Commentary: China is so far ahead in the EV market it’s a warning for Europe

The complaint that China’s success is down to a multi-decade government-planned effort is both true and slightly academic at this stage.

The country’s accumulated advantages are daunting. It controls two-thirds of global capacity for processing lithium, the raw material for batteries, and dominates every aspect of battery production. It produced 10 times as many battery vehicles last year as Germany. It has a manufacturing cost advantage of perhaps 20 to 25 per cent.

Shipping costs (as well as 10 per cent tariffs) have narrowed that gap but will become less important as China’s exports rise, particularly of the affordable mass-market vehicles that face little European competition.

LITTLE PLANNING AND SUPPORT TO REACH TARGETS

Erecting trade barriers is a terrible option for an industry reliant on selling to China, and for policymakers wary of the costs of energy transition for consumers. The European industry body this month called for a “robust industrial strategy that guarantees a level playing field” with both China and the United States.

It is true that United Kingdom and European policy – either through complacency or ineptitude – has been heavy on setting targets, like the 2035 halt to sales of combustion engines, and light on planning and support to get there. 

But the sector itself continues to hedge its bets. It is still demanding “technological neutrality” from policymakers.

That arguably gives policymakers an out from, say, building the dense charging network needed for widespread adoption and for reducing battery size and costs.