China's EV Push Could Help the Country Create a Global Auto Company

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【Summary】With China moving towards becoming a leader in EV sales, the country has an opportunity to create an automotive company to rival the likes of Audi, General Motors, and others.

Original Vineeth Joel Patel    Dec 29, 2017 10:30 AM PT
China's EV Push Could Help the Country Create a Global Auto Company

It's no secret that China is the world's largest automotive market. While Reuters reports that China's auto market will slow down to three percent next year, automakers still managed to shift a total of 25.8 million vehicles in the first 11 months of 2017. That's a staggering number. Furthermore, new-energy vehicles (NEVs) accounted for a large percent of the sales, as the outlet reports that sales of the vehicles jumped 51.4 percent from January to November. NEV sales are so good, in fact, that the vehicles are on set for a record year with a total of 700,000 NEV sales in the country this year.  

Perfect Time For China To Capitalize

Electrified vehicles and those that put fuel economy and emissions regulations first are playing a large role in China's automotive future. According to Bloomberg, China's push towards NEVs and its incredible sales figures make it the perfect time for the country to come out with an automotive brand to rival those of BMW, Mercedes-Benz, General Motors, and Audi. 

As the outlet reports, China's President, Xi Jinping, is looking to put the nation on a new path with stricter regulations and laws that will reduce the country's pollution and its dependence on imported oil. These changes could, as Bloomberg points out, help give China an opportunity to create a world-class automotive brand for the first time in the country's history. 

China is extending a helping hand to companies leading the way in new forms of thinking, especially in the e-commerce, social media, and smartphone segments, reports Bloomberg. Beijing, on the other hand, is focusing more on companies that are looking into NEVs.

"With the development of smart electric vehicles, Chinese automakers are embracing great opportunities to build higher-end brands," said William Li, a founder of NIO, a Chinese automaker that recently unveiled the ES8. "We can change lanes and lead." 

Pricing Is A Major Factor

While automakers like Toyota are still working on finalizing their NEV program in China, consumers in the country can purchase the electric ES8 SUV that costs 448,000 yuan (roughly $67,830) before subsidies. NIO's battery-powered SUV is much cheaper than other offerings, like the Tesla Model X, which carries a price tag of 836,000 yuan (approximately $127,581). The vehicle's affordable price tag and usable range of 311 miles on a single charge aren't the only things that will make the vehicle likely to succeed. Bloomberg, citing Robin Zhu, a Hong Kong-based analyst, reports that NIO's financial bakers will help the company catapult to the top. 

China has already made large changes to its automotive regulations to aid automakers looking to sell NEVs in the country, as it aims to hit a goal of 7 million NEVs on the road by 2025. In order to reach its target, the country is giving out subsidies and tightening regulations surrounding fossil-fuel vehicles, reports Bloomberg and even more changes are coming. 

According to the outlet, NEV quotas for automakers importing more than 30,000 traditional vehicles into China are set to go in place. Automakers that meet the above parameter will have to achieve an NEV credit score of approximately 10 percent for their vehicles. Credits, as Bloomberg reports, range from two to five points per NEV. Creating a NEV with more range or ones that run on pure electricity garner more credits. The requirement jumps to 12 percent in 2020. Automakers that fail to meet the quota can either buy credits from other companies or pay a hefty fine. 

"With electric cars, the cards are being reshuffled," said Wolfgang Bernhart, a senior partner at Roland Berger Strategy Consultants in Munich. "We'll see significantly more competition." 

More competition, at least for Chinese automakers will be a good thing. 

via: Bloomberg

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