Industrial policy and the creation of the electric vehicles market in China: demand structure, sectoral complementarities and policy coordination

Abstract

Since the late 2000s, the Chinese government has been adopting active industrial policies to create a market for electric vehicles. While celebrated as a success nationally and internationally, a closer look reveals a mixed picture with market growth concentrated in only a few cities. On the basis of heterodox industrial policy literature, Chinese-language policy documents and interviews, we develop an analytical framework to empirically study electric vehicles deployment at the city-level, and to assess the achievements and obstacles of implementing industrial policies in this sector. We particularly stress the interrelatedness of policies governing the demand structure of the electric vehicles market and its main complementary sector, the charging infrastructure, which need to be aligned in the progressively more complex segments making up the electric vehicles market. Taking this industry as a case study, we contribute to the wider debate on the determinants of industrial policy effectiveness.

Proceedings of the 7th International Conference on European Integration 2024

“…To qualitatively assess the role of regulation with emphasis on the new industrial policy in shaping the outlook for the EU automotive industry's technical change and competition, we follow a mixed-method triangulation design for industrial policy research as used, for example, by Gomes et al (2023). We critically discuss the EU automotive industry state and outlook and deliver a top-down overview starting from a) the EU auto industry's international position and the policy framework under which it operates, b) the new EU approach to industrial policy, and c) the CEE region's perspective.…”

“…Such a change is of drastic rather than non-drastic innovation character and impacts the constantly evolving global value chains. Electrification and the new battery industry have so far been championed by Asian producers and, specifically, the Chinese industries and firms, which have benefited from various interventions through the state-led industrial policy, including the Energy-saving and New Energy Automotive Industry Development Programme, or Made in China 2025 (Gomes et al, 2023). Demand and supply shocks have marked the recent development of the world economy.…”

Three major challenges in the shift to electric vehicles: Industrial organization, industrial policy, and a just transition

“…The aim is to stimulate demand for EVs, encourage significant investment, and create a first‐mover effect that positions Chinese‐made EVs to dominate the domestic market and venture into foreign markets. While this has been acknowledged as a successful policy (Li et al., 2022), a closer examination reveals a nuanced scenario, with EV market growth concentrated in select cities (Gomes et al., 2023).…”

Fiscal Monitor, April 2024

“…China made a strategic decision to prioritize electric vehicles in 2009, when the market was still virtually nonexistent, with the Plan to Adjust and Revitalize the Auto Industry (Branstetter and Li 2023). Key goals were technological self-reliance, avoiding dependence on oil imports, and reducing emissions (Gomes, Pauls, and ten Brink 2023). The government initially leveraged public procurement and required carmakers to prioritize electric vehicles.…”