Study: China’s Massive RM1.02 Trillion Investment Fuels EV Growth

China has invested a staggering US$230.8 billion (RM 1.02 trillion) over the last decade to cultivate its electric vehicle (EV) sector, reports the Centre for Strategic and International Studies (CSIS).  Scott Kennedy, an expert in Chinese Business and Economics at CSIS, highlighted that this sum constitutes 18.8% of total EV sales from 2009 to 2023. 

He also noted a declining trend in government spending relative to EV sales, dropping from over 40% before 2017 to just above 11% by 2023. The European Union (EU) plans to impose tariffs on Chinese EV imports, citing concerns over subsidies. Similarly, the United States has raised tariffs on such imports to 100%. 

Kennedy pointed out that Beijing's support for EVs include enacting policies favouring domestic automakers, a contrast to perceived inaction in Western countries.

However, Kennedy emphasised that China's subsidies haven't solely benefited car development. In earlier stages, the Ministry of Finance discovered fraud where companies cheated the government of over RMB1 billion (RM 659.61 million).

Despite China's progress, Kennedy noted that extensive support and market growth for Chinese EV firms has not substantially boosted profits. He argued that in a competitive market, companies would adjust investments based on demand, possibly leading to industry consolidation.

Meanwhile, the US has also ramped up efforts to bolster its EV sector. The Inflation Reduction Act of 2022 allocated US$370 billion (RM 1.743 trillion) for advancing clean technologies, including a US$7,500 (RM 35,347) credit for qualified electric car purchases. 

This contrasts with China's decreasing average support per EV purchase, falling from US$13,860 (RM 65,322) in 2018 to US$4,600 in 2023.

Overall, while China has surged ahead in EV development with robust government backing, challenges still persist, including profitability issues and global trade tensions over subsidies.  In contrast, Western efforts are seen as lagging, prompting calls for more aggressive policies to compete effectively in the burgeoning EV market. KR

Source: CSIS via CarScoops and CNBC