In Guangzhou in 2014, a company emerged with a vision to redefine the driving experience. XPeng Motors, or Xiaopeng to its Chinese audience, set out not just to craft electric vehicles, but to embed artificial intelligence at their core, creating cars that anticipate and adapt to their drivers. Founded by He Xiaopeng, a former Alibaba executive with a passion for digital innovation, XPeng has grown from a determined startup into a global force, challenging industry titans and capturing imaginations – including, now, in the United Kingdom.

The story begins with He Xiaopeng, a tech trailblazer who saw cars as the next frontier for software. Having built UCWeb, a mobile browser acquired by Alibaba in 2014, he pivoted to automotive, inspired by the global surge in sustainable transport. He was joined by Henry Xia and He Tao, both veterans of China’s car industry. Xia brought years of expertise from Guangzhou Automobile Group, a cornerstone of Chinese manufacturing, while Tao’s research and development skills ensured XPeng’s vehicles could meet exacting standards. They rooted their headquarters in Guangzhou, a hub of industry, and established a second base in Mountain View, California, strategically nestled in Silicon Valley, near the likes of Tesla.

Those early days were fraught with challenges. China’s electric vehicle market was already fiercely competitive, with domestic giants including BYD, a Shenzhen-based leader in affordable EVs and battery technology, and NIO, a Shanghai-headquartered maker of premium electric cars known for its luxurious designs and innovative services, dominating headlines. Globally, Tesla’s sleek models set a high bar. XPeng grappled with supply chain constraints and the need to build a reputation from scratch. Yet its founders focused relentlessly on research, particularly in autonomous driving and AI, believing that intelligence would distinguish them. By 2018, they unveiled the G3, a compact electric SUV blending affordability with smart features, announcing XPeng’s arrival with confidence.

He Xiaopeng remains the heartbeat of XPeng’s mission. His tech roots shape the company’s emphasis on user-focused innovation, from seamless voice controls to intuitive interfaces. “We’re building intelligent mobility for all,” he told Reuters in 2024, his conviction clear. His leadership is bolstered by a formidable team. Henry Xia’s manufacturing know-how ensures reliability, while He Tao drives technical breakthroughs. Brian Gu, vice chairman and president, brings financial sharpness from his J.P. Morgan days, guiding XPeng’s global strategy. The team includes former executives from Ford, BMW and Tesla, lending a worldly perspective vital for markets like the UK.

Funding has powered XPeng’s ascent, blending Chinese and international capital. In 2018, Alibaba and Foxconn, the Taiwanese electronics manufacturing giant, led a £260 million round, captivated by XPeng’s tech-forward vision. Alibaba’s support extended beyond cash, integrating XPeng into its digital ecosystem for sharper software. By 2020, global investors such as Qatar’s sovereign wealth fund and US and Asian funds added £230 million, followed by £380 million more. XPeng’s 2020 New York Stock Exchange listing raised £1.1 billion, affirming its global appeal. About 60% of its funds come from Chinese investors, including IDG Capital and Xiaomi, with 40% from international sources, enabling XPeng to navigate both Eastern and Western markets adeptly.

XPeng’s defining trait is its pursuit of intelligence. Unlike BYD, which excels in volume and battery prowess, or NIO, with its focus on luxury and customer-centric services such as battery-swapping, XPeng crafts vehicles that feel alive with technology. Its cars boast advanced driver-assistance systems (ADAS), voice-activated controls and software updates that evolve over time. “No Chinese carmaker matches our AI scale,” He Xiaopeng proclaimed in a 2024 social media post, spotlighting his company’s in-house work on autonomous driving, leveraging techniques like reinforcement learning.

The current lineup showcases this approach. The P7+ sedan, priced from £27,000 to £35,000, delivers a 400-mile range and ADAS that competes with pricier rivals, appealing to professionals seeking sophistication. The G6 SUV, going for £23,000 to £31,000, draws younger drivers with its sleek design and smart cockpit, featuring real-time navigation and voice interaction. Launched in 2024, the MONA M03, a £15,000 compact EV, targets urban commuters, its affordability and tech driving thousands of monthly sales in China. The X9, a £38,000 MPV, caters to families with luxury and space, recently exported to markets including Thailand. XPeng is also pushing boundaries with its AeroHT division, developing eVTOL (electric vertical take-off and landing) flying cars. While still in prototype – showcased at events like the 2024 Beijing Auto Show – these hint at a future where XPeng’s ambitions soar beyond roads. By late 2025, XPeng aims to roll out Level 3 autonomous driving across its range, a step toward hands-free travel.

XPeng’s pricing is strategic, undercutting Tesla’s Model 3 (£27,000-plus) and BYD’s Han EV (£23,000-plus). Its premium models rival NIO’s ES6 (£35,000) and Li Auto’s L9 (£38,000), a Chinese brand known for hybrid SUVs. In China, XPeng faces intense rivalry – BYD’s scale and battery expertise dominate the mass market, while NIO’s high-end focus and lifestyle offerings like battery-swapping stations carve a unique space. XPeng’s AI emphasis, however, resonates with tech-hungry buyers, giving it an edge both at home and abroad.

Globally, XPeng is on the move. Since 2020, it has entered Europe, starting with Norway, a leader in EV adoption, then Sweden, Germany and France, navigating EU tariffs of up to 35.3%. “We’ll be in 60 countries by late 2024,” He Xiaopeng vowed in a press release, undeterred by trade challenges. In February 2025, XPeng shipped 300 right-hand drive X9s to Thailand, capitalising on Southeast Asia’s EV growth. Co-president Gu Hongdi told Bloomberg, “ASEAN’s low EV penetration and fast adoption are ideal for us.” XPeng aims for 50% of sales to come from overseas by 2033, backed by local charging infrastructure and tailored software.

The UK marks a pivotal chapter. In 2025, XPeng launched here with the G6 SUV and the X2, a concept car with gullwing doors that Wallpaper magazine called “a bold vision of tomorrow”. Showrooms in London and Manchester have drawn curious crowds, with the G6’s £23,000 starting price and 350-mile range appealing to families and commuters alike. The X2, while not yet in production, has sparked buzz for its futuristic design, hinting at XPeng’s flair for innovation. In a market where EVs like the Nissan Leaf (£26,000) and MG4 EV (£21,000), from Chinese-owned MG, compete fiercely, XPeng’s AI-driven features – such as predictive navigation and voice controls – could win over tech-savvy Britons. However, tariffs and brand unfamiliarity pose hurdles. “The UK loves innovation, but trust takes time,” an XPeng spokesperson told Autocar in March 2025. With plans to expand dealerships and partner with UK charging networks, XPeng is betting on its intelligent design to carve a niche.

Looking forward, XPeng’s plans are bold. In his 2024 letter shared widely online titled “2025 New Journey, Through the Storm, Keep Running!” He Xiaopeng set a goal of one million annual sales, up from 30,000 monthly in 2024, and Level 3 autonomy in all models by 2025. He’s investing in talent via the “Thousand Generals Plan” to train leaders and the “Explorer Plan” to inspire engineers. Globally, XPeng targets Asia, Europe, and potentially North America, despite trade barriers. AeroHT’s eVTOL work, while speculative, keeps XPeng forward-looking, with He Xiaopeng teasing “sky-bound mobility” at a 2024 tech summit.

From Guangzhou’s streets to Britain’s motorways, XPeng’s journey reflects China’s rise as an innovation hub. He Xiaopeng’s vision, backed by a stellar team and robust funding, has made XPeng a challenger to BYD, NIO, and Tesla. As it accelerates into a competitive future – on roads and, perhaps, in the air – XPeng’s blend of intelligence and accessibility signals a brand not just keeping up but leading the charge.

The post XPeng Motors: China’s answer to electric innovation lands in the UK appeared first on Focus - China Britain Business Council.

The discussion explored BYD’s strategic focus on the UK, the role of policy in accelerating the EV transition, and the company’s innovative approach to technology and customer experience. The conversation provided valuable insights into how BYD is navigating the challenges and opportunities of the global EV market.

