Chinese Electric Vehicles Rearranging the market

For almost two decades China made products have dominated the consumer market. The country has been called the workshop of the world. Owing to the facilitation by the Chinese government, which included provision of free electricity to cottage industries, the country produces products cheaper than any other place in the world. Prudent policies have also ensured infrastructure development to sustain this massive uplift. However China as much as it is known for its production, is not as renowned for its design.

In the global product life-cycle structure, products are mainly designed in the west and enter production in the east. The design engineering and technology are the key areas western developed economies have relied on. The other area where western economies (Western Europe and US) are profiteering is through managing the brand prestige, value addition and marketing.

Every year Chinese graduates are returning in masses, not only brining with them degrees but also the skills they have acquired through jobs in western economies. As a result there has been a paradigm shift in the approach of companies that manufacture Chinese products bottoms up. The stock of Chinese OEM is gradually rising. The quality of product with Chinese company badges has inclined.

BYD e6 the show stopper

BYD e6 the show stopper

A proof of this is electric cars sales. Three Chinese companies make in the list of top 10 selling electric cars. These cars are not just selling in China, but across the world. Compare this a decade ago, when there was no Chinese company that would feature in the list of top car producer in the world.

In the electric vehicle world, Chinese companies are a force to reckon with. The three companies that will be giving stiff competition to the likes of GM, VW and Ford are BYD, BAIC group and JAC motors.
It has to be remembered that most of the Lithium chemistry batteries are produced in China and east Asia. The disadvantage of losing production by the west has weakened their supplychain strength. There is also a loss of insight in elementary details that one gains only through physical production. This has given China an upper hand in the electric vehicle business. It should be noted the Lithium batteries are highly flammable and can be only transported by sea. Any manufacturer in China has the advantage of lower lead times.

Out of the 1 million Electric Vehicles in the world the current share of china is 10% (102,000 vehicle). This share is set to grow with time particularly in the micro electric car sector.

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