How China’s Electric Vehicle Market Became the World’s Biggest
China’s rise to become the world’s largest adopter of electric vehicles (EV) was not preordained. The establishment of the country’s EV industry was shaped over a decade, as the government recognized pollution as a growing issue that the rising middle class would exacerbate.
From the 1990s onwards, the number of vehicles on Chinese roads began to rise, with the country eventually becoming the biggest car producer in the world in 2009. In the same year, the Chinese government introduced a policy called “Ten Cities and [One] Thousand Vehicles,” a pilot program that picked 10 cities in the country and tested out 1,000 electric vehicles on their roads.
In 2021, China is now home to 44% of the world’s electric vehicles (more than 4.5 million vehicles), which is almost triple the number of electric vehicles in the US. At this point, you might find yourself asking: How did the country’s EV industry come so far in such a short period?
Subsidizing an Environmental Movement
The decision by the Chinese government to aggressively adopt EVs was made based on four factors: to become a world leader in this young industry, to cut back dependence on the Middle East for oil, to reduce the amount of air pollution in urban areas and to cut back on carbon emissions.
This decision-making process combined various rationales for adoption, combining political, economic and environmental motives.
When we speak about the aggressive tactics that precipitated the rise of EVs in China, one particular policy stands head and shoulders above the others. In the early 2010s, the Chinese government announced plans to provide subsidies to encourage buyers to snap up electric cars instead of traditional combustion engine vehicles.
This policy was introduced to offset the higher price of electric vehicles, and the subsidy was as high as 60,000RMB (more than 9,200USD) for people buying fully electric cars. This policy was initially rolled out in five Chinese cities: Shanghai, South China’s Shenzhen, Hangzhou and Hefei near the eastern coast of the country, and Changchun in Northeast China.
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