Peter Burnett opened the discussion by asking Simon Bisp about BYD’s significant commitment to the UK, and why the UK offers BYD a particular opportunity. Bisp, who previously worked at Peugeot, explained that his transition to BYD was driven by the company’s unique positioning as a pioneer in electric and battery technology. “At Peugeot, the shift to EVs felt like a necessary direction, but at BYD, it’s in their DNA. They started as a battery manufacturer, and EVs have always been their focus,” he said. Bisp highlighted the UK’s importance as one of the largest automotive markets in Europe, particularly in light of the recent decision not to impose tariffs on EVs. “The UK’s policy environment has made it an even more attractive market for us,” he added.

Burnett then turned to the role of policy in shaping the EV market, noting that BYD had recently outsold Tesla in the UK. “How much does policy matter in driving this transition?” he asked. Bisp acknowledged that policy plays a significant role but emphasised that it primarily affects the speed of adoption rather than the overall strategy. “Our objective is to be the number one brand in every market we enter. Price and accessibility are key factors, and we’ve achieved price parity in the UK. Now, it’s about educating consumers,” he explained. Bisp pointed out that while many customers want to be environmentally conscious, price remains a decisive factor. BYD’s plug-in hybrid models, which offer an easier entry point for consumers with low EV penetration, have been particularly successful. “In China, 50% of our sales are plug-in hybrids, and they offer an impressive range of up to 2,000 kilometres,” he said.

The conversation then shifted to the challenges of transitioning to EVs in the UK. Burnett noted that dealers are now required to ensure that 28% of their sales are battery-powered EVs or face fines, with a broader target of 100% EV sales by 2030. Bisp expressed some reservations about this approach. “British people don’t like being told what to do. Instead of focusing on penalties, we should be encouraging people to buy EVs by highlighting the benefits,” he said. He criticised the current system, which allows manufacturers to offset targets by buying credits from others, arguing that investment in infrastructure would be more effective. “Tesla focused on creating reasons to purchase their vehicles rather than treating it as a profit centre. There’s a lot more we can do to make EVs appealing,” he added.

Burnett then asked about BYD’s recent US$5 billion post-IPO fundraising and how the company prioritises its investments. “Is the focus on EVs and battery development, or are there other areas?” he inquired. Bisp explained that BYD’s chairman, Wang Chuanfu, is deeply committed to innovation and adaptability. “The chairman often says that companies that don’t move forward simply die. He’s instilled a culture of constant evolution within BYD,” Bisp said. He shared an anecdote about visiting BYD’s museum in Shenzhen, which chronicles the company’s journey from its humble beginnings to its current status as a global leader. “I have a presentation for investors that I have to update every month because things change so quickly. We have over 100,000 engineers out of a million employees, and they are the beating heart of the organisation,” he said.

Bisp emphasised that BYD’s approach to innovation is not about solving specific problems but creating a “basket of solutions” for future challenges. “We don’t design for a particular problem; we develop a range of solutions that we can draw from when needed,” he explained. This philosophy extends to advanced driving technologies, automation, and alternative propulsion methods. “We’re working on solutions for problems that may or may not arise in the future,” he added. Bisp also highlighted BYD’s vertically integrated supply chain, which gives the company greater control over quality and costs. “When we first started making cars, people said we wouldn’t be able to sell them. So, we created our own sales network,” he said.

The discussion concluded with a brief mention of autonomous vehicles. Bisp noted that the technology for self-driving cars already exists, but regulatory hurdles remain. “The tech is there; it’s just a matter of regulation,” he said.

The fireside chat underscored BYD’s commitment to innovation, customer experience, and strategic growth in the UK. As Simon Bisp put it, “Our goal is not just to sell cars but to drive the transition to a sustainable future. The UK is a key part of that journey, and we’re excited about the opportunities ahead.” With its focus on education, accessibility, and cutting-edge technology, BYD is well-positioned to lead the charge in the global EV revolution.

The post BYD’s commitment to the UK and the future of electric vehicles appeared first on Focus - China Britain Business Council.

Chinese EV manufacturer BYD posted record sales of electric vehicles (EVs) in 2024, as Elon Musk’s Tesla saw sales slow for the first time in years. BYD reported that it sold 4.3 million EVs and hybrids in 2024, of which 1.76 million were pure EVs. While Tesla narrowly beat BYD across the whole of 2024, delivering 1.79 million pure EVs, BYD’s 2024 Q4 did actually surpass Tesla.

BYD (short for ‘Build Your Dreams’) was founded in 1995 as a rechargeable battery manufacturer. It expanded into automotive after buying a Shaanxi-based car company in 2003, using its battery experience and supply chains to pivot to EV. It is popular for its cheaper models, which range in price from around RMB 70,000 (£7,697) to RMB 200,000 (£21,991). Tesla’s Model 3, on the other hand, starts at RMB 231,900 (£25,499).

Tesla remains the world’s most valuable car maker, driven by its innovative approach, high-performance vehicles and strong branding (thanks, in part, to the inescapable figure of Elon Musk). However, its higher price point has made it less accessible to a broader market segment, an area where BYD has gained a competitive edge.

This edge over other Chinese brands and, increasingly, international brands, has been sharpened by a number of external and internal factors.

Like all Chinese EV companies, BYD has benefitted from extensive Chinese government subsidies over the past few decades. The government has been subsidising producers of EVs for public transport, taxis and the consumer market since 2009. More than RMB 200 billion (£22.14 billion) was spent on EV subsidies and tax breaks in China over the 2009-2022 period. Moreover, EV consumers in China have received purchase subsidies from the government for a number of years. China is expected to sell more EVs (pure EVs and hybrids) than traditional vehicles for the first time in 2025.

China also has a very strong position in the supply chains for the critical materials used to make EV batteries, especially rare earths. At present, China accounts for over 80% of the world’s rare earth processing, and in late 2024, the country banned shipments to the US of several minerals and metals used in semiconductor manufacturing and military applications, including gallium, germanium and antimony, citing national security concerns.

In terms of internal factors, BYD has also benefitted from its background as a battery manufacturer, which has given it a head start in terms of technology and access to materials. By keeping battery production in-house, it can also achieve significant cost savings.

The big threat posed by BYD’s recent success is increased competition for established automotive brands.

Western markets have largely taken a protectionist stance in response to the massive growth of China’s EV sector. In October 2024, tariffs of up to 45.3% on imports of Chinese-made EVs came into force across the EU, while the Biden administration has also imposed a 100% duty on EVs from China, with President-elect Donald Trump expected to impose further tariffs on imports.

Nevertheless, some commentators suggest that BYD and Tesla are so far ahead of the field that traditional automotive manufacturers are already struggling to compete. Indeed, the growth of the two companies is showing that brand recognition or company history are not predictors of success in the EV market. Future growth will come down to things like AI integration and battery technology, rather than just the cars themselves, giving Silicon Valley and fast-moving Chinese companies a leg-up over traditional car manufacturers.

Now the question for BYD will be whether it can translate its current sales figures, most of which are concentrated in the Chinese market, into global success. For Tesla and other EV manufacturers, the rise of BYD serves as a call to innovate in an increasingly competitive market, innovation that could have a positive knock-on effect in other areas. Ultimately, getting more EVs of any brand on the road is an important step towards giving more people more access to sustainable transportation options.

The post How Chinese EV manufacturer BYD overtook Tesla appeared first on Focus - China Britain Business Council.

At the Beijing Auto Show in April, CATL, the world’s largest electric vehicle (EV) battery maker, stunned many with a new product. The Shenxing Plus battery can power an EV for more than 1,000 kilometres on a single charge, according to CATL. That’s enough to get from Guangzhou to Wuhan, or London to Berlin.

“[The battery] can reach a range of 600 kilometres with a 10-minute charge, equalling one kilometre every second,” Gao Huan, chief technology officer of CATL’s electric car business, proudly announced at the launch ceremony.

