China, having fostered world-class IT companies, is now targeting the electric vehicle industry.

In a recent report titled "Chinese EV IT Companies Are Recreating the Success Story," LG Economic Research Institute argued that "the Chinese government's active support for the EV industry incorporates the government-led growth model that elevated the IT industry to a world-class level, demonstrating the government's determination to raise the EV industry to a global standard."

In 2015, China's electric vehicle sales increased more than threefold compared to the previous year, and the annual market size surpassed 200,000 units. The researchers analyzed that the explosive growth of the electric vehicle market appears to have been significantly influenced by the Chinese government's policy support, including subsidies for Chinese companies, the establishment of infrastructure for EV operation, the creation of a market environment favorable to Chinese firms, and government-led demand expansion.

On May 24 of last year, President Xi Jinping, who visited SAIC Motor, China's largest automobile company, said, "The development of new energy vehicles (hereinafter 'electric vehicles') is an essential course for China to go from a major automobile nation to an automobile powerhouse."

Faraday Future attracted attention by unveiling a sports car-shaped electric vehicle called the FFZERO1 at CES held in Las Vegas, USA last January.


BYD, which accumulates capabilities through technology internalization in line with the government-led electric vehicle industry growth strategy; Beijing Automotive, which actively adopts technology through cooperation with external companies; Chery, which demonstrates rapid market responsiveness with small electric vehicles of low specifications and low prices; and Zotye, which grew based in rural areas, are representative Chinese companies currently leading the Chinese electric vehicle market.

The report pointed out that, similar to the IT industry, it is highly likely that it is only a matter of time before local brands with competitiveness in the Chinese market emerge as global brands in the electric vehicle industry.

China Targeting the US EV Market?strong>

A newly launched electric vehicle attracted a lot of attention at CES held in Las Vegas, USA, this January. The sports car-shaped electric vehicle called the FFZERO1, created by Faraday Future, garnered interest from the automotive industry as it became known as a competitor to Tesla.

Faraday Future, which is benchmarking Tesla's strategy to enter the electric vehicle market, appears to be following Tesla's success formula exactly, as this vehicle development project was led by engineers from Tesla, its market entry strategy starting with a luxury sports car is similar to Tesla's, and it announced plans to build a production plant in Nevada, where Tesla's Gigafactory is located.

The report stated that while Faraday Future cannot be considered a purely Chinese brand and there may still be doubts regarding its potential for success, its future moves warrant attention given that a Chinese-involved electric vehicle has declared its entry into the global U.S. market.

Although electric vehicle sales in China have increased, there are still many challenges that need to be addressed for the market to grow stably. Consumer pain points, such as short driving range and a lack of charging facilities, remain unresolved.

However, the report predicted that despite the drawbacks of electric vehicles, demand for them in China will steadily increase. As grounds for this, the researchers cited three reasons in the report. First, the Chinese public's interest in quality of life and the environment is rising. Of the 161 cities inspected by the Chinese Ministry of Environmental Protection, 145 fell below the standards, leading to significant public dissatisfaction. There is a growing need to solve the problem of automobile exhaust gas, which accounts for one-third of PM 2.58.

Second, the government is planning to create an EV-friendly ecosystem alongside related industries with a strong commitment to fostering the electric vehicle sector. To secure a leading position in the next-generation automotive market, the Chinese government is considering factors such as upgrading the manufacturing industry and diversifying energy demand. Third, it is highly likely that the range of EV options available to Chinese consumers will diversify, and performance will also improve rapidly.

"Made in China 2025" envisions annual sales of over 1 million units for Chinese local electric vehicle brands and a global market share of over 70% by 2020, as well as Chinese EV companies entering the global Top 10. Furthermore, it aims to foster key EV components such as batteries and motors to a global level, targeting a 70% market share. By 2025, the goal is to achieve annual sales of 3 million units and a market share of 80%.