The Chinese government's push for the new energy vehicle market has drawn significant attention from global automotive giants. While all players are exploring different paths in the sector, one common factor remains: power batteries are at the core of development. China’s battery industry is transitioning from a period of catching up technologically to a phase of synchronized growth. With continued government support, further technological breakthroughs and collaborative efforts are essential.
Japanese automakers, always conscious of their reliance on traditional fuels, have been proactive in adopting new energy technologies. Toyota, for instance, has taken a multi-pronged approach, covering hybrids, pure electric vehicles, and even fuel cell and hydrogen technologies. In contrast, companies like Renault-Nissan Alliance and Volkswagen have focused more on pure electric vehicles, which are considered a lower technical barrier during the transition phase.
Academician Chen Qingquan from the Chinese Academy of Engineering once emphasized that zero-emission vehicles rely heavily on battery technology. However, batteries are electrochemical and have inherent limitations. Japanese hybrid systems, though complex, offer promising future potential by allowing the engine to generate electricity rather than directly drive the vehicle.
As policy-driven pure electric vehicles move toward a more independent development path, the gradual withdrawal of subsidies will soon bring them into direct competition with both domestic and international players. With subsidies expected to be fully phased out in three years, the real test for the industry is just around the corner.
The new energy vehicle industry has entered its golden age, with clear signs of growth. According to CLUCC data, new energy vehicle sales hit 560,000 units in 2017, a 75% increase from 320,000 in 2016. This growth far outpaces the 2.1% rise in overall auto sales, highlighting the industry's rapid expansion.
Recent figures show that in January-February this year, new energy vehicle sales reached nearly 75,000 units, a 200% year-on-year increase. Industry targets have already surpassed 700,000 units, with expectations that actual sales will exceed these numbers.
Premier Li Keqiang’s recent government work report confirmed a three-year subsidy policy for the new energy sector, signaling long-term support. As a result, domestic brands must now compete directly with both traditional and foreign new energy vehicles.
However, many independent brands, especially in the bus segment, have struggled as subsidies decline. For example, Zhongtong Bus saw a 78% drop in net profit in 2017, reflecting the challenges of relying on government support.
In the passenger vehicle segment, while some consumers opt for new energy cars due to license incentives, issues like limited range, low charging infrastructure, and high prices remain unresolved. Most models fall short of the performance of traditional vehicles, with only a few reaching over 300 km range.
Foreign brands like Tesla have an advantage in endurance but still face challenges in penetrating the Chinese market. Despite this, the planned phase-out of subsidies is pushing multinational companies to prepare for the next stage of competition.
Toyota, for example, continues to focus on hybrid and fuel cell technology, having recently launched a hybrid ethanol-powered vehicle in Brazil and planning to deploy fuel cell buses in Tokyo for the 2020 Olympics. Its long-term vision includes expanding into commercial vehicles in China.
Nissan and Volkswagen, meanwhile, are aggressively entering the Chinese market with plans to boost electric vehicle sales significantly by 2022. Their joint ventures and new models signal a strong commitment to the sector.
While pure electric vehicles seem to dominate the current landscape, experts suggest that hybrid and fuel cell technologies may play a more sustainable role in the future. As the industry evolves, the coming years will test whether domestic brands can stand up to global competitors after subsidies fade.
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