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Why China Indirectly Controls EV Markets

November 5, 2018

By Paul Homewood


From the OILPRICE.COM website:


While Europe has long been at the forefront of the automotive industry, it will most likely be overtaken in the very near future by another economic superpower–China. The world’s second-biggest economy is already well-established as the global leader for the batteries that power electric vehicles, which are seen as a vital component to the future of the automotive industry. In light of this dynamic, Europe will become increasingly dependent on China as an integral part of their automotive sector, an industry with millions of employees across the continent.

The European market should start contending with the likely outcome that European car production will soon be making a mass move to China. This will have a major impact on the region that has long counted companies like Volkswagen, BMW, Mercedes-Benz and Renault among its economic strongholds.

China produces about two thirds of the whole world’s supply of lithium ion batteries, the most common battery type used in electric vehicles. Furthermore, these highly valuable batteries make up a staggering 40 percent of the cars’ value. As it stands, Europe is far from being able to compete with China when it comes to the production of lithium ion batteries. In fact, currently the entire continent is estimated to hold just 1 percent of the market.

Moving the production of electric cars to China is a no-brainer for European car companies. Not only is China the site where many of the essential parts are manufactured, allowing car companies to avoid the heft tariffs currently imposed on electric vehicles, it’s also home to what is by far the world’s biggest market for electric cars. China already accounts for about half of electric vehicle sales worldwide, and these numbers will only continue to grow. Last year the Chinese government went so far as to release a “road map” that shows a plan to replace at least one-fifth of new car sales with alternative fuel vehicles by 2025. These are all facts that the international car industry has not let go unnoticed–investments in Chinese-made electric cars are through the roof.

Last year Volkswagen announced that it would be pouring a whopping $12 billion into the production of electric vehicles in China. Meanwhile, electric car wunderkind Tesla is busy building a Shanghai factory that will have a production capacity of half a million electric cars per year. To compare, currently in the whole

Even European battery companies are investing overseas instead of building the industry locally. Take the Dutch lithium ion battery maker Lithium Werks, which already has two plants in China, and has now announced plans to build an additional factory outside Shanghai to the tune of €1.6 billion ($1.8 billion). The massive factory will, when up and running at full capacity, be able to manufacture enough batteries to power 160,000 cars a year. The company cited better infrastructure and easier access to building permits as their primary reasons for building in China–in Europe a similar venture would simply be met with too much red tape.

Taking cues from China, the European Union (EU) is now trying to make the continent a more attractive place for both makers and buyers of electric vehicles. This year the European Commission released an action plan that aims to foster heavier investing in battery technologies on European soil by offering more funding, among other incentives. The plan underlines the ever-increasing risk that Europe will get edged out of supply change and losing influence over environmental standards if they don’t make more of a presence in the battery industry.

That being said, the European Commission’s initiative may very well may be too little, too late. Action plan or no, Europe would have to work miracles to catch up with China. 1 percent of the lithium ion battery industry versus two thirds is far beyond your standard David and Goliath tale, and miracles are a bit harder to come by in the modern world.

  1. tim leeney permalink
    November 5, 2018 6:01 pm

    All very well, as long as there are people to buy the things. But the problem of refuelling (aka recharging) time will remain, as will the question of providing the necessary electricity.

  2. November 5, 2018 6:02 pm

    China’s massive investment in electric cars is frequently cited by the green blob as evidence that China is at the forefront of the ‘fight against climate change’. Far from it. China as a nation has minimal supplies of oil and necessarily imports most of its supply, but has massive quantities of low-grade coal. The latter can readily be used for power generation, so it simply makes economic sense to emphasize electric cars as much as possible and de-emphasize hydrocarbon-powered cars. Furthermore, China is rapidly becoming a largely urban nation, so most automobile trips are short distance city trips for which electric cars are well suited. In addition, they have a horrendous smog problem and anything they can do to curb it will be welcomed.

    But fighting climate change? Not a whole lot.

