China is in a position to leave behind subsidies and aid to encourage the purchase of electric cars. A strategy that cannot be applied in North America and Europe. Tesla and Volkswagen are at the forefront of the fight for the long-awaited affordable electric car.
About a month ago a comprehensive report on the evolution of electric car prices was published. A report that made it possible to discover in which part of the world the prices of electric vehicles have fallen the most and, on the contrary, also to know where these types of cars have become more expensive. Now, JATO Dynamics has published supplemental information that takes you one step further to discover the state of the battle for the affordable electric car.
China is undergoing a refocusing of its industry with a special emphasis on the electric vehicle alongside OEMs better prepared for the change from the industry’s reliance on incentives. The aforementioned report found that government-led incentives have been a determining factor in electric vehicle adoption over the past decade. This has been a vital support for the automotive industry to make up the price gap between traditional cars and electric cars.
China’s commitment to the electric car against Europe
The growing environmental agenda has also been a key consideration, leading many countries towards incentive schemes, such as Germany’s ‘Umweltbonus’ or the UK’s ‘Road to Zero’. However, in China, the country’s problem with air pollution has been the main reason why its central government decided to bet without complexes on electric mobility.
In January 2013, China experienced severe air pollution, with 26 days of the month covered in toxic fog. This episode marked a significant turning point for the Chinese authorities to engage in a “war on air pollution”, with electric vehicles proposed as a key approach to combat the complicated situation.
Wan Gang, who was the Minister of Science and Technology of China, was the great architect of the plan that was launched to encourage the replacement in large cities of cars with internal combustion engine by 100% electric models. In parallel, this drive for the electric car would allow China to place its automotive industry at the level of the rest of the large vehicle manufacturers.
The evolution of the electric car in China allows you to say goodbye to subsidies
Due to the great impact that the incentive program for the purchase of electric cars in China has had, it has allowed a rapid evolution and, today, many manufacturers indicate that they are in a position to abandon subsidies and direct aid . Technology has advanced so much in the Chinese territory that the electric car is in a position to rival the combustion vehicle.
What’s more, the Chinese government’s plans were to end the subsidies. However, the arrival on the scene of the coronavirus pandemic upset everything and it was decided to postpone this measure. In any case, in the short term electricity subsidies will be history. However, in the rest of the world, everything indicates that manufacturers will continue to use government subsidies and incentives to attract consumers to electric vehicles.
Tesla and Volkswagen in pursuit of the affordable electric car
The giants of the global automotive industry have launched their transition to electric mobility. However, only a handful of brands are playing a really leading role. Tesla and Volkswagen are taking steps to lower production costs and improve profitability.
Video test of the new Volkswagen ID.3
Tesla is targeting just two vehicle production plants to build 900,000 units by the end of the year. This will represent 86% of Tesla’s annual production capacity. The well-known American brand is experiencing increases in its profitability, and during the first quarter of 2021, its gross profit increased 94%. These indicators show that Tesla will soon be in a position to launch more affordable electric vehicles.
Volkswagen is also accelerating its offensive with the launch of the ID family. of electric cars. The plans of the German company go through unifying its platforms in a scalable architecture. This will allow all types of electric vehicles to be launched under a single platform, which will reduce costs and consequently prices will be adjusted.