The US-China trade dispute could inadvertently support China’s efforts to become the global leader in new energy vehicles, or NEVs, if US automakers are “squeezed out of China,” S&P Global Ratings said in a new report.
The ratings agency said US auto companies could be put at a disadvantage as a result of the dispute if they are unable to share research and product development in China and “leverage Chinese supply chains to compete in markets around the world with the most efficient platforms.”
China’s central government, along with the domestic private sector, are investing around $30 billion on establishing dozens of NEV manufacturing hubs in the country. Though China has reduced subsidies for manufacturers this year, Beijing is still pushing NEV producers to upgrade technology and lower costs to ensure a profitable industry, Ratings said.
“We don’t think the US-China trade dispute has diverted attention from the Chinese government in pushing the adoption of electric vehicles,” Ratings said in the report.
Delegates at a battery metals conference in Shanghai last week believed the subsidy cuts were largely responsible for a decline in NEV sales growth.
“The cuts are negative to the growth of the industry in the near term but will probably be positive in the long run,” Han Heng, marketing director at Guangzhou Tinci, a major Chinese electrolyte producer, said at the event hosted by consultancy Roskill.
China in March announced an adjustment to its decade-long central subsidy program for NEVs and said they will be phased out after 2020.