Chinese firms have been unveiling new lithium-ion cells with longer ranges, shorter charging times and more charging cycles in their lifespans, at a frequency unseen anywhere else in the world. But with the global demand for EV batteries projected to jump up to tenfold by 2030, companies worldwide have been racing to develop next-generation technologies to seize future market shares.

The innovation rush is driven by various motivations, mainly to cut cost and avoid supply chain bottlenecks. But it could also benefit the environment and climate by reducing carbon emissions during the mining and production of certain minerals, according to a report by consulting firm McKinsey.

“Whoever wins the battery war will win it all,” Chinese economist Ren Zeping said in 2022. Ren noted that the technologies and performance of batteries is the “core” of taking the EV sector forward.

LFP vs NMC

Currently, commercial EVs use one of two main types of lithium battery – those that contain iron and phosphate, known as LFPs, and those that contain nickel, manganese and cobalt, known as NMCs.

The primary distinction between them is that NMCs usually have a greater energy density while LFPs are safer, Liu Chenguang, an assistant professor at Xi’an Jiaotong-Liverpool University specialising in battery materials, tells Dialogue Earth.

Energy density typically measures how much energy a battery contains in proportion to its weight, and is a key performance metric.

The two types have an equal footing in the EV market globally, but in China, LFPs have become far more popular over the past few years because they are safer, according to Mao Shiyue, a researcher at the International Council on Clean Transportation (ICCT) thinktank. They are also cheaper than NMCs given the high cost of cobalt and nickel, Mao tells Dialogue Earth. “[LFPs] can be charged and discharged more times, and they have a longer lifespan, too,” he adds.

LFPs are also more environmentally friendly than NMCs because cobalt and nickel are heavy metals that can be harmful to humans and the environment, particularly the aquatic environment.

Mining operations can also damage nature and local communities by eroding soil, disrupting habitats and diminishing biodiversity. EV and battery manufacturers have been put under increasing scrutiny due to such adverse impacts, particularly as countries like Indonesia – the world’s largest nickel producer – have lowered labour and environmental standards to boost their mining industry.

Ingredients for the batteries of EVs – as well as for their bodies – are among the minerals with “the strongest links to deforestation”, according to a new report published by environmental NGOs AidEnvironment and Rainforest Foundation Norway. This makes the automotive industry the second most important driver of mining-related deforestation globally after construction, the report said.

Searching for new options

Lithium technologies are expected to advance quickly over the next few years. However, companies in China and beyond are frantically pursuing alternative batteries not centred around lithium, in part because the minerals needed to make the current options come from just a few countries.

These elements are often described as “critical raw materials” or “transitional minerals”, and they mostly include lithium, cobalt, nickel, manganese and graphite. Their concentrated supply chains can lead to problems such as dramatic price swings. Cost control sits high among Chinese firms’ reasons to seek alternatives. A battery typically accounts for 40% of the price tag of an EV, according to Reuters, and the ability to minimise production cost is critical for firms to survive the nation’s brutal EV price wars.

Between June 2020 and November 2022, the prices for lithium carbonate, a key ingredient for lithium-ion batteries, soared nearly 14-fold, Phate Zhang, founder of Shanghai-based industry outlet CnEVPost, tells Dialogue Earth. “That was when Chinese car and battery makers started to seriously look for alternative battery technologies that are not only cheap, but also suitable for mass production,” he says. “Sodium-ion batteries are one of them.”

These batteries use sodium, a highly abundant element that can be extracted from sea salt.

CATL debuted its first-generation sodium-ion battery in 2021 amid those rapid price hikes. “After that, quite a few Chinese companies also announced their plans to develop sodium-ion batteries,” Zhang says. For western companies, however, it is their less developed supply chains for battery materials – such as mining and refining – that forces them to think outside the box.

By avoiding the use of so-called critical raw materials, companies can reduce “geological and geopolitical constraints”, Maximilian Fichtner, an expert in energy-storage materials, tells Dialogue Earth. Fichtner is executive director at the Helmholtz Institute Ulm, a battery research centre in Germany, and a professor in solid-state chemistry at the universities of Ulm in Germany and Swansea in the UK. He stresses the importance of switching “from less abundant and maybe toxic materials, coming sometimes from politically insecure regions, to materials which can be obtained everywhere on Earth”.

Regulations, such as the European Union’s Batteries Regulation, are also pushing companies – Chinese or not – to reduce their cells’ carbon footprint and pursue sustainable production.

For one, a battery carries 40-60% of the embedded greenhouse gas emissions in the production of an EV, according to estimates by McKinsey. A previous analysis projected that producing enough cobalt to facilitate the global energy transition will lead to at least 4.7 million tons of CO2 emissions by 2030, equivalent to the total fossil fuel and industrial emissions of Albania in 2022.

Cutting the demand for some “high risk” minerals and battery chemistries will allow the industry to reduce its negative impacts on biodiversity and forests, Julia Naime, senior supply chain advisor at Rainforest Foundation Norway, tells Dialogue Earth. But she also warns that “caution is needed so that alternative battery chemistries do not create other adverse impacts on nature or people.”

Sodium-ion: the star

Other battery technologies are also being developed across the world, from magnesium-ion batteries to zinc-air batteries. Both magnesium and zinc are more abundant than lithium. Sodium-ion batteries are likely to be the first to make headway because they are close to commercialisation and can achieve similar performance to LFP cells, according to a report by the Germany-based Fraunhofer Institute for Systems and Innovation Research.

Although sodium-ion batteries are cheaper and more sustainable, their “main bottleneck currently is the low energy density,” Zhang says. Sodium-ion batteries support a shorter range than a lithium-ion battery of the same weight. The technology is therefore more likely to be used in low-speed and small EVs, as well as electric trikes and scooters. An industry insider told Dialogue Earth that it is also considered an ideal solution for the energy storage sector as companies look for safe, reliable and cost-effective methods to store renewable power.

Moreover, sodium-ion batteries deal effectively with cold temperatures, explains Cory Combs, associate director at Trivium China, a Beijing-based research group. “If you’re looking at, say, the Scandinavian market or the Russian market, this might actually be a really good way to go.”

China: A strong player

From UK-based Faradion to the US’s Natron Energy, global firms are racing to make a breakthrough in the potentially revolutionary sodium-iron battery technology. The huge interest could see the market balloon by nearly six times, from USD 860 million in 2022 to USD 4.8 billion in 2032, according to market analyst Precedence Research.

China is a strong player in this industry. Patents related to the technology filed by the country jumped 109 fold over the past decade, dwarfing Japan and the United States, according to analysis by Nikkei Asia. It is also the first country to mass produce EVs powered by these new cells, with two models currently on offer.

One was launched by battery manufacturer Farasis Energy and automaker JMEV, both based in Jiangxi. The other, Huaxianzi, was the brainchild of Jiangsu-based HiNa Battery and Yiwei, a subsidiary brand of the Anhui Jianghuai Automobile Group. Both models rolled off the production line last December and the companies claimed they had a range of around 250 kilometres.

BYD and CATL are also in the mix, with the former having started building a USD 1.4 billion sodium-ion battery plant in Jiangsu and the latter reportedly working on its second-generation sodium-ion cells. CATL has also said that its sodium-ion batteries would be used in a model by Chinese automaker Chery.

Other contenders have also upped their game. Swedish start-up Northvolt announced late last year that it had developed a “state-of-the-art” sodium-ion battery for energy-storage systems. Northvolt’s chief executive and co-founder Peter Carlsson told the Financial Times that the technology, which could be “worth tens of billions of dollars”, would open up markets for the company, including the Middle East, Africa and India.

All-solid-state batteries

Another buzzword is “all-solid-state batteries”. Also known simply as “solid-state batteries”, these replace the liquid or gel electrolytes in traditional lithium-ion batteries with solid electrolytes.

