NEV innovation can help sector stay ahead of competition
Production and sales of newenergy vehicles (NEVs) have soared in China since the beginning of 2022, thanks to the central government’s persistent efforts to accelerate highquality manufacturing and build up the nation’s industrial competitiveness in the global marketplace. At the same time, China is committed to green and sustainable development in order to reduce greenhouse gas emissions and lead in the worldwide push to combat climate change.
Benefiting from China’s huge market size and the government’s pro-growth measures, NEV production will continue to flourish and NEVrelated new technology innovations will continue to be rolled out in the world’s second-largest economy.
China now leads the world in both NEV production and sales, according to data from China Association of Automobile Manufacturers. This year’s total NEV production is estimated to reach approximately 7.2 million units, surpassing the combined output of all other countries in the world.
Just like China’s meteoric rise in manufacturing the world’s top-caliber high-speed train systems, industrial robotics, and advanced telecommunication hardware and software, NEVs have become another landmark industrial lane in which China has begun to establish its global competitive edge, bolstered with many locally developed technological advantages, especially in electric battery technology.
In order to expand the country’s advances in this new industrial line, the country needs to consistently rely on ramping up NEV sector research and development, improving industrial design levels pertaining to NEVs, and extending the government’s tax credits and other favorable policies in the coming three to five years before winding back. Currently, NEV sales in China can enjoy a consumption tax exemption, which is 10 percent of an NEV’s retail price. This tax holiday should continue, because other governments are catching up, quickly.
It is important to maintain China’s leading position in the NEV sector. The high growth rate of Chinese NEV makers and Chinese NEV brands’ strong market penetration abroad have effectively backed up the country’s overall economic performance in 2022, a year of largely gloom around the world because of the pandemic and geopolitical clashes in the West.
To stay ahead of the curve in the competition, Chinese companies should continue to concentrate their resources, lure the most talented technicians to their research and development teams, and focus on innovating even more powerful, cost-effective, and longlasting batteries and in-vehicle smart infotainment systems that are enabled by 5G and AI. And, the country should also focus on maintaining NEV sector supply chain resilience, particularly the supply of lithium and other materials needed for making the batteries. In addition, China should attach importance to original innovation of core technologies such as automotive chips. Only through constant and indigenous technology innovations can China sustain its global leading position in the increasingly competitive industry.
Meanwhile, China should continue to fiscally support both NEV makers and incentivize Chinese motorists with subsidies and other targeted favorable policies to facilitate their switch from dumping petrol guzzling SUVs to buying clean NEVs.