Exclusive: China’s electric vehicle edge

Source: BY MATTHEW CHOI, Politico • Posted: Monday, June 21, 2021

 In addition to transitioning to solar, Biden has also emphasized electric vehicles as core to his climate goals. But while lawmakers are going back and forth to craft legislation on exactly what the federal government should do for the industry , China is turning to the same playbook it developed after the 2009 financial crisis to lock in its EV dominance.

new report consultancy Horizon Advisory— the same firm that helped shed light on forced labor in the solar supply chain — details how China has moved into the lead on everything from critical mineral inputs to battery production to vehicle manufacturing and increasingly to EV brands.

“This is not an accident. It’s been so long in the making and it’s a deliberate approach that seeks vertical integration,” says Emily de La Bruyere, co-founder of Horizon Advisory.

Beijing sees EVs as an opportunity to leapfrog other international automotive leaders. It has deployed a strategy of consumer-side subsidies and incentives to encourage domestic demand, the report said, then leveraged that demand to attract foreign automotive companies. It has under-priced and out-produced foreign competitors, making international auto players dependent on Chinese inputs, and it supported enterprises by buying up international assets — like sources of technology, critical raw materials and brand value — that offer resources, influence and leverage.

Chinese manufacturers already account for over 50 percent of global EV production and it leads global battery production, according to the report. It also has developed outsize control over the critical materials inputs, like graphite.

“We’re further behind than we think we are,said de La Bruyere. “Even if you have Tesla, and we have all the big OEMs and they’re all moving towards electric vehicles, they’re relying on an industry chain” outside of the U.S.

There is opportunity, however, for the U.S. to compete, the report concluded. But it must act immediately and account for the positions of global dependence China has already secured. “The U.S. must also learn from the 2008-2009 playbook that Beijing has now reactivated,” the report said. “Otherwise, the [Chinese Communist Party] is poised to pass its global competitors at an industrial inflection point.”

GRANHOLM’S TAKE: ICYMI, Energy Secretary Jennifer Granholm penned an op-ed in USAToday on China’s efforts to overtake the U.S. on its own energy transition goals, framing the challenge as a drive for the America Jobs Plan.

|