“They offer higher energy densities, improved safety as they are less prone to catching fire, and potentially longer lifespans,” says Yang Li, associate dean for research and impact at Xi’an Jiaotong-Liverpool University’s school of science.

Solid-state batteries could also charge faster and have lower carbon footprints than the current lithium-ion options, according to Scott Gorman, a senior research scientist at CPI, a technology innovation centre in the UK. The latter is down to the fact that they use fewer materials, Gorman wrote in a CPI blog post.

But their high manufacturing costs could pose a roadblock. Solid electrolytes are harder to design and more expensive to fabricate – factors that have restricted their mass production. The cost to produce solid-state batteries can be four to 25 times higher than that of conventional lithium-ion batteries, Nikkei Asia reported, citing the Japan Science and Technology Agency.

“Companies like Toyota, CATL, and China Aviation Lithium Battery (CALB) are heavily investing in this technology, working to overcome challenges related to manufacturing costs and temperature sensitivity,” Yang tells Dialogue Earth.

Full-on global race

The race to master solid-state battery technology is fully on, which could bring new dynamics to the future battery sector. Governments and blocs around the world – from the United States to the European Union – have included its development as an official strategy, according to an analysis by TrendForce, a market intelligence firm. Beijing has instructed the country to “fast-track the research, development and industrialisation” of solid-state batteries in its strategy for the new-energy vehicle industry from 2021 to 2035.

BMW plans to roll out its first “demonstrator” vehicle featuring a solid-state battery before 2025 after partnering with US firm Solid Power for the technology. Meanwhile German firm PowerCo SE, a battery subsidiary of Volkswagen, said in January that its tests had shown that a solid-state battery from its partner, California-based QuantumScape, maintained more than 95% of its original capacity after more than 1,000 charging cycles.

Toyota last year said that it intended to halve the size, cost and weight of batteries for its EVs following a “breakthrough” in solid-state batteries, the Financial Times reported. The Japanese automaker, which is working on the technology through a joint venture with Panasonic, plans to mass-produce the cells as early as 2027. South Korea’s Samsung SDI has set up a pilot line for solid-state batteries and is also eyeing mass production in 2027.

China’s CATL is similarly aiming to commercialise its solid-state battery in 2027, but only for small-scale production, the company’s chief scientist, Wu Kai, said at an industry forum in April. Large-scale production would continue to face problems such as high production costs, Wu noted.

Meanwhile, Shanghai-based NIO is reported to have developed a type of “semi-solid-state” battery pack that can travel 1,070 kilometres on a single charge.

China has also set up a dedicated fund of six billion yuan (US$828 million) to fast-track the development of solid-state cells, an industry insider told Caixin. A battery manufacturer must team up with an EV maker to apply for the fund, the publication said, citing the source.

The period around 2028 is expected to be a “tipping point” for the cells’ mass production, TrendForce predicts. All-solid-state batteries could be a game changer for the battery sector. TrendForce pointed to “a significant gap” in the “patent layout” between Chinese companies and their international competitors for the technology. “In the future competition for [all-solid-state batteries], companies from Japan, South Korea, Europe and the US have the opportunity to surpass China and reshape the competitive landscape of the future EV battery industry,” it wrote.

But Zhang thinks the race is too early to call because the technology is still being developed. Battery makers are currently looking at three main chemical routes to make a solid electrolyte, each with their advantages and shortcomings.

“There are no signs yet to show which route will be the best choice,” Zhang says. “Once one of the routes takes the lead, the EV industrial chain will be key in deciding if this solution is actually viable commercially, and China has a massive advantage in this regard.”

This article was originally published on Dialogue Earth with the title “China’s position in the global race for alternative EV batteries” and has been reproduced under the Creative Commons BY NC ND licence.

The post Where does China stand in the global race for alternative EV batteries? appeared first on Focus - China Britain Business Council.

On 14 May, the US government announced huge increases in tariff rates on a range of Chinese exports, most of which are forms of “green” or low-carbon technologies. The measures, which will come into effect on 1 August, include a 100% tariff on the value of electric vehicles, 25% on lithium-ion batteries and 50% on solar cells. This means importers of Chinese goods from the affected categories, which also include medical products, steel and aluminium, and ship cranes, will have to pay the specified percentages to the US government as tax.

Besides representing a new area of tension between the US and China, the tariff hikes have implications for global energy transitions, climate diplomacy, Latin American manufacturing and trade relations, and the very nature of technological progress in the 21st century.

Dialogue Earth spoke to experts from Europe, China and Latin America on their assessment of these issues and more.

Belinda Schäpe
Independent expert and advisor on Chinese climate policy and EU-China relations

The recent US tariffs on green technologies mark the next stage in a trade war with China that could slow down an already delayed energy transition in the US. A race to the top in production would be welcome, but current US policies might not have the anticipated effect. Green technologies in the US will likely become more expensive due to the new tariffs, despite the large subsidies of the Inflation Reduction Act, hampering global efforts to tackle climate change. The EU should not compromise on its climate targets; instead, it should find its own way of handling China’s dominance in green technologies.

The EU needs to carefully balance its objectives of achieving resilient supply chains and climate resilience. Hastily cutting China out of green technology supply chains could jeopardise the EU’s climate objectives. This requires a pragmatic look at the threat from Chinese green technologies: while dependence on China for some goods may create economic and strategic risks, it may not for others. To ensure a smooth energy transition, some reliance on China may be unavoidable in the short- and medium-term, given its dominance in international supply chains. Diversifying these supply chains will require global partnerships, particularly with countries in the Global South, backed by financial firepower and innovation, rather than new tariffs.

With tensions between the US and China escalating, EU-China relations play a pivotal role in maintaining continuity in climate efforts and diplomatic dialogue. A looming tit-for-tat between China and the US on green technologies risks undermining global climate cooperation. Under a second Trump administration, the US might abandon its climate commitments – and with that, one of its few active working groups with China. If US-China climate engagement falls apart, the onus will fall on the EU to work more closely with China towards advancing global climate efforts and to hold China accountable for its climate commitments. The EU should stand ready to maintain its climate leadership position, while carefully navigating trade tensions.

Yao Zhe
Global policy advisor for Greenpeace East Asia

With elections approaching, President Biden’s decision to escalate the trade disputes on Chinese green products is a risky bet. Going tough on China may win over some voters as an immediate political gain, but he could lose China’s trust for climate cooperation. China is expected to take countermeasures in response to the new tariffs, but US-China climate dialogues are set to continue. However, if green trade disputes continue to intensify, it could prevent any substantial coordinated climate effort from the two countries.

US-China climate engagement is now headed by new leads. John Podesta, now America’s top climate diplomat, is also in charge of the implementation of the Inflation Reduction Act. His dual hats will inevitably draw trade and climate talks closer together, and that will be a tough test for the resilience of bilateral climate engagement.

Climate was the special bond stabilising relations between the two countries during difficult times. But recent moves in the US, including pressuring China with “overcapacity” claims and hiking tariffs on Chinese EVs and solar cells, are sending conflicting signals.

Competition may well be the baseline of US-China relations for a long time to come. But that doesn’t mean they have to compete on every front. On climate, there are still good reasons to cooperate, even in green industries.

Chinese companies are exploring opportunities to set up joint ventures and manufacturing centres in overseas markets, including the US. This will help create local jobs and economic growth. If Chinese and American businesses have the desire to work together, politics should not get in the way.

David Tyfield
Professor of sustainable transitions and political economy, Lancaster University

The new US tariffs on Chinese electric vehicles (EVs) show that there are increasingly powerful voices in the US, who get that there is much more at stake with the EV than a minor upgrade of a long-established technology.

We are only at the beginning of the socio-technical evolution of the EV. They are increasingly “supercomputers on wheels”, in an age where everything is digitalised. As a result, EVs are not only central to the transformation of mobility and geopolitical competition in associated key industries of the 21st century, they are also the key technology that will shape forms of urban life, visions of the (“good”) future, and thus, global order and power.

