All nations are involved in pushing for its industrial plant and nation economy that results from its industrial policy.
Industrial policy is facilitated via subsidies in the form of interest rate breaks, tax credits, subsidies, borrowing guarantees, and tariffs.
Both China and the US subsidized the creation of EV manufacturing and charging infrastructure. But corporate entities that receive government help then compete to see which corporation rises to the top of the heap. In the US it is Tesla and in the PRC it is BYD. Both Tesla & BYD utilized engineering innovation & vertical integration in the creation of superb products.
Just what help did Tesla & BYD receive?
Tesla’s total subsidy value according to the data is $2,441,582,590 ($2.44 billion), across 109 “awards” — 82 federal grants and tax credits as well as 27 state and local awards.
Tesla received $0.4 billion of federal loans and bailout support via the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. However, that amount was repaid in full with interest, almost a decade early.
During Musk’s visit, the Chinese government announced that Tesla had obtained crucial automotive data security certification – the only foreign EV brand to do so. This lifts restrictions on Tesla vehicles entering or parking in “sensitive areas” across the country. This breakthrough not only marks a pivotal moment for Tesla but also highlights China’s commitment to maintaining market accessibility for foreign companies, at a time when Chinese EV firms’ access to other markets is increasingly in question.
This gesture of openness from China starkly contrasted with U.S. Treasury Secretary Janet Yellen’s recently expressed concerns about China’s production overcapacity in key green technology sectors: electric vehicles, solar panels, and lithium batteries.
Despite intense competition, new entrants continue to enter China’s EV market. Recently, Xiaomi, best known for its smartphones and smart home appliances, invested 10 billion yuan (about $1.57 billion) and engaged 3,400 engineers over three years to develop its EV business.
Ford’s CEO loved his EV provided by Xiaomi.
the significant cost advantages of China-made EVs do not stem directly from government subsidies.
China’s rise in the EV sector is the result of deliberate and pragmatic policies that align government intervention with market dynamics.
EVs are not a Chinese invention, yet China’s industrial prowess has transformed these technological breakthroughs into cost-efficient products. In 2014, Musk made Tesla’s patents, including 51 design patents and 935 invention patents, openly accessible. While all EV makers have had access to these patents, they appear to have catalyzed significant advancements primarily in China.
The government’s early involvement, particularly through policies and subsidies aimed at stimulating R&D, technological standardization, and environmentally sustainable solutions, has greatly accelerated the production and adoption of EVs in China.
I do not want to get bogged down on what has been fair or unfair in government aid in development. Both US & Chinese corporate entities have benefited from government subsidies. And Tesla has gone to both the US & Chinese subsidy wells. A smart move.
Both EV & subsidiary charging infrastructure has benefited from government aid. The world has benefited from pollution wise from such government help. And maybe there will be less US intervention in the Middle East as the US need for petroleum declines.
Government aid can go too far. Case in point China’s real estate overbuilding.
In the 1990’s gave huge amounts of subsidies to facilitate the China population movement to big cities to fuel the need for workers for the expanding industrial base both domestic and foreign. Not only residential properties were built in large industrial cities but satellite cities around them were created.
China’s economy shifted from rural agriculture to urban industrialization. A big success driving China’s economy upward as a new middle class bought consumer goods and invested in housing.
Private capital from Chinese savings that bought private apartments [and purchased multiple flats for investment] flowed into developers hands that continue to build, on borrowed money in addition to private savings received from buyers, regardless of need for further expansion.
A huge real estate bubble has been created. Will China be able to exit the crisis without a US 2008 bubble bust?