  3. Adamsson permalink
    November 5, 2018 6:30 pm

    Don’t worry EVs aren’t really going to be used that much. Cars and commercial vehicles will continue to be powered by petrol or diesel for a long, long time. The only tricky thing will be how the politicians back track on all their stupid announcements about banning them by the year after next or whenever.

    Still they usually don’t find such changes difficult Brexit means Brexit for instance

    • Harry Passfield permalink
      November 5, 2018 8:30 pm

      What I can’t figure out is that the Government are planning to ban NEW petrol/diesel cars from 2030/x/x/x, which makes one wonder, will people owning old clunkers continue to drive them? Will the UK become another Cuba, full of old cars with dodgy maintenance?

  4. November 5, 2018 7:56 pm

    One market which we should happily leave to China is the battery which stores 10,000 less power per kilo than an equivalent litre of gas. It will work in Tokelau where you get 1 ship per year and fuel cost 5x as much as the mainland and have all the sun you want in your own solar farm, but if they had that they could have enriched or distilled CO2 as a liquid fuel anyway. All we are doing is moving our CO2 burning to the grid, The real developments are coming in capacitors and oddly enough Coal To Liquid which brings king coal back into competition just in time for peak oil and empty Saudi wells. Needless to say government are therefore making demands of the public to buy ‘new’ vehicles to bring in all electric/hybrids when the majority have not bought a car for years, mine is 13 years old. I could not afford payments on a Tesla on a manual wage regardles of where it is made.

  5. A Man of No Rank permalink
    November 5, 2018 8:33 pm

    Ian Plimer, in his brilliant ‘Climate Change Delusion’ book (get it for Christmas!), points out that electric cars first appeared in Aberdeen around 1837. He adds that if there was a future for EVs we would have known about it by now.

    • bobn permalink
      November 5, 2018 11:47 pm

      Agree its another great book by Prof ian plimer debunking the Climate alarm industry. Ian plimer deserves a Nobel Prize for scientific truth.

      • keith permalink
        November 6, 2018 8:59 am

        Since when has our Government and MPs believed in scientific truth?

  6. markl permalink
    November 6, 2018 3:24 am

    With centuries of fossil fuels remaining the hype about everyone, and every car, going electric is …. well, hype. There are still barriers to going all in electric for cars and until they figure them out ICE cars are still king for reasons of economics and practicality. Legislating EVs can’t force their adoption.

  7. John F. Hultquist permalink
    November 6, 2018 6:19 am

    Dundee Michelin tyre factory closes with loss of 850 jobs

  8. November 6, 2018 8:06 am

    I still don’t understand the current UK government plans to transition directly from IC to pure EV. There are just too many problems with it. I don’t understand why we aren’t implementing some form of transition period where pure IC are no longer sold and instead we use diesel electric hybrids for a few decades and then transition to pure EV when we have a power network capable of supporting them.

    When I first heard the government plans to ban the sale of IC cars in the near future I thought that hybrids would still be sold, which would make sense. My family live in a rural area where pure EV’s are just not a workable solution at the moment, not least because we have virtually zero public transport here.

    I was actually planning to convert one of my old Land Rovers to ‘diesel electric hybrid’ as I think it could be a good solution. A small diesel engine running in a narrow rev band and tuned for maximum efficiency to run as a generator, replace all the immensely heavy axles and transmissions and with battery and electric hub motors. (removal of all heavy axles and transmission mostly negates weight of battery and motors). I’ve read about such conversions and they provide great performance, low running costs and most important, great range. They can also run on battery power alone for fair distances for driving in town/city. If we are to lose pure IC cars then IMHO a diesel electric hybrid is the least worst alternative for my family.

    Sadly I now hear that the government is planning to ban hybrids too?