Given the fundamental mismatch between the global worldviews of the current and rising superpowers, it is little surprise that we are witnessing a dynamic of escalating rivalry and progressive “strategic decoupling” regarding the EV, what it will become and how it, in turn, will shape the future world.

The determined presence of the US in a genuine “global EV race” is welcome – not necessarily for the quantitative pace of EV roll-out, nor because American innovation is somehow “better”, but because it at least secures a platform for meaningful competition regarding the qualitative moulding of future EVs. It also ensures that the trajectories of this crucial technology are not ceded by default to the demands of the Chinese Communist Party.

The protectionism involved, though, is a strategy beset by the risk of being self-defeating. Yet this is now unavoidable. What is clearly not on the table any longer is the “best case”, win-win and lowest-risk strategy: that of US-China collaboration.

So, how this latest move affects the global sustainable mobility transition depends on complicated detail as it develops over the medium-term. As the US and China offer increasingly distinct and directly competing visions of the EV, the rest of the world (whose markets both will need) could play one against the other, yielding a positive global outcome. But the opposite outcome may also arise, as a worsening geopolitical split spills over, slowing EV adoption through cycles of distrust that negatively affect this technology.

In short, the tariffs have announced a new era in which intensified global competition could accelerate or slow EV adoption but will definitely make it more turbulent.

Jorge Heine
Research professor at the Pardee School of Global Studies and interim director of the Frederick S. Pardee Center for the Study of the Longer-Range Future at Boston University

This should be a wake-up call for all countries in the region, as it may be the opening salvo of a major escalation in the US-China trade war. Candidate Trump has announced that, as president, he would impose a 10% tariff on all goods imported into the United States and a 60% tariff on all Chinese goods.

Since the 90s, a number of Latin American countries including Chile, Colombia, Peru and Uruguay have bet on free trade and on having access both to the US and Chinese markets (whose economies comprise 40% of the world’s GDP) to increase their exports and grow. This bet has stood them in good stead.

The message coming out of Washington now is that the era of globalisation and open markets is over. Protectionism now rules the roost. For a region endowed with so many of the key commodities for the transition to a green economy, including copper and lithium, the targeting not just of electric cars, but also of batteries and other green renewable energy products like solar panels, is especially worrisome for Latin America.

Leveraging and adding value to these key commodities for the transition to a green economy is, for many Latin American countries, the best option to boost growth, after yet another “lost decade”. Latin American countries are keen to work with both the United States and China to make this happen by triangulating the relationship – much as the region did at the height of the commodities boom.

The message coming out of Washington, however, is that this is a no-go. The US is now strictly prioritising its own internal market, with climate change and the region’s green transition considered mere collateral damage.

Enrique Dussel
Coordinator of the Centre for China-Mexico Studies at Mexico’s National Autonomous University

In the past few years, we have been experiencing a conflict between the US and China. Many are speaking of “near-shoring”, “onshoring” and “offshoring”. I would add “security-shoring” to the conversation, which places US national security above trade and has a direct impact on third countries.

Recently, the expectation in the US is that third countries must use the same regulations against China. It is the “invest, align, compete” strategy that the US has taken against China. The “align” aspect affects third countries, because the US is looking for third partners to join against China; the expectation is that Mexico aligns itself with security-shoring strategy in all areas.

In the electoral field, both Biden and Trump agree on this, and the game will be who is tougher against China.

This article was originally published on Dialogue Earth with the title “Roundtable: Implications of US tariffs on China’s ‘green’ products” and has been reproduced under the Creative Commons BY NC ND licence.

The post America’s new tariffs on China’s ‘green’ products: 5 experts weigh in appeared first on Focus - China Britain Business Council.

2024 started with a surprise for the automotive industry as Chinese manufacturer BYD announced that it sold more battery electric vehicles (BEVs) (526,409) than Elon Musk’s Tesla (484, 507) in Q4 of 2023. This is the first time that sales by a Chinese company have outpaced the US titan.

BYD (short for ‘Build Your Dreams’) was founded in 1995 with an initial focus on rechargeable batteries. It expanded into automotive after buying a Shaanxi-based car company in 2003, using its battery experience and supply chains to pivot to electric vehicles. It sold over 3 million EVs in 2023 (including both hybrid and battery-only models), an increase of 62% over 2022. Its popular models include the best-selling Qin Plus, a compact car that retails for between RMB 99,800 and 176,800 (£11,065-19,602), the Dolphin hatchback, which retails for between RMB 116,800 and 139,800 (£12,949-15,497), and the premium Yangwang SUV.

Technically, Tesla still sold more BEVs across the whole of 2023 (1.81 million vs. BYD’s 1.57 million), and it remains the world’s most valuable car maker, but as Sino Auto Insights noted, “symbolically an important line has been crossed”. Tesla’s innovative approach, high-performance vehicles and strong branding (driven, in part, by the inescapable figure of Elon Musk) have contributed to its dominant position, but its higher price point has made it less accessible to a broader market segment, an area where BYD has gained a competitive edge.

This edge over other Chinese brands and, increasingly, international brands, has been sharpened by a number of external and internal factors.

Like all Chinese EV companies, BYD has benefitted from extensive Chinese government subsidies over the past few decades. The government has been subsidising producers of EVs for public transport, taxis and the consumer market since 2009. More than RMB 200 billion (£22.14 billion) was spent on EV subsidies and tax breaks in China over the 2009-2022 period. Moreover, EV consumers in China have received purchase subsidies from the government for a number of years.

China also has a very strong position in the supply chains for the critical materials used to make EV batteries, especially rare earths. At present, China accounts for 85% of the world’s rare earth processing and 92% of rare earth magnet production.

In terms of internal factors, BYD has also obviously benefitted from its background as a battery manufacturer, which has given it a head start in terms of technology and access to materials. By keeping battery production in-house, it can also achieve significant cost savings.

The big threat posed by BYD’s recent success is increased competition for established automotive brands.

Western markets have largely taken a protectionist stance in response to the massive growth of China’s EV sector. In September 2023, the European Commission launched an investigation into whether to impose higher tariffs on Chinese BEVs (the standard EU tariff on imported vehicles is 10%). The US currently imposes 25% tariffs on Chinese automobiles, and the Biden administration is reportedly considering upping this levy. Chinese automakers could get around this by setting up factories in Europe or in Southeast Asian countries.

Nevertheless, some commentators suggest that BYD and Tesla are so far ahead of the field that other companies are already struggling to compete. Indeed, their growth is showing that brand recognition or company history are not predictors of success in the EV market. Future growth will come down to things like AI integration and battery technology, rather than just the cars themselves, giving Silicon Valley and fast-moving Chinese companies a leg-up over traditional car manufacturers.

Now the question for BYD will be whether it can translate its current sales figures, most of which are concentrated in the Chinese market, into global success. For Tesla and other EV manufacturers, the rise of BYD serves as a call to innovate in an increasingly competitive market, innovation that could have a positive knock-on effect in other areas. Ultimately, getting more EVs of any brand on the road is an important step towards giving more people more access to sustainable transportation options.

The post How a Chinese EV brand overtook Tesla appeared first on Focus - China Britain Business Council.

The electric vehicle (EV) sector in China, as elsewhere, has benefitted from government support in its early phase as an up-and-coming green industry. The government has been subsidising producers of EVs for public transport, taxis and the consumer market since 2009. Moreover, EV consumers in China have received purchase subsidies from the government for a number of years.

More than 200 billion RMB (US$28 billion) was spent on EV subsidies and tax breaks in China over the 2009-2022 period. In 2022, the country sold more than 6 million EVs, accounting for half of all sales globally.

As the market has matured, government support and subsidies have declined. Purchase subsidies for EV consumers were phased out at the end of 2022. And, according to information gleaned by China Dialogue from an internal industry meeting, it is likely that other subsidies for EV producers, such as tax breaks, will also be phased out.

Can China maintain its frenetic pace of transport electrification as subsidies disappear? And will the rate of carbon reduction in the sector be affected?

