EV Superpower Rivalry: China, the United States and the EU Vie for Dominance
Hamza Qayyum 12-08-2023
Electric Vehicles (EV) have become a global interest for manufacturers and consumers all around the world as the primary and the traditional mode of transportation are being faced with major problems such as; the rise in fuel costs and the increase in carbon emission. To counter these issues, the EV were introduced which do not need any fuel nor do they produce any greenhouse gases reducing the carbon emissions and air pollution, playing a vital role in tackling the climate change as well. These have been playing a significant role in the global economy. Beside this, EV have a geopolitical significance and it has become a priority for global car makers to build affordable vehicles and revolutionize the traditional automobile sector. The Superpowers vie for dominance in the EV market as EV could shift the economic balance of the world. Currently China is leading and dominating the EV production market and battery manufacturing due to the strong government support, abundant EV minerals and a large local market. If China maintains the dominance, it might drive out its competitors and provide economic advantage over other countries including the United States and European Union who see the growing market of China as threat. This seems to be an alarming situation and might become another geopolitical battleground. The discussion below discusses the strategic steps taken by these countries, the pros and cons of evolving Electric vehicles and the ways how Pakistan can learn from the world examples and cope up with the challenges by incorporating such innovations.
One of the major and strategic markets in the world is the Oil market and it has been a center point of many geopolitical conflicts however with the boost in the EV market, a large decline is expected to be seen in the Oil sector which would have a great impact on oil producing states. An exponential growth has been observed in the EV market in the previous years, in the US, the sales of electric cars have been increased from 0.2% to 4.6% in 2021 and talking about 2022, 10% of global sale of passenger vehicles were electric cars, meaning that more than 10 million cars were sold and China was at the front with having 60% global EV sales. Such statistics are raising concerns among all the other automobile industries as the world is moving towards EV. Following China, Europe has the second highest number of electric vehicles sales which went to almost 15% of global EV sales in the year 2022 whereas the US reaching sale share of 8% globally. In recent times, more than 2.3 million electric vehicles have been sold in the very first quarter of 2023 and around 14 million sales are expected by the end of this year and with such a huge sale of EV, a massive decline of 700 Mt CO2 in carbon emissions is to be seen by 2030 due to the use of electric cars as per reports of International Energy Agency .
A positive forecast for EV sales is supported by market dynamics and legislative initiatives in important auto markets. The global projection for the share of electric car sales based on current policies and company targets has climbed to 35% in 2030 under the IEA Stated Policies Scenario (STEPS), up from less than 25% in the prior outlook. According to the forecasts, China would continue to be the world’s largest market for electric vehicles, accounting for 40% of all sales by 2030. By the end of the decade, the US doubles its market share to 20% as recent policy pronouncements spur demand, while Europe keeps its present 25% share.
In such a competitive market, government policies are pivotal for the growth of industry and economy. The three major EV industries are with China, US and EU. The Chinese have always remained aggressive when it comes to development and they offer significant amounts of subsidies to the manufactures and the consumers bringing the EV at an affordable cost. They work differently and in a much more effective way. In the automobile market, one of the reasons for their dominance is that they design and produce as per the consumer preference at a subsidies price. Following strict emission standards, China tends to incentivize the automobile sector towards advance technologies just like the EV. By 2035, the government wants all new automobiles sold in China to be “new energy” vehicles (NEVs), which comprise both fully electric and plug-in hybrid vehicles.
China is not only the largest producer of EV but it is also the largest exporter of EV products. A concern has arisen among the European Union regarding the competition in the market and that the EV products which they’re receiving at subsidize prices have distorted the competition among their market. EU is planning to outlaw the sale of traditional engines by 2035 in order to have a clean energy system however again there lies the concern for distortion in the market and they plan on becoming the leader in the EV global market for which measures are being taken.
