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The Chinese EV Dilemma: Subsidized yet Striking

Scott Kennedy writes that Chinese EVs have benefitted from massive industrial policy support, and their quality is improving, making them attractive to domestic and overseas consumers. An effective response by the U.S., Europe and others must take account of both facts.

These include regulatory changes such as the “dual-credit system,” which has pushed automakers to have a growing share of their fleets be electrified and to make license plates for EVs easier for consumers to obtain than for internal-combustion engine (ICE) vehicles. By contrast, defenders of China could point out that the data show that subsidies as a percentage of total sales have declined substantially, from over 40% in the early years to only 11.5% in 2023, which reflects a pattern in line with heavier support for infant industries, then a gradual reduction as they mature. Battery makers Gotion (based in Hefei, Anhui) and SVolt (headquartered in Changzhou, Jiangsu) have huge plants that are highly automated, which they claim translate into low error rates, improved quality, and rapid production.

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