    • November 6, 2018 8:35 am

      PS. The seemingly odd reason for modifying the old Land Rover is that I can do it at home myself, the 88″ Land Rover has a kerbweight of 1450kg as standard, just 50-100Kg more than a Toyota Prius. Approx 600Kg of that is the gearboxes, propshafts, leaf springs and axles. If the engine was replaced with a small (and lighter) modern efficient unit and all the transmission, axles etc replaced with hub motors and a small battery I believe the kerbweight would come down to 1100Kg, lighter than most small modern hatchbacks such as Vauxhall Corsa. The battery only needs to be small as it is there mainly to provide smoothing. Four modern electric hub motors would still provide 4×4 too 🙂

    • keith permalink
      November 6, 2018 9:02 am

      Because they are stupid. Remember stupid pills are handed out to all members of the UK Government.

    • bobn permalink
      November 6, 2018 2:21 pm

      ‘I now hear that the government is planning to ban hybrids too?’

      Yes thats this years fantasy bullpoo statement. Of course it wont happen as the impracticality of it all dawns. Future govts will backtrack on this unicorn farming nonsense. Alas we have to keep listening to this fantasy garbage (No ice at north pole in 2008, 2yrs to save the planet (2005), ‘I will slow the rise is sea levels!’ -Barack the idiot Obama said this arrogant claptrap, but then he also declared ‘the science is settled!’ – what a moron!

      Best to ignore all politicians (and media) pronouncements. They’re rubbish and wont happen. However escalating energy prices will happen.

  9. Vernon E permalink
    November 6, 2018 11:21 am

    Roger Graves has it spot on. It makes total sense for China to adopt EV’s for the reasons he gives – they have few gasoline sources but infinite capability to provide coal-based reliable electricity. Add to that their dominance over cobalt sources and it all fits. If our own ridiculous government sticks to its plans to phase out internal combustion engines that’s it – bye bye motor industry. My personal vision is that we could still salvage some kind of position if we focussed on developing a range of EV commercial vehicles – say 2 cwt, 5 cwt and 10 cwt for use in the most polluted city zones and with dedicated charging points. At least something would be achieved, especially with on-line shopped home deliveries continuing to gain dominance.

  10. November 6, 2018 12:55 pm

    O/T update on Paul’s story that ASA did rule that SmartEnergyGB are not allowed to say that smart meters are “free”
    @Pcar logged this Channel4 19:49 5 Nov 2018
    “…Smartmeter…..At no extra cost”
    ..surely that’s the same as “free” ?

    • Tim the Coder permalink
      November 7, 2018 3:57 pm

      Not at all.
      “Free” means you pay nothing.
      “No extra cost” means you pay through the nose for a ‘smart’ meter whether you have one fitted or not.
      The only purpose of ‘smart’ meters is the remote disconnection capability, so that as the power stations are all shut, they can switch off household by household, always looking after members of the Party.
      Fortunately, the first major switch off hack will discredit them and their backers.

  11. November 6, 2018 5:15 pm

    It’s interesting to see how China overcame Germany’s and Japan’s lead in photovoltaic production for solar panels.
    I think Europe and developed technologies are doing a better job at holding off wind turbine manufacturers from China but who knows for how long. At least the trend for very large blades makes local production more competitive.
    Vehicles on the other are easily shipped world wide and the biggest barrier to electric vehicles developed in China is that most EV’s there are small, short range, inexpensive vehicles used for running errands. As the standard of living improves in China, they’ll develop world class EV’s that will likely compete very effectively. Perhaps the best hope for production in developed economies is that the Chinese market is so large and vehicle ownership at such low levels that they will focus on their very large domestic market rather than export.

  12. Tim the Coder permalink
    November 7, 2018 4:04 pm

    Making the rare-earth magnets for electric cars and windmills generates a lot of radioactive waste (Thorium). This has made such mining – and hence dependent manaufacturing – uncompetitive anywhwere but China, where the radioactive waste isn’t worried about too much.
    Indeed, since the principal source is in Uighur province, this is a win/win for the Han.
    Greenies agonise over ‘blood’ cobalt in the batteries, but don’t look at the ‘blood’ cost of those magnets.

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