“Europe that wants to protect the environment cannot tie our hands to the Chinese. Because Europe that wants to impose electric cars on everyone is a pointless thing that sparked in Italy and helped China.” Matteo Salvini fiercely attacked the EU Council’s decision to stop petrol and diesel from 2035, in a very powerful passage, during a rally last month that closed the Friuli Venezia Giulia Regions election campaign. That’s why the Minister of Infrastructure, the government’s Deputy Prime Minister and the weight minister, who has the right to speak on behalf of the executive, have put forward strong doubts about the fact that the electric car was launched only to support China. But is it really so?
With his statements, Carroccio’s leader wanted to revive an anti-Chinese rhetoric reinforced by the second Conte government. Like various defenders of the Italian right—but also of the international right—Salvini forgets that it was then that Italy’s commitment to the New Silk Road – which may not be renewed by the Meloni government – took place as it attacked China on various fronts. He was deputy prime minister in the first Conte government. And perhaps the Northern League also forgets that Michele Geraci, former undersecretary for foreign trade at the Ministry of Economic Development, was at the forefront of the match that resulted in Italy (the only G7 country) breaking into the Chinese infrastructure. The megaproject chosen by the League (but much closer to the locations of the Five Stars).
Italy wants to trade Silk Road for Taiwan’s microchips
Setting aside China’s Silk Road controversy, Salvini suspects that China is now becoming the world leader in electric vehicle production and sales, as the Asian giant is the world’s leading battery manufacturer for electric vehicles.
Electric car boom in the world
Chinese supply may soon meet demand from buyers around the world. Electric vehicle sales will explode this year, with one in five cars sold in 2023 to be electric. This is the forecast in the International Energy Agency’s (IEA) latest report that sales will increase 35% this year to reach 14 million units. This explosive growth means that the share of electric cars in the overall car market has increased from around 4% in 2020 to 14% in 2022 and will rise to 18% this year, according to the latest IEA estimates.
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Recalling that today the world’s oil consumption is only 2.5 billion on average, the IEA emphasized that the rapid electrification of road transport will have significant implications for the energy industry, as it will eliminate the need for five million barrels of oil per day by the end of the decade. over 100 million barrels a day.
The vast majority of electric car sales to date are mainly concentrated in three markets: China, Europe and the United States. China leads with 60% of global electric car sales in 2022. Today, more than half of all electric cars in the world are located in the Asian country. Europe and the USA, the second and third largest markets, experienced strong growth in 2022 with sales increases of 15% and 55%, respectively. Ambitious policy agendas in major economies such as the Fit for 55 package in the European Union and Reducing Inflation Law in the United States will further increase the market share of electric vehicles this decade and beyond.
By 2030, the average share of electric cars in total sales in China, the EU and the US is expected to rise to around 60%. But the lion’s share will always be taken by the Asian giant: China increased its share of global electric car exports to over 35% last year.
How did China dominate the electric car world?
Generous government subsidies, tax exemptions, purchase agreements and other incentives for sustainable mobility: These are the tools that enable the Asian giant to become a leader in the manufacture and sale of lithium batteries and electric cars. Tools that have been enacted by the central government since the early 2000s and have been further strengthened by Beijing’s initiation of a new policy to reduce CO2 emissions.
At the time, the Chinese government relied on Wan Gang, who was appointed Minister of Science and Technology in 2007 by Prime Minister Wen Jiabao, who succeeded in persuading the State Council of the People’s Republic of China to invest everything in automotive. Known as the “father of electric cars in China,” Wan has forced the government to focus on next-generation vehicles to be included in the urban and extra-urban fleet. In practice, this pressure has also translated into a gradual shift of government subsidies from battery-powered vehicles to fuel-cell vehicles. At the same time, the Asian giant began its escalation that resulted in the worldwide dominance of rare earths, which are strategic mineral resources for the manufacture of batteries for electric vehicles.
It was not difficult for Chinese brands to compete with foreign automotive companies, so much so that they even surpassed the giant Tesla. Competition is getting stronger: China, Europe and the US have consolidated their leadership in future mobility with risks to the industrial strength of the automotive sector. Data from Chinese customs shows that in the first quarter of 2023, exports of lithium batteries increased by 66.9% year-on-year, while exports of electric cars increased by 122.3%.
Competition with foreign companies
Fueled by government subsidies, China’s electric vehicle market has grown rapidly since 2020: In 2022 alone, more than six million electric vehicles were sold in the Asian giant, accounting for more than half of global sales. But growth slowed last December when, after 13 years (from 2009 to 2022, the government paid more than $29 billion in subsidies and tax breaks to businesses and consumers), the government funding tap was turned off. Thus, foreign competition started the race to lower prices by finding fertile ground to attract buyers in the already crowded market segment. That’s because the average price of an electric car in China is significantly lower than the rest of the world, around $35,000, compared to $60,000 in Europe and $70,000 in the United States.
Tesla is struggling to keep up with the Chinese giants, despite lowering the selling prices of electric cars inside the Great Wall of China. In fact, large foreign companies have to deal with a sense of patriotism that often drives the Chinese to buy. At the top of the sales podium in China is BYD, which has already surpassed Tesla in global sales volume. Then there’s Nio, which has grown to six out of two models and plans to launch five more in 2023. Finally, Geely holds the record for the world’s largest production of lithium-ion batteries. The panorama of Chinese electric car makers is expanding to include companies dealing with other things, such as Xiaomi, a well-known smartphone maker, and Evergrande, a heavily indebted Chinese real estate group.
Should Italy be afraid?
With sales booming inside the Great Wall of China, Chinese EV companies feel they have a chance to enter the global market. But to do this, they need to review their marketing strategies, listen to the needs of different consumers, and above all adapt to the technical standards imposed by different countries. There’s also the geopolitical context, a thorn for Chinese industries looking to expand their business in the West. With Beijing and Washington at odds, Chinese companies risk being banned from entering the Western market because of the feared risk to national security and corporate sovereignty.
Electric cars: because it’s a fiasco in Italy
Therefore, Chinese companies find the market of other regions such as East Asia and Southeast Asia more promising. Consider how electric car sales more than tripled in India and Indonesia (although from a low base) and more than doubled in Thailand last year. And this, as in India, has come about through a combination of effective policies and private sector investment.
Unlike in other countries, Italy has taken little action to encourage the purchase of next-generation cars: the Meloni government has even reduced incentives for the purchase of electric vehicles, setting a maximum threshold of 35,000 euros for the purchase price. Obviously, most models with higher list prices are excluded. Rather than pointing to Rome, Brussels and Beijing, he should ask himself how much management is willing to invest in the sector. Because, amid delays, doubts and stumbling, it is the Italian government itself that increases China’s advantage. Already in pole position in automotive racing.
Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