Subsidies have accelerated transport towards carbon peaking

As of the end of 2022, carbon emissions from transport accounted for about 10% of China’s total carbon emissions, making it the third largest source after the power sector and manufacturing. The major share of those transport emissions came from road traffic. Electrification has a significant part to play in reducing road transport emissions and enabling peak carbon to come as soon as possible.

China needs to meet domestic demand for new cars with EVs, making sure they capture the new market, while also accelerating the EV substitution of conventional combustion vehicles on the existing market. To this end, a comprehensive set of financial support policies have been rolled out.

At a national level, China uses exemptions on consumption tax to help lower production costs for EVs and fuel cell vehicles. (In China, consumption tax is payable by producers of luxury and environmentally unfriendly goods, including cigarettes and cars). At the same time, consumers have been spurred with purchase subsidies and relief from vehicle purchase tax. China also exempts car owners from vehicle and vessel tax, while providing infrastructural support to optimise conditions for EV usage.

Meanwhile, regional administrations can offer localised subsidies and other incentives to businesses and consumers, complementing central government support and making EV ownership even more attractive. The municipal government in Chengdu, for example, which wants 800,000 EVs on the road by 2025, awards up to 50 million RMB (£5.5 million) to any carmaker that develops and brings a new EV model to market, and also gives individual consumers 8,000 RMB (£890) for acquiring an EV.

How are subsidies being phased out?

The EV industry and market have grown rapidly in China, with policy backing, and for eight years now the country has ranked number one in the world for both production and sales. EV ownership in China at the end of 2022 reached 13.1 million units, accounting for more than half of the global total.

As the market has developed, there has been a winding down of incentives.

One of the best-known was the vehicle-purchase subsidy for EVs, particularly for private buyers. Funded by the state, the policy gave consumers a 4,800 RMB (£530) discount on the cost of a PHEV and a maximum 12,600 RMB (£1,400) on a BEV, enabling them to afford EVs that met the policy criteria.

In 2015, the Ministry of Finance announced that subsidies for models other than fuel-cell vehicles would be reduced year by year, and in 2019 the end was declared on subsidies for BEV passenger vehicles with a range of less than 250km. A further announcement in 2020 specified another reduction, and the subsidy was fully withdrawn at the end of 2022, after 13 years.

Support in the form of purchase-tax exemptions has also tailed off, having been extended three times since launching on 1 September 2014. Under the terms of the most recent of those extensions, the tax-free allowance for an electric passenger car purchased between 1 January 2024 and 31 December 2025 is a maximum of 30,000 RMB (£3,320). For a vehicle bought between 1 January 2026 and 31 December 2027, purchase tax will be levied at 50%, with a maximum allowance of 15,000 RMB (£1,660).

The withdrawal of vehicle-purchase subsidies and phasing out of purchase-tax incentives raises costs for buyers, which could result in higher prices for EVs coming onto the market, deterring consumers.

In fact, some car companies were facing losses even before subsidies were withdrawn. Corporate earnings reports show that most Chinese EV brands have failed to achieve profitability, having relied on the major technology companies and traditional auto manufacturing to establish themselves. Among Chinese carmakers solely selling EVs into the domestic market, BYD is the only one making an annual profit.

Investment in R&D and fixed assets is the main reason for car company losses. As one report points out, EVs require much higher technology R&D investment than conventional vehicles. At a scale of 400,000 vehicles, for example, EV makers invest more than twice as much as producers of conventional cars. Fluctuating prices for battery materials, the rising price of traction batteries and the tight supply of chips also add to the pressure on EV makers.

What determines the phasing out of subsidies?

EV firms may not be profitable as yet, but this is not the key criterion for deciding on the timing for phasing out incentives. A recent article by the lead specialist at China Automotive Technology & Research Center (CATARC), Liu Bin, lists eight key factors affecting the timing for withdrawing vehicle-purchase tax incentives: the scale of the EV market as a share of new car sales; the reaching of price parity between EVs and conventional vehicles; the degree of consumer acceptance; the industry’s stage of development; the government’s financial situation; requirements for environmental protection; the withdrawal of support policies abroad; and the need for domestic economic stimulus.

According to data from the Ministry of Commerce, the share of EVs as a fraction of new car sales increased from one-eighth in 2021 to one-quarter in 2022. Addressing the 2022-2023 annual conference of the China Clean Transportation Partnership (CCTP), Liu Bin said: “It is generally forecast to be over 30% this year and around 40% in 2025. Looked at this way, the gradual withdrawal of vehicle-purchase-tax incentives should be considered without delay.”

In terms of full life-cycle cost of ownership, the gap between EVs and conventional vehicles is shrinking. A report from the International Council on Clean Transportation (ICCT), released in 2021, analysed eight EVs compared with conventional vehicles. It found that lifetime costs for only one of the EVs were on par with those of conventional vehicles in 2019. For the model with the largest gap, the cost of ownership was around £4,700 higher. However, by 2030 lifetime costs for the four BEVs among the eight were predicted to be £4,700-£6,200 lower than that for conventional vehicles. While costs for the other four, which were PHEVs, essentially matched those of conventional vehicles.

Regarding market development, the scale of the EV market will gradually stabilise, with technology and products becoming basically mature and market competition being relatively intense, predicted Liu Bin in his article. Firms will focus more on improving efficiency, reducing costs and seeking competitive differentiation. Liu Bin believes that policy should give more ground to the market at the current stage, allowing incentives to be steadily withdrawn.

However, he also suggested that compared with the scenario of restoring a 10% levy, maintaining vehicle purchase tax incentives beyond 2023 will benefit EV sales to the tune of around 1.3-2.6 million units per year. Continuing to offer EV purchase-tax incentives will significantly accelerate electrification of the transport sector, he wrote. It will also bring forward, from 2030 to 2025, achievement of the 40% target for sales of new-energy-based and clean-energy-powered transportation affirmed in China’s “Action plan for carbon peaking by 2030”, he noted.

What comes next?

“China is still providing support for EVs in terms of policy, but the policy is shifting from carrot to stick”, ICCT researcher Chu Yidan told China Dialogue.

Since 2018, China has operated a “dual-credit” scheme for makers of passenger cars. This involves parallel sets of credits determined by “average fuel consumption” levels and output of “new energy vehicles” (NEVs). Firms that meet the benchmarks are awarded positive credits, while those that fail to receive negative credits. One way for firms to offset negative scores and reach zero is by buying NEV credits from other companies. Those that fail to get to zero have to submit their offset plans to the Ministry of Industry and Information within a specified period, and realise those plans. Otherwise, the offending company is subject to penalties, including suspension from producing and selling high-fuel-consumption products, and from expanding production capacity. To meet benchmarks, carmakers have to produce more, cleaner, and better (having a greater range, for example) EVs. By tightening its policies in this way, China is accelerating its transition towards electrification.

From the corporate perspective, Liu Bin spoke at the CCTP conference about how reducing the green premium on the price of EVs is the key to achieving the transition to zero-emissions vehicles. Only by speeding up cost reductions can stakeholders in the market be lastingly incentivised to drive the transition to clean transportation.

Cost reduction begins with technology upgrading and product differentiation. “Apple phones replaced Nokias because they added new features that won favour with consumers”, says Liu Bin. “New features brought in with EVs include functions for assisted driving and smart cockpits, which also encourage consumers to buy them. If added features do not attract buyer support, however, then the increased costs become a drag on sales instead.” Internal management and strategy also become key factors for a company in reducing costs. Carmakers should consider key nodes in policy development and the changing costs for different models, and determine their targets for profit, production and sales accordingly.

Municipalities may also manage to continue supporting new EV development by providing subsidies and tax incentives in lieu of central government. According to He Hui, project director at ICCT China, there are a range of financial and non-financial incentives that cities can exploit. These include exclusive parking spaces and ultra-low- or zero-emission zones; privileged right-of-way or road use; convenient charging facilities; and reduced or exempted service fees for parking and charging. These can strongly incentivise development of EVs and spur consumer interest in buying the vehicles, He added.

