As the European Union moves to ban the sale of new petrol and diesel cars from 2035, car makers and countries are taking steps to help smooth the transition. While the majority of electric vehicle (EV) markets are still heavily dependent on subsidies and financial incentives from governments, China’s electric cars are now competitive, attractive and affordable. This makes it a crucial case study for European companies who wish to follow in their footsteps.
Of the world’s 10 best-selling EV brands, half are Chinese, led by BYD, which lags only Tesla in global market share and is starting to ship its electric cars abroad. It took China more than a decade of subsidies, long-term investments and infrastructure spending to lay the foundation for its EV market to start standing on its own. Since 2009, 14.8 billion US dollars in subsidies have been provided to EV consumers. Direct state aid was supposed to end in 2020, but to help sales rebound from the pandemic in 2020, the government extended monetary incentives and purchase-tax exemptions of EVs until 2023.
China now has the biggest electric cars market in the world, making up 57% of global electric vehicle sales. Producers compete on prices and features, a sign that they have stopped being dependent on subsidies. But financial incentives are not the only reason for the Chinese to switch to electric cars. Many cities have introduced additional restrictions on fuel-powered cars, and advantages to electric ones. In Chengdu, Southwest China, traditional cars are restricted from being on the road certain days of the week to help reduce congestion and pollution. Electric vehicles, however, are free to come and go. For electric cars, parking is free for the first two hours at public parking lots. These incentives lower the costs of driving electric cars and boost their attractiveness.
China doubled its number of charging stations in one year, reaching around four million in the country, an essential step to ensure that drivers of electric vehicles have the reassurance that they will be able to charge their batteries as necessary. Rolling out adequate charging infrastructure is one of the main challenges faced by producers of electric cars, as batteries still offer less driving autonomy than fuel tanks, and take much longer to recharge. This generates what is known as “range anxiety” among prospective EV buyers hesitant to make the switch.
As of today in Europe, EVs are suitable for those who commute to work daily and can recharge their batteries every night, but they have limited use for any type of longer drive, as the availability of charging stations is unpredictable throughout Europe. According to the Electric Vehicle Database, the average battery range currently sits at 326 km, enough for everyday use. But a cross-border European road trip would require charging along the way, and the infrastructure across the continent remains patchy in many areas. Charging stations are still unevenly distributed, and car producers and governments are pushing to make them increasingly available to pave the way towards a greener future.
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