The JATO Dynamics consultancy is building on its considerable knowledge of the industry with the release today of its data looking at the impact of government incentives on the electric vehicle (EV) market during the past decade. In so doing JATO prompts a realization at AutoInformed that China has the lead here.
This of course is not good news for occidental auto conglomerates or their customers, which through a forced combination of government regulation, shareholder pressure and consumer sentiment are investing billions in EVs to solve the very real and deadly problem of fossil fuel use, which has increasingly visible negative health and climate effects. (Mazda MX-30 EV Starts at $33,470 in CA this October; BMW Group Sales Up for First Half of 2021. EV Sales Surge; EU Gets Tougher on Climate Change – Wants All EVs by 2035)
The report found that government-led incentivization has been a driving factor in EV adoption during the last decade, “acting as a vital support for the automotive industry to offset the price gap between traditional cars and EVs. Alongside this, the rising environmental agenda has also been a key consideration, leading many countries towards incentivization schemes – such as Germany’s ‘Umweltbonus,’ or the considerably delayed UK’s ‘Road to Zero’ electrification strategy, and the bonus-malus scheme in France,” said JATO. Executive summary: too many self-interested inputs from special interests resulted in little progress or false starts down the wrong roads.
China’s ongoing struggle with air pollution is the primary reason that its central government invested heavily into EVs, JATO notes. The problem was identified during January 2013, when China experienced major air pollution, with 26 days of the month covered by a very dense smog. A war on air pollution ensued, with EVs projected as a key approach to combat this.
JATO notes that China placed a large influence on the guidance and direction from visionary leaders. The past Minister of Science and Technology, Wan Gang, was behind the country’s plan to replace ICE vehicles with domestic EVs. A former experienced engineer at Audi, ouch, Gang was known for his ideas. When he was brought into the government, his wanted to create automotive technology that would outpace Western automakers and put China ahead in the electric market.
The upshot? Due to the impact of China’s strong incentive program, many automakers operating in the country have been able to quickly expand offerings. It appears that production is now cheap enough to no longer require government support. Across the globe, in the short term it appears that manufacturers will continue to demand and use government subsidies and incentives to entice consumers towards EVs. However, some OEMs are closer to giving up this dependency than others.
“The EV market continues to rapidly grow, especially as the environmental crisis climbs only higher on the agendas of governments, businesses, and consumers alike. As countries start to roll back their incentive programs, manufacturers in the US and Europe should look to China’s lead and find avenues to reduce production costs, if they are to remain competitive in this space,” said David Krajicek, CEO at JATO Dynamics.