This article was originally published on China Dialogue with the title “Life After Subsidies for China’s EVs” and has been reproduced under the Creative Commons BY NC ND licence.

The post Can China’s EV market thrive without subsidies? appeared first on Focus - China Britain Business Council.

With a growing focus on sustainable transportation and environmental consciousness, Chinese original equipment manufacturers (OEMs) are making significant strides in BEV battery technology, revolutionising the industry and impacting markets worldwide.

China’s emergence as an electric vehicle (EV) powerhouse has been underpinned by its dedication to innovative battery technology. One of the most critical components of any BEV is its battery pack, which determines range, charging speed, and overall performance. Chinese researchers and manufacturers have invested substantial resources into developing high-performance battery chemistries, resulting in lithium-ion batteries with improved energy density, safety and longevity.

Several Chinese OEMs have made significant contributions to the evolution of BEV battery technology.

“In some ways, the environment in China for developing NEVs is unique in that there are literally hundreds of companies of differing scale and experience,” says David Gregory, China Market Business Advisor, CBBC. “Some are legacy players from the automotive industry, of course, but many have roots in completely different industries, all competing intensely for the home customer and in some cases, for those overseas, as well. This creates an extremely competitive and creative environment where technological advances that increase range, efficiency, safety, and convenience are moving at pace”.

Contemporary Amperex Technology Co. Limited (CATL) has risen as a global leader in BEV battery technology. CATL’s lithium iron phosphate (LiFePO4) batteries are known for their enhanced safety features and are widely used in both passenger and commercial electric vehicles. Moreover, CATL’s pursuit of solid-state battery technology could potentially revolutionise the EV industry by addressing concerns about energy density and charging times.

Another prominent player is BYD Auto, which has focused on vertical integration by manufacturing its batteries in-house. BYD’s “Blade Battery” technology is designed to improve safety by minimising thermal runaway risks – when the battery’s temperature drops below or above a safe range and damages it or causes fire – and is a testament to its commitment to innovation. This innovative approach has not only bolstered the company’s reputation, but has also accelerated the global shift toward safer and more efficient EV batteries.

Geely Auto Group, one of China’s largest privately-owned automotive companies, has also demonstrated a commitment to BEV technology. Geely’s focus on research and development has resulted in cutting-edge battery management systems and thermal management technologies. These innovations contribute to longer battery life, improved performance and overall enhanced user experiences.

The United Kingdom, with its commitment to reducing carbon emissions and promoting sustainable transportation, provides a fertile ground for the adoption of BEVs. Chinese OEMs have recognised this potential and are actively seeking opportunities to expand their market presence in the UK.

“In China, the NEV sector started with huge government support and subsidies, initially to OEMs then to buyers. This is then coupled with the restrictions of ICE vehicle number plates in various tier one and two cities so those with the need and desire to purchase vehicles were persuaded down the NEV route,” says Mark Xu, CBBC Sector Lead, Advanced Manufacturing and Transport. “The market environment in the UK is somewhat different so it will be interesting to see how NEVs take off in the UK”.

BYD’s electric buses have found a strong market in the UK, contributing to the country’s efforts to electrify public transportation. With an emphasis on cleaner air and reduced noise pollution in urban areas, British municipalities have shown interest in BYD’s electric bus solutions. These vehicles not only promote sustainability, but also highlight Chinese OEMs’ commitment to environmental responsibility on a global scale.

While the integration of Chinese BEV technology into the UK market presents numerous opportunities, challenges also arise. One primary concern is the perception of Chinese brands in a market traditionally dominated by established European manufacturers. Overcoming this will require Chinese OEMs to emphasise their technological advancements, safety features, and commitment to quality.

Government incentives and charging infrastructure will be pivotal in accelerating BEV adoption in the UK. For example, Chinese EV brand Nio recently pushed back its UK launch until it has developed the infrastructure to offer battery swaps. Nio’s 1,200 ‘Power Swap’ stations are one of its main USPs in China, allowing drivers to exchange their depleted batteries for new ones in minutes. Chinese OEMs must collaborate with local authorities and businesses to establish a robust charging network, addressing range anxiety and ensuring a convenient experience for BEV owners.

The UK market, driven by environmental concerns and governmental support, provides a promising platform for the integration of these cutting-edge technologies. As collaboration between Chinese OEMs and UK stakeholders continues, the road ahead for BEVs appears increasingly charged with potential, paving the way for a greener automotive future.

Photo by Michael Fousert on Unsplash

The post How China’s EV Battery Technology Will Benefit the UK appeared first on Focus - China Britain Business Council.

The global shift towards sustainable and eco-friendly transportation solutions has given rise to the rapid adoption of electric vehicles (EVs) across the world. China has been leading this transformation and has been strengthening its EV market for over a decade. The size of the EV market – which grew 29% year-on-year in the first quarter of 2023 to over 8 million vehicles – has led to the development of a comprehensive charging network.

Although battery-powered EVs (BEVs) make up 70% the market, plug in hybrid electric vehicles (PHEV) are also seeing huge growth, with a surge of 88% year-on-year. This growth comes despite the fact that the Chinese government has discontinued the 13-year-old new energy vehicle (NEV) purchase subsidy, and is in no small part due to the country’s vast and successful EV charging infrastructure. This infrastructure means that it is not just cheaper and more environmentally friendly to drive an EV in China today, but also a lot more practical than it was in the past.

In 2014, China started to roll out EV charging infrastructure in urban areas, along highways and in key regions where EV adoption was encouraged. By 2018, there were approximately 330,000 public charging points servicing 2 million electric vehicles. Today, there are over 1.2 million charging stations, demonstrating the country’s rapid progress in building a comprehensive charging network and commitment to sustainable mobility. The dominant provider of charging stations across China was the State Grid Corporation of China, but an increasing number of private car manufacturers and energy suppliers are joining the EV charging race.

Chinese original equipment manufacturers (OEMs) have emerged as significant players in the EV market. While compatibility among different EV models is generally high, it is important to note that not all EVs made by Chinese OEMs work with the same charging stations. The charging infrastructure in China includes various types of connectors and charging speeds, leading to a requirement for adaptable charging solutions.

The compatibility of internationally made EVs with Chinese charging stations also depends on the type of charging connector used. However, as the industry has evolved, many internationally manufactured EVs now offer adaptability to the Chinese charging infrastructure. This adaptability has allowed foreign EV manufacturers to ease into China’s vast EV market with less friction.

“As with other areas of BEV technology, China continues to generate ideas to make ownership and utilisation more practical. One of the more creative ideas is the battery swap concept, which is now being widely introduced,” says Mark Xu, Sector Lead, Advanced Manufacturing and Transport at CBBC.

Battery swapping offers a quicker alternative to conventional charging, addressing the time-consuming aspect of recharging. Users can replace depleted batteries with fully charged ones, significantly reducing waiting times. This approach is particularly beneficial for EVs used by ride-hailing platforms such as DiDi and delivery services including Meituan and ele.me, where downtime affects profitability.

This concept has been embraced by Chinese EV companies like Nio. Nio has set up an extensive network of over 1,300 battery swap stations, allowing its customers to exchange batteries quickly, akin to refuelling a conventional vehicle.

International energy company bp has also recognised the potential of China’s booming electric vehicle market. Bp, known for its expertise in fuel retailing, has made strategic moves to establish a foothold in China’s EV sector. One of its initiatives involves collaborating with DiDi to develop a charging network through its joint venture, bp Xiaoju. This partnership already provides rapid charge points across a network of around 400 charging hubs, covering 30 cities.

“We’re really excited by our joint venture with DiDi in China. Their drivers are completing around 25 million journeys a day, covering approximately 300 million kilometres and all these journeys need to be electrified. We’re doing that and we’re serving other fleet customers across the country,” Richard Bartlett, head of bp pulse says. “China holds massive market potential and bp pulse has substantial potential for expansion there. And we’re expanding fast. bp pulse entered the China market in 2020 and today has around 10,000 DC rapid or faster charge points. We see massive opportunity for more growth and fast, launching us towards our ambition to be China’s leading EV charging brand, providing ultra-fast and rapid charging services to customers when and where they need it.”

