KARACHI:

Chinese electric vehicles (EV) are gaining immense popularity throughout the world because of their cheaper rates and amusing features, flooding and astonishing the US and European markets despite tough competition with local industries in the West.

China has knuckled down to do far more work on research and development with a view to having a full command over technologies, manufacturing new products, revamping cutting-edge technologies and providing the world with cheap and attractive goods.

EVs are getting cheaper and abundant and as people are eager to meet global climate goals, climate-friendly technologies such as EVs are becoming the future of global industry. A deluge of cheap Chinese EVs might dent sales of US auto giants including Ford and General Motors to a great extent.

US President Joe Biden has swung into action and issued directives to the US Department of Commerce to investigate potential national security risks from imported Chinese vehicles and address concerns about dependence on foreign supply chains, particularly in critical industries like automotive manufacturing.

This investigation aims to assess any risks posed by Chinese vehicles, including potential threats related to technology, cybersecurity and intellectual property infringement.

US Commerce Secretary Gina Raimondo said rising sales of Chinese EVs in the West were a national security risk for the US and the European Union.

“A sophisticated EV, and then an autonomous vehicle, is filled with thousands of semiconductors and sensors. It collects a huge amount of information about the driver, the location of the vehicle and surroundings of the vehicle,” Raimondo said at an event hosted by US think tank Atlantic Council, according to a report.

Earlier, she noted how Beijing had banned the passage of vehicles made by US EV giant Tesla in certain parts of the country, citing national security concerns.

About 70% EV cars and over 95% EV motorbikes of China are dominating the international market, while the US, Europe, Canada, Japan and other countries have lagged behind in cheaper technology.

Although the US and Europe bristle with far better and costly technologies, yet China’s sales volumes are so high that the West cannot compete on prices.

China is fully capable of covering production costs due to high volumes, but the US and European car volumes are decreasing quickly and their industries could face the spectre of closure.

A decade ago, China was notorious for producing the replica of everything, but this is for the first time that it is manufacturing good-quality, cheaper products in competition with market leaders including the US, Germany, South Korea and others. “That is why, the West is coerced to take some initiatives, while impeding progress of China’s growing economy,” said auto sector analyst Muhammad Sabir Sheikh.

According to media reports, BYD sold 3 million electrified vehicles in a year, more than any other company, and it now has production capacity to manufacture 4 million cars. China’s state-owned shipping giant Cosco [China Ocean Shipping (Group) Company] has ordered 24 large vehicle carriers.

“I think we should not look at the perspective of the US being narrow-minded towards other countries but look at the cost of such policies to its own consumers. The average price of EV in the US has increased significantly in recent years, making it out of the reach for many. Political representatives are more likely to introduce policies that benefit their own constituents and lobby groups rather than foreign producers and consumers,” he said.

Chinese automakers, especially BYD, are now the largest producers of EVs in the world. Although their access to the US market is limited, they may route their production through other countries such as Mexico.

One benefit of globalisation is that it provides innovative companies with different avenues to access their target markets and grow. “We see a potential increase in foreign direct investment in third markets with better linkages with the US,” said Sheikh.

“One key factor in EV growth is the evolution of battery technology. Also, we are seeing that cars are becoming more autonomous over time. With net zero emission targets, investment in EV is likely to grow,” said auto maven and IBA Assistant Professor Aadil Nakhoda.

Furthermore, “as technology for EV improves, it is likely that consumers will become more attracted towards this as an alternative, even in the developing world. The idea is to make it more accessible and cheaper.”

Concerns over economic competition, national security and regulatory disparities contribute to the perception that the US and Europe resist the progress of China in the EV industry. Protective measures, trade tensions and intellectual property issues may reflect a desire to safeguard domestic interests.

Critics argue that such policies hinder global collaboration and the potential consumer benefits from cheaper and quality EVs. However, perspectives can vary widely and decisions are often influenced by complex geopolitical and economic considerations.

If the US actively hinders Chinese companies due to perceived competition, China may face challenges in expanding its global market share.

“Determining the superiority of EV technology between China and the US/Europe is nuanced. China has rapidly advanced in EV production and battery technology, while the US and Europe have made substantial contributions to innovation,” said EV expert and Mehran University of Engineering and Technology Professor Dr Qasim Arain.

“Each region has unique strengths, with China excelling in production scale and affordability, and the US/Europe focusing on high performance and cutting-edge technology. Comparisons should consider factors like battery efficiency, charging infrastructure and regulatory environments. In essence, the question doesn’t have a definitive answer, as both regions contribute valuable elements to the evolving landscape of EV technology.”

The future of EVs appears promising globally. Increasing environmental concerns and advancements in technology are driving a shift towards sustainable transportation.

Governments worldwide are promoting EV adoption through incentives and infrastructure development ass battery technology improves, offering longer ranges and faster charging.

The automotive industry is investing heavily in EV development, indicating a long-term commitment to this transformative shift. EVs are likely to play a significant role in the future of global transportation.

The writer is a staff correspondent

 

 

 

Published in The Express Tribune, March 11th, 2024.

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