According to JATO Dynamics, both incentives and the infrastructure, together with a choice of 138 EV models, has put China well ahead of the other nations.
Its report “The Race for EV Leadership: Lessons learned from China” said state incentives in China include free road licensing costs for EVs. At the same time owners of petrol and diesel passenger vehicles have had an increase of fees by an average of $US13,000 ($A18,000) per vehicle in Shanghai, for example.
“As consumer confidence is heavily reliant on infrastructure creation and keen price points, state intervention becomes integral to the EV market success formula,” the report said.
“This is evident when you look to markets outside of China, such as Norway where a concerted effort has been made to drive EV uptake since the 1990s and yielded strong results.
“In contrast, this can also be seen in the US, where a light touch regulatory approach has characterised a flattening out of the market.”
JATO said Chinese car buyers have a choice of 138 different EV models, compared to just 60 in Europe and 17 in the USA, with average retail prices 58 per cent and 52 per cent higher in Europe and the US than in China which has a focus on the cheap production of affordable products.
JATO said that, according to data published by the International Energy Agency (IEA), the number of public slow and fast-charging spots around the world reached 862,118 with China having a 60 per cent share.
The IEA also said that 64 per cent of China’s electricity is produced via coal power, compared to around 40 per cent in Europe.
JATO said that the race for EV dominance could yet take a new twist, however, because China is now poised to cut the subsidies for car-makers that have successfully boosted the shift towards EVs.
The grants will reduce by 20 per cent in 2021 and by 30 per cent in 2022.
Subsidies have also changed to affect the vehicle prices. The incentives are now only available on passenger cars priced at less than RMB300,000 ($A62,000).
JATO said that the Covid-19 crisis has raised concerns that the economic hardship could lead governments to relax fuel efficiency standards to lower the pressure on struggling automakers or reduce support measures for electric cars to free up funds for use elsewhere.
“That has not happened so far. China announced it would extend the purchase subsidies that it had originally planned to discontinue this year until 2022 – albeit at a slightly reduced rate,” JATO said.
Despite China’s impressive growth, over the past year JATO said there has been a stabilisation in its EV market and that China remains some distance from meeting its ambitious target for 25 per cent of total new vehicles to be New Energy Vehicles (NEVs) by 2025.
“This slowdown comes as a result of a subsidy reduction enforced by the government over the last few years,” it said.
“As Europe’s EV market has continued to grow from strength to strength, this stagnation prompts the question – is China’s success solely down to heavy government intervention?”
JATO said that there was little doubt that the future of the growing EV market is on the minds of the world’s largest OEMs.
“China has already begun owning it, but with a cooling of the market in China as the government pulls back on subsidies, the race is far from over,” it said.
“Rapidly shifting regional dynamics means other markets led by Europe now have an opening to lead global growth in electric-car sales for the first time, as governments across the region offer consumers sweeteners toward the purchase of new vehicles.
“Momentum is building in Europe that’s already the world’s second biggest – well behind China but significantly ahead of North America.
“In fact, the European market is growing at such a pace that it is looking increasingly likely that Europe will outsell China on EVs in the near future.”
JATO said sales of EVs in Europe are skyrocketing with new registrations up by over 50 per cent year-on-year through August.
“Surprisingly, Covid-19 hasn’t deterred the growth of EVs in Europe,” it said.
“In fact, European countries are using the pandemic as a premise to make a green recovery out of the crisis, with some governments creating additional purchase incentives as part of their Covid-19 economic-stimulus programmes.”
JATO said there was little doubt that the market in Europe was starting to gain real momentum and that “it increasingly seems that the continent is taking a leaf out of China’s book by ramping up state intervention to accelerate uptake and growth, as it races to meet carbon emission targets.”
The report said Norway was currently leading the charge in Europe, in part due to its enduring commitment to electrification since the 1990s.
Its original plan was to have 100,000 electrified vehicles on the road by 2020 – a figure that Norway exceeded in 2018.
“Norway posted the highest pure electric-car registrations last year with 60,400 units which equates to 42 per cent of total market. This year through August, volume totalled 38,600 units,” JATO said.
“However, many European nations are looking to catch up by setting bold ambitions and further incentivisation.
“For example, Germany’s ambition is to have a staggering 10 million EVs on the road and one million charging stations implemented by 2030.”
Germany recently issued a €130 billion ($A213 billion) post-Covid-19 stimulus package for the country that included significant funding to boost EV incentives.
In France, the government has pledged €8 billion ($A13.1 billion) to the automotive sector as part of the Covid-19 recovery support package and is set to increase the state-provided grant towards an electrified vehicle purchase to €7000 ($A11,480), up from €6000 ($A9830).
“Notwithstanding these incentives, in Europe, adoption will be economic rather than regulatory, and only when parity in total cost of ownership is achieved will EVs begin to gain a significant share of new-vehicle sales,” JATO said.
By Neil Dowling