The Chinese government's push for the new energy vehicle (NEV) market has drawn significant attention from global multinational automakers. While each player is exploring different paths in the NEV space, one thing remains clear: power batteries are at the core of this technological race. China's battery industry is currently transitioning from a period of catching up technologically to a phase of synchronized development. With continued policy support, breakthroughs in technology and collaborative innovation are essential for long-term success.
Japanese automakers, particularly those with a history of relying on traditional fuel sources, have taken an early lead in exploring various new energy technologies. Toyota, for instance, has pursued a multi-pronged approach, including hybrids, pure electric vehicles, and hydrogen fuel cell technology. In contrast, companies like Renault-Nissan Alliance and Volkswagen have focused more heavily on pure electric vehicles, which are seen as a less technically complex transition path.
Chen Qingquan, an academician of the Chinese Academy of Engineering, has emphasized that the viability of purely electric vehicles depends largely on battery performance. Despite their advantages, batteries are electrochemical systems with inherent limitations. On the other hand, Japan’s hybrid systems, while complex, offer promising potential by allowing the engine to generate electricity rather than directly powering the vehicle.
As policy-driven support for pure electric vehicles begins to shift, the industry is preparing for a future where all new energy vehicles will compete directly in the open market. With subsidies set to decrease over the next three years, the real test for Chinese brands—and indeed for all players—will come when they must stand on their own without financial backing.
The past few years have marked a golden era for the NEV industry, with sales growing rapidly. In 2017, total new energy vehicle sales reached 560,000 units, a 75% increase compared to the previous year. This growth far outpaced the modest 2.1% rise in overall auto sales, highlighting the sector’s explosive potential.
Recent data shows even stronger momentum. In January and February of this year, new energy vehicle sales rose by 200% year-on-year, reaching nearly 75,000 units. Industry targets for 2023 exceed 700,000 units, and with current trends, actual sales may surpass these projections.
At the same time, the government has confirmed a three-year support plan for the NEV industry, signaling a clear timeline for subsidy reductions. As a result, domestic brands will need to prove their technological competitiveness against both traditional and foreign electric vehicles.
However, the reliance on subsidies has already begun to show its limits. Many new energy bus manufacturers have experienced declining profits, with some reporting drops of over 70%. The decline in pure electric bus sales in 2017, down 23% to 89,000 units, further illustrates the challenges ahead.
In the passenger vehicle segment, limited access to new energy license plates and concerns about battery life, charging infrastructure, and high costs continue to hinder widespread adoption. Even among top-selling models, only a few can reach over 300 kilometers on a single charge, falling short of the range of conventional vehicles.
While imported brands like Tesla offer longer ranges, their high prices prevent them from fully disrupting the domestic market. Nevertheless, the gradual reduction of subsidies means that the competition between Chinese brands and international players will soon intensify.
Toyota, for example, has been actively expanding its hybrid and hydrogen fuel cell technologies. It recently launched a prototype hybrid vehicle using ethanol and gasoline in Brazil, aiming to test durability and performance for future commercial applications. Meanwhile, it has also made progress in fuel cell vehicles, planning to deploy over 100 fuel cell buses during the 2020 Tokyo Olympics.
Nissan and Volkswagen are also positioning themselves strongly in the Chinese market. Nissan aims to sell 1 million electric vehicles annually by 2022, while Volkswagen plans to introduce over 20 new electric and plug-in hybrid models by 2025.
As the market evolves, the debate between pure electric and hybrid technologies continues. While many Chinese brands have bypassed hybrid development due to technical barriers, others are beginning to explore hybrid solutions as a transitional step.
Ultimately, the coming years will determine whether Chinese brands can successfully compete with global giants once subsidies are phased out. The new energy automobile market is no longer just a niche sector—it is becoming the battleground for the future of mobility.
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