The US, on the other hand is investing more in the Electric vehicles industry to catch up with the competitive market as well as reduce its reliance on the foreign oil because the foreign oil was costly and not only that, the combustion of engines has created a lot of greenhouse gases. So, in order to cope up with these issues and to enter the competitive market, the US has taken such steps to revolutionize the system. As per recent news, there is a fear among the US workers towards losing their job and pay cuts due to the EV industries. EV requires fewer parts hence it is understandable that fewer parts require fewer workers and for the US to enter the competitive market, it has to cut down its costs. Concurrently, another issue has arisen is integration of AI Robots which has taken over the industry and has further reduced the need of human labour. President Biden vows to have a “clean energy future” for his citizens and that’s why the US is investing more in EV industries to have a win-win situation by conserving the environment as well. EVs with “tank to wheels” typically have a three times higher efficiency than vehicles with internal combustion engines. The US is planning to own the EV industry rather than relying on China as this could lead towards their economic development.
The World Trade Organization (WTO) is playing a key role in regulating EV trade, has helped reduce the tariffs on electronic vehicles and its parts and tend to promote the building standards to EV. The market is going to rise more in the upcoming future.
However, doing this comes with more challenges, and difficulties in adapting the EV system, it puts a high cost of infrastructure, limited range, charging stations, performance of EV batteries and advance system. As mentioned earlier, a revolution always comes with a degree of chaos. Imagine driving an Electric vehicle on a highway where there is no charging station nearby and you are running out of range, here come the range anxiety which can cause mental agony and it can be a serious concern however to overcomes such challenges the state must ensure a significant increase in charging stations, improve battery technology and have an up to date system.
One of the most important implication which the rivalry has brought is the “trade war”, and “Intellectual Property rights”, there is a huge possibility that this rivalry can bring a huge trade war and a potential trade dispute among the EV players and might end up disrupting the global trade which is going to have a negative impact among the market globally and raise geopolitical tensions among the major players resulting in a negative impact on the global economy. Intellectual property rights are also concerned in relation to this as they aim to protect the interests of the companies as well as the consumers.
As Pakistan struggles with economic challenges and soaring fuel prices, embracing the Electric Vehicle (EV) revolution could offer a ray of hope for its economic stability and environmental goals. Pakistan can draw lessons from global leaders like China, the US, and the European Union. Firstly, Pakistan should consider incentivizing the EV industry through subsidies and support for both manufacturers and consumers. By promoting the adoption of EVs, Pakistan can contribute to reducing its reliance on imported oil and mitigate the economic impact of fluctuating fuel prices. Secondly, Pakistan should focus on improving its infrastructure for EVs. This includes establishing a robust network of charging stations, particularly along highways and in urban centers.
Thirdly, Pakistan should invest in research and development to enhance battery technology. Improved batteries with longer ranges and faster charging times will make EVs more practical and attractive to consumers. Moreover, Pakistan should ensure that its policies and regulations align with global standards and promote fair competition in the EV market. This will prevent distortions and trade disputes that could arise from differing policies among nations. Lastly, the government should consider the social impact of this transition. As the EV industry evolves, job displacement may occur due to reduced labor needs. Pakistan can proactively address this by promoting workforce reskilling and facilitating a smooth transition for workers.
Convulsively, EV is going to change the specs of the automobile industry and prove beneficial for the consumer as well as the environment as EV vehicles tend to be environment friendly, but its production might not be as the industries require machines to work and there will be generators for the charging stations which obviously run on fuel. It is not reasonable to say at this moment that EV has taken over, it will take time but it will take over the industries and bring a revolution in the industry. The rivalry among the superpowers will continue and it might get serious as it might become a ground for geopolitical battleground.
- Electronic Vehicles: Benefits, challenges, and potential Solutions for widespread Adaptation by Fayez Ananazi https://www.mdpi.com/2076-3417/13/10/6016
- Al Jazeera – Is a new geopolitical battleground developing over electric cars?
- Data includes plug-in hybrids. For more information, see “Global EV data explorer,” International Energy Agency (IEA), https://www.iea.org/data-and-statistics/data-tools/global-ev-data-explorer.
- International Energy Agency Data report https://www.iea.org/data-and-statistics/data-tools/global-ev-data-explorer
- Global EV outlook 2023 https://www.iea.org/reports/global-ev-outlook-2023
- China Considers Extending Its EV Subsidies to 2023. Available online: https://www.china-briefing.com/news/china-considers-extending-its-ev-subsidies-to-2023/