Biden EV Drive needs a lot more to beat China

After the huge sigh of relief that the political unrest in the U.S. over the past month has now taken over, the focus quickly shifts to exactly what President Joe Biden’s policies will be. to pull his country back from Covid’s exaggeration. In addition to the obvious direct attack on the virus itself, it needs to address the main economic problem it has caused. One of Biden’s solutions in this regard is a greater emphasis on green technologies and in particular electric vehicles. However, Biden’s timing in America is facing a higher battle in the EV market compared to China. Here’s why.

There are many positive policies in mind. During his campaign, Biden promised to recover the full federal tax credit for the purchase of electric vehicles. This will be great for GM and Tesla, who used it themselves a year ago. Biden also proposes to switch all 500,000 U.S. school buses to electricity by 2030. The promises around infrastructure are more flexible, with a call for a national network of 500,000 electric vehicles, but a plan is unclear still there for how to get there. However, this could include some of the $ 50 billion earmarked for roads and highways.

The $ 5 billion $ 300 billion Build Back Better plan will focus on battery and energy storage to improve range and reduce the cost of EVs. There will be a 10% tax credit for creating American jobs in the automotive industry, with particular reference to retooling a car factory to produce EVs. There are indications that California’s framework in increasing fuel efficiency by 3.7% per year will be rolled out across the entire U.S., resulting in manufacturers producing more hybrids , plug-in hybrids, and battery-powered EVs.

This is good news for the adoption of EV, and there is no denying that the incoming Biden administration will be far more favorable in terms of green technologies than the Trump one that was going out, which seemed to be a return to steam engines running on “clean coal”. But the big impossibility of all of these plans will be the intervention of the American car buyer and the car industry in general. This problem is not entirely American; it is reproduced throughout the developed world, including Europe and Japan. Just a few minutes on a public forum discussing EVs will show just how much of an attack this disruptive technology is from a variety of directions, and recent statistical evidence is emerging.

The 2020 Motion Survey conducted by Continental, which has been running since 2011, has shown that, in the US, only 44% of those surveyed can see that they are currently driving an EV future, compared to 50% can not. Germany, France and Japan are even more tired of not wanting EVs in the future, even though European EV sales are better than those in the US – more than half a million compared to less than 350,000 in America.

Contrast this with Chinese figures. In China, 86% of people want EV in the future, compared to about 12% who don’t. It should be noted that there is an urban pressure in this survey in China, but the difference is still quite stark and noted at constant paradoxes that we see in the adoption of new technology. When new technology requires a major change in culture and disturbs existing industries, developing countries have an advantage over those that are already developed, which have much more to lose. Imagine how cheap it is to build a new house with the latest practices and technologies than replacing those into an old one. A recent example is how developing countries have run wired broadband infrastructure and gone directly to wireless data.

There are parallels with EVs in China, where the much smaller legacy of the fossil fuel industry is at stake. Manufacturers don’t have to re-skill workers from mechanics to electronics – they ski them to electronics from word to word. Traditional parts supply chains will not be destroyed – new ones will be built from the ground up. Many EV buyers will not buy EV willingly to replace a popular fossil fuel vehicle. This could be like their first car, not to mention their first EV.

China also has a lower entry cost for EVs, although this needs to be measured relative to wage differences. The average revenue in the US is around $ 66,000 compared to around $ 10,500 in China, so the $ 4,200 price of a best-selling Chinese Hongguang Mini EV is equivalent to a $ 26,000 vehicle in the U.S. compared to a salary, ironically close to what Tesla is aiming for with the much-anticipated ‘Model 2’. Nevertheless, as I said in a previous column, Tesla is still very much at the forefront of market luxury and is far from clear that it will be as brand dominant as EVs become. the main market material. In China, its range benefits are less important because less than 1% of passenger vehicle trips exceed 75 miles at least, according to Rupert Mitchell of Weltmeister. This makes even low-range EVs more feasible for Chinese buyers, who on average drive just 697 miles a year, compared to 13,474 miles in the US.

EVs are therefore already a more viable transportation option for Chinese buyers, but the battle that Biden and America are going through if they are to succeed in the global EV market against drivers ’trust is to change their habits, and the negative drive by the gas and oil industry. When “coal roll” pickup drivers are Tesla drivers on U.S. highways, they are not protecting American jobs in the long run. They maintain the status quo as a fossil fuel and give China a greater chance of gaining the upper hand over the US in this important emerging market. While Tesla is likely to maintain its technological advantage at the inflation level in the future, the big market is about affordability. That requires high volume, and despite Biden’s larger EV favor, the Chinese market is already larger and likely to grow faster with unit sales as well.

In fact, politics is the elephant in the room in any comparison between China and the US. Under Joe Biden, America can regain its status as the foundation of world democracy, but China is the other way around, with a terrible record of human rights. But economics tends to avoid politics with intimidating regularity. But perhaps we feel about communism, someone who buys cheap but high quality products has an economic advantage over those who do not. It’s hard to beat because of China’s potential in the EV market. Remember how Japan began to dominate the fossil fuel car market from the 1970s, despite the low pressures? That could easily happen with EVs, unless we put more effort into promoting the revolution than the conventional incentives designed by the Biden administration, or those of other developed countries.