Chinese Companies as Emerging Forces in EV Tech
Author: Tanessha Paranjape and Amit Koshal
With the recent launch of its Cybertruck, the American based Tesla proved itself to be the EV giant once again. Although from the global perspective, China remains the most dominant player. The questions pertain- Is the future of EV ‘Made in China’? Countries have finally woken up to face the imminent problem of climate change and are taking efforts to reduce their carbon footprint globally. In the wake of the same, a shift from combustion engines to sustainable electric vehicles is on the rise.
An EV uses electric motors or traction motors for propulsion. Basically, they utilize electricity instead of fossil fuels. Since EV produce negligible to zero tailpipe emissions, they are the cleaner alternative driving towards a green future. There are four types of EV. Battery Electric Vehicles (BEVs) are fully electric vehicles which use rechargeable batteries to run the electric motor and onboard electronics. They also use regenerative braking wherein the electric motor slows down the vehicle and partially recovers the energy that would have been converted to heat during braking. They do not have a gasoline engine and hence are the greenest vehicles. Hybrid Electric Vehicles (HEVs) use electricity as well as gasoline. First the electric motor uses regenerative braking and then it switches to the combustible engine as the speed or load increases. It is still much cleaner than using fully gasoline powered vehicles. Plugin Hybrid Electric Vehicles (PHEVs) are capable of recharging the battery by using regenerative braking as well as by plugging in to an external source of electric power like an EV charging station. While standard hybrids run for about 1.5 to 3.5 kms before switching to the gasoline engine, Plugin Hybrids can go from 16 to 65 kms before making the switch. Fuel Cell Electric Vehicles/ Fully Hybrid Electric Vehicles (FHEV) uses an electric motor wherein the fuel cell draws in oxygen from the atmosphere and reacts with the stored hydrogen resulting into a chemical reaction which moves the vehicle. The only emission or byproduct is water and hence it is considered as the cleanest EV, although it is still in development phases.
According to the “Global EV Outlook 2019″ report brought out by International Energy Agency, China remains the world’s largest electric car market, followed by Europe and the US, while Norway is the global leader in terms of electric car market share. More than 2 crore EVs were sold by Chinese companies. With sales in the tens of millions per year, the Chinese market for electric two-wheelers is hundreds of times larger than anywhere else in the world. This is predominantly because of the governmental subsidies granted in EV sector under the ‘Made in China 2025’ industrial initiative. On an international footing, Chinese companies are the emerging forces in EV technology in USA and India as well. This is because of two reasons. Firstly, China majorly controls the lithium supply which is needed to make batteries which powers the EVs, by acquiring mines in Bolivia and Congo. Secondly, Chinese companies hold a huge number of patents to manufacture the said batteries. Moreover, China is also the home to nine out of the top 20 selling EV brands worldwide .
As can be seen from the data below, Chinese companies possess the most number of patents in the EV sector followed by USA.
The Chinese company BAIC group and ‘Build Your Dreams’ or BYD Auto were the leading players in EV sale . In the global patent perspective, BYD auto holds the most number of patents in the EV Sector as can be seen from the data given.
China has the biggest EV market and its expanding globally, although at a slow pace. However, it is tough for foreign companies to tap the Chinese EV market. Firstly, when companies reach the mass production scale, labor cost is crucial, and these companies cannot compete with the low labor cost that Chinese companies offer. Secondly, if a foreign company wants to open shop in China, it must form a joint venture with a Chinese company by manufacturing in China and sharing blueprints. This leads to the foreign companies losing exclusive control over their Intellectual Property.
In India, Mahindra is the leading player in the EV sales currently. Although China’s SAIC Motor Corporation already established a foothold in the Indian market through its subsidiary – MG Motors by planning a $350 million investment in India. Chinese company Sunra is also interested in setting shop in India as it sees India as the biggest market to sell electric bikes. More and more Chinese giants will take up space in the EV industry in both India and USA considering the pace at which they are expanding. However, with tech giants like Tesla in the game, it will be interesting to see if China would still be at the forefront in EV tech 5 years down the line.