China has put a lot of cash into advancing its electric vehicle industry, which is set to account for 10 million sales this year in the world’s largest auto market. That’s a major achievement — but how much did it cost?
At least $230.8 billion between 2009 and 2023, according to new research from the Center for Strategic and International Studies (CSIS). Funding over the first nine years the Washington-based think tank examined came out to about $6.74 billion per year, before tripling for the following three years, and then spiking again from 2021 onwards.
The CSIS based its analysis on five areas: national rebate programs, government funding for beneficial infrastructure, research and development programs for EV makers, government purchases of electric cars, and exemption from China’s 10% sales tax. The buyer’s rebate — which ended in 2023 — and the sales tax exemption provided the bulk of Beijing’s support.
And here’s the kicker: The CSIS says it’s probably lowballing it. The think tank says its data creates a “highly conservative estimate,” since it doesn’t include a number of factors. That includes rebate programs from local governments like Shanghai and Shenzhen, and low-cost land, credit, and electricity provided for EV companies.
The CSIS also excluded subsidies for other parts of automakers’ supply chains, such as companies mining and processing raw materials and developing batteries. CATL, a titan of the EV battery industry that controlled more than a third of the global market last year, got $809.2 million in subsidies in 2023, up from $76.7 million five years prior.
The Chinese market is overcrowded — 200 EV producers exist there — which has helped production and competition explode, and also led to price wars and increased exports. The European Union and U.S. are preparing to slap Chinese EV exports with tariffs of varying levels over the next two months to alleviate pressure on their domestic carmakers.
The Biden administration’s new tariffs on imported EVs — of which there are very few — are aimed at protecting domestic autoworkers and manufacturers. Treasury Secretary Janet Yellen has said the U.S. would not allow a second wave of the “China shock” of the early 2000s, when a flood of cheap Chinese imports helped kill about 2.4 million U.S. manufacturing jobs.
The European Commission said it would put tariffs as high as 38% on some Chinese EV makers, on top of its existing 10% duties. In a statement earlier this month, the E.U.’s regulatory arm said “the battery electric vehicles value chain in China benefits from unfair subsidization, which is causing a threat of economic injury” to European companies.
“[The] endurance of these subsidies is unlikely part of an intentional plot for global domination of this industry,” CSIS researcher Scott Kennedy wrote. More likely, he says, it’s a “byproduct of China’s inefficient industrial policy system in which support typically extends too long and is spread overly widely.”