their advanced batteries and other technological breakthroughs have allowed Chinese firms to offer EVs at an average price of $34,400, as opposed to the $55,242 average cost of an EV in the US.

In fact, BYD, the biggest EV maker, is planning to offer a $15,000 EV in 2024. The plug-in hybrid version of the new platform is even less expensive, at $11,000. This platform is an ICE-slayer.

BYD is hoping to get an agreement by the end of this year from Mexico on opening a manufacturing plant there. The cars it makes in that country would be eligible under NAFTA for special access to the US market, unless Congress makes a law targeting this one company. The US Big Three automakers are petrified of this plan, since BYD’s inexpensive EVs have great range.

That is, the Chinese advances in green transportation could position that country to dominate the world automobile market and deindustrialize its rivals. For this reason, Europe has slapped high tariffs on Chinese EVs, but Beijing is appealing this move to the World Trade Organization.

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Bonus Video:

Vox Video: “Why China is winning the EV war”