The electric vehicle sales blitz in China, and the perceived threat of those EVs populating American and European roads, have led to protectionist measures in recent months. Recently, the U.S. increased its tariffs on Chinese EVs from 27.5% to 100%. Europe followed soon with up to 38% in tariffs. Europe argues that Chinese EVs have benefitted from excessive subsidies. Now we finally have a number on how much that might have been. Spoiler: It’s upwards of $200 billion.
With that, we start the Friday edition of Critical Materials, your daily digest of news and events shaping up the world of EVs, autonomous tech and software-defined cars.
Also in today’s edition: Ford CEO Jim Farley revealed that the company is close to unlocking Level 3 conditional self-driving capabilities. Plus, we look at how Japan, home to automotive manufacturing pioneers, is now planning to catch up with the U.S. and China in the race to develop next-generation of cars.
30%: How Much China Spent On Its EV Sector
While EV sales are somewhat plateauing in the U.S. and Europe, they’re continuing to grow on the other side of the planet, in the world’s biggest car market. Chinese consumers are showing no signs of slowing down the country’s EV adoption rates. Several forces have put China on this trajectory. One of that is: lots of cash.
A recent report by Scott Kennedy, the senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies (CSIS), approximates that the Chinese government support for EVs totaled $230.8 billion between 2009 and 2023.
Here’s an excerpt from the CSIS report:
Absolute funding annually was around $6.74 billion in the first 9 years of our analysis (2009-2017), as the sector was just getting off the ground. Spending roughly tripled during 2018-2020, and then has risen again sharply since 2021.
These estimates reflect the combination of five kinds of support: nationally approved buyer rebates, exemption from the 10% sales tax, government funding for infrastructure (primarily charging poles), R&D programs for EV makers and government procurement of EVs.
The buyer’s rebate and sales tax exemption have accounted for the vast majority of support for the industry. That said, because of the high cost and desire to winnow the field of producers, the central government reduced the buyer’s rebate in 2022 and eliminated it beginning in 2023.
And that’s a conservative estimate. It doesn’t even take into account local support, like rebates in Shanghai, Shenzhen and Beijing. So the true spending could be worth billions more. It also leaves out subsidies in the EV supply chain, like battery raw materials, processing, mining and more.
Among the biggest beneficiaries of Chinese government support has been CATL, the world’s largest battery manufacturer. CSIS said CATL went from receiving $76.7 million in 2018 to a whopping $809.2 million in 2023.
In simple terms, the country began implementing EV policy and financing with brute force more than a decade before the U.S. passed the Inflation Reduction Act in 2022. For better or worse, now China is not only electrifying its own roads, but also pouring its cars into Europe and the Global South.
“If Chinese EVs were pieces of junk, then they would not be a serious challenge to the rest of the world’s automakers,” Kennedy wrote in the report. “But Chinese firms have narrowed the gap in autos in general and moved ahead in EVs.”
60%: Ford’s Level 3 System Is Just Two Years Away
Imagine running late for work. Your boss is hounding you with calls, but you have a 30-minute commute before even beginning your daily meetings. Yet thanks to your self-driving car, you’re not worried at all. All you have to do is hop inside and start working as the car drives itself to the destination, hopefully in a safe manner.
Ford CEO Jim Farley said that the company was only a couple of years away from when the “car becomes like an office.” There’s a prototype in the works that is already capable of Level 3 autonomy, wherein drivers can take their hands off the steering and eyes off the road on certain mapped roads, and take over when the vehicle alerts to do so.
Here’s what Bloomberg reported recently:
“We’re getting really close,” Farley said in an interview with Bloomberg TV’s David Westin. “We can do it now pretty regularly with a prototype, but doing it in a cost-effective way is just the progress we’re going to need to make.”
Farley believes Ford can make that progress quickly enough to be offering the feature in 2026, which could make it the first mass-market car brand to offer what auto engineers call Level 3 autonomy. That’s where the car takes over the driving task under certain conditions, enabling the driver to divert their attention to other tasks.
“Level 3 autonomy will allow you to go hands and eyes off the road on the highway in a couple years so then your car becomes like an office,” Farley said. “You could do a conference call and all sorts of stuff.”
I’d take these claims with a grain of salt for now. Autonomous driving technology has faced several delays over the years and has proven to be far more complex than once estimated.
Take Tesla, for example. CEO Elon Musk claimed several times in the past that Autopilot and FSD were probably better than human drivers. Unfortunately, they’re also human killers. Several Teslas have crashed while allegedly driving on Autopilot or FSD and some cases are under investigation by NHTSA.
Only Mercedes-Benz has successfully deployed Level 3 “conditional autonomy” systems in the U.S. so far, but only on EQS and S-Class models sold in California and Nevada. InsideEVs tested this system and found that it was indeed capable.
Part of what made the drive safe was a steep educational curve. Mercedes-Benz Drive Pilot works only on designated highways and it requires you to learn how the system works, what precautionary measures are required and under which circumstances the driver must override the system and take over.
90%: Japan Plans To Catch Up In The SDV Race
Japan has a rich history of car manufacturing. Toyota and Honda have for decades set standards for quality and reliability. In many ways, they still do. The Toyota Prius triggered an era of hybridization that’s in vogue even today, as consumers have shown an affinity towards hybrids in recent months.
But when it comes to both EVs and software-defined vehicles (SDVs), Japanese automakers have fallen behind rival American and Chinese brands. Now the Japanese government is taking measures to address this gulf.
Here’s another Bloomberg excerpt:
The government has set a goal of Japanese companies accounting for 30% of the market for so-called software-defined vehicles, or SDVs, in 2030 — when it estimates global sales will reach 35 million to 41 million units.
The Ministry of Economy, Trade and Industry will provide financial support and help nurture workers such as IT engineers by partnering with universities and launching re-skilling courses, it said.
The government wants to build an ecosystem where companies can share data and profit from after-sale services as the auto industry’s business model evolves.
It’s not just Tesla that envisions a future where streets are packed with robots on four wheels. Japan estimates the global robotaxi market to be worth ¥80 trillion ($503 billion) by 2035.
Japanese automakers have long been accused of being laggards in the EV race and are famous for their notorious anti-climate lobbying. They seem to have locked in their EV goals only recently, compelled by stricter emissions norms and criticism from environmentalists. Maybe they’re now hoping to not miss the bus on the next big thing, which is robotaxis and self-driving cars.
100%: Many Brands Are Into Self-Driving Tech. Which One Would You Try Out?
Every major automaker is advancing its driver assistance systems in hopes that they'll one day lead to fully self-driving cars. Just to name a few, GM’s Super Cruise, Mercedes-Benz Drive Pilot, Ford’s BlueCruise and Tesla’s FSD seem to be headed this way.
Who do you think gets there first? And if that day ever arrives, would you use these systems? If so, how? Leave your thoughts in the comments.
Correction: The previous version of this article misstated the subsidies CATL received. It's in millions, not billions.
Contact the author: suvrat.kothari@insideevs.com