As well as the State Grid Corporation of China and NIO, Chinese tech giants Tencent and Alibaba have also invested in EV charging infrastructure through their respective platforms. They aim to integrate charging services into their ecosystems, offering users the convenience of locating, reserving and paying for charging services through their apps.

In terms of international brands, Tesla has taken a unique approach to charging in China. In addition to its widely adopted standard charging connectors, Tesla has also established its own network of Supercharger stations across the country. These Superchargers are designed exclusively for Tesla vehicles and offer faster charging speeds compared to standard charging stations. This approach aligns with Tesla’s commitment to providing seamless charging experiences for its customers.

China’s EV charging landscape is dynamic and rapidly evolving, accommodating a diverse range of EV models and charging solutions. The compatibility of both Chinese and international EVs with charging stations has contributed to the expansion of the EV market. As China continues to witness remarkable growth in EV adoption, collaborations between companies like bp and DiDi underscore the global interest in shaping the future of sustainable transportation. With Tesla’s unique charging approach complementing the infrastructure, China’s electric vehicle sector is poised for continued progress and innovation.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

The post China’s Electric Vehicle Charging Landscape appeared first on Focus - China Britain Business Council.

Sales of China’s so-called new energy vehicles (NEVs) more than doubled between November and December of 2021. According to the China Passenger Car Association (CPCA), full-year deliveries reached a record 2.99 million units, representing 14.8% of new car sales. 

The Chinese government forecasts that by 2035, EVs are expected to account for 50% of all new car sales. Although China could face some hurdles in achieving this target, the country is already well ahead of its government’s forecast to reach a 20% nationwide penetration rate by 2025. Further, it is hoped that by 2030, three in five new cars on China’s roads will be powered by electricity instead of fossil fuels.

As a result, China’s EV market is hyper-competitive. Tesla may still dominate at present, but there are an increasing number of popular home-grown brands. The combined sales of Chinese brands NIO, Xpeng and Li Auto are estimated to have reached around 280,075. Although this is still 13% less than Tesla, whose 2021 deliveries more than doubled to 321,000 units, these domestic brands are quickly developing aggressive new expansion models. 

“In general, there is a notable preference for international brands of passenger vehicles in China, with 62% of consumers choosing an international option,” David Gregory, China Business Advisor at CBBC, told FOCUS. “However, there is a striking contrast within the EV market where nine of the top ten manufacturers are domestic companies, including SAIC, BYD and GAC Group.” Gregory added that a number of Chinese companies that concentrate solely on producing EVs are emerging, suggesting that China will continue to lead the way not only in terms of market size but also in the development of the EV industry.

“EV brands that make it in China will be well prepared for sale in other parts of the world. The quality of Chinese cars including EVs is, compared to a few years ago, at an extremely high level,” explains Thomas Engel, product launch manager at Volkswagen Anhui.

What new government support is available for EVs in China?

One of the key factors driving the EV market is the slew of local and central government incentives. NEV subsidies were introduced in 2009 to help prominent Chinese EV companies such as NIO and Xpeng to grow quickly. Subsidies not only aided the development of the companies themselves; they also made EVs more affordable for consumers.

However Professor Kent Deng of LSE believes the subsidies are falling out of fashion: “The government provided blanket subsidies to encourage investment in and consumer demand for electric cars over the past 10 years. But the subsidies are on the decline, cut by 30% last year.”

Instead of direct subsidies, China has turned to a market-based approach. In 2017, the government introduced a new policy that asks automakers to trade ‘New Energy Vehicle’ credits. These credits are similar to a reward-based system, whereby for each EV that is produced, carmakers receive positive credits (and vice versa). The scheme is designed to further strengthen China’s growth in the global automobile industry. In addition, the government is hoping to wean carmakers off rebates to foster survival of the fittest in the overcrowded marketplace.

In 2020, the government announced a new policy that called for mandatory emission quotas for internal combustion engines (ICE). China is determined to ensure EV manufacturers are fit for purpose, with the ultimate goal of phasing out ICEs. The impact of these policies remains to be seen, as the reduction in subsidies will inevitably translate to higher consumer prices. Nevertheless, the government is confident that slashing subsidies will have a minimal impact on NEV sales in 2022, which are hoped to reach an estimated 6 million units. 

What challenges are facing the EV market in China?

Beijing’s efforts to encourage the purchase of greener vehicles have certainly paid off. Today’s consumers are more willing to purchase an EV, yet they still face some practical drawbacks. 

One main drawback is the lack of charging points. Some Chinese consumers have held back from buying a pure-electric car as they are concerned by the inadequate number of charging facilities. Although boasting the world’s largest charging network for EVs with an average of one charging station for every three EV cars, China has not yet reached its ideal ratio of one car to one charger. Indeed, during national holidays, some consumers have faced queues of up to four hours to charge their vehicle on motorways where charging facilities are stretched to the limit. 

“Very often, the sale of EVs is connected to the availability of charging infrastructure. And yes, [in China], this can be improved. But once customers make the step from combustible engine cars to EVs, they adjust quite fast and find ways to charge their cars,” says VW’s Engel.

In older neighbourhoods, one of the main challenges is installing charging circuits, as the buildings cannot take large power loads. In addition, many rural areas lack the infrastructure for EVs. Charging points are mainly concentrated in central business districts in top-tier cities, where the commercial returns of running charging units are much higher. The use of EV cars in rural areas is still significantly less than in major urban cities and one of the main questions that needs to be addressed is how to incentivise station owners to invest in ‘low utility’ areas.

Engel hopes that “car batteries become more and more bi-directional. In case of a temporary power loss in a rural area, I see an advantage in being able to use the energy from a car for a house.”

Inside an Xpeng, a popular Chinese electric car brand

In order to further address this issue, the government is requiring all new residential buildings to install charging posts in parking spaces. Policymakers have also launched a New Energy Development Plan and a Technology Roadmap 2.0 to further support the construction of the required infrastructure. 

Another challenge is high price sensitivity. China is aiming to scale back price support for consumers because of the improving costs of battery technology. However, there is currently an acute global shortage of key battery components such as lithium, leading to worries about a huge negative impact on the EV market. 

Fortunately, China has been investing in battery recycling technologies, and it is hoped this will help to avert supply shortages. Indeed, if battery prices continue to decline in the next five years, EVs could achieve price parity with ICE. 

What targets is China’s EV market working towards in future?

At the macro level, the upward momentum of the use of EV cars is helping China to achieve its climate change goals. 

“Seventy-two percent of China’s oil use currently depends on foreign imports. So the government has a desire to cut its oil intake to save hard currency,” asserts Professor Deng.  “The promotion of electric cars seems, to a great extent, to be able to foot the bill,” he adds. “The government is also committed to reducing greenhouse gases. The promotion of electric cars now kills two birds with one stone.”

China hopes to cut carbon dioxide emissions to near zero by 2060. With the growth of the EV market, the outlook on the government’s aims and objectives is positive. Another factor underpinning the government’s support for EVs is that it will help to reduce air pollution and reduce carbon emissions. Furthermore, the use of EVs will strengthen China’s technological progress and economy, especially as more European countries look to China to supply their new energy vehicles.  

Over the next decade, there is no doubt that EVs are going to become increasingly dominant, but Deng says that “China still has a long way to go — in 2020 China had 281 million cars on road, only 5 million were electric ones, or 1.8%.” As new rules and policies slowly come into effect, it will be worth re-evaluating the EV market as it continues to surpass expectations. 

If you are a British company in the electric vehicle industry, call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can help you find the perfect partner to support your growth in China. 

The post How big is China’s electric vehicle market really? appeared first on Focus - China Britain Business Council.