The last few decades China has been actively trying to create a competitive automotive industry, but now, judging by the Navagates broker, they are switching to electric cars. The government believes that they will help solve numerous environmental problems, raise the technological level, and possibly reduce the amount of oil purchased. China's automobile companies already have fairly cheap electricity, strong production, successful projects in cooperation with leading world enterprises and, most importantly, full support from government agencies. The government wants China to become a world leader in this industry, which they see as the future market. However, the Chinese will have to hurry, even if the whole world chooses electric cars, because their market is overheated, and Navagates review analysts are already talking about a bubble that could be a catastrophe if government support ceases.
It is worth noting that competition in the electric car market is taking place between a variety of companies, including traditional car manufacturers, Internet companies, startups and even real estate construction companies. According to the results of research by Navagates scam analysts and ZSW, the Center for Solar Energy and Hydrogen Research in Germany, electric car sales in 2018 almost doubled, compared to the previous year, their total volume exceeded 1.2 million, which means that China accounts for about half of the global electric car sales. The USA traditionally takes the second place (about 360 thousand in 2018). In total, there are now about five and a half million electric cars in the world, and a little less than half of them are owned by the Chinese.
However, despite the fact that sales continue to grow, the Chinese car market consists of electric cars in only a small fraction so far. According to the China Automobile Manufacturers Association, only 4 percent of car sales for 2018 came from electric cars. Analysts at the Navagates broker review believe that by 2025 (as planned by government in China), the total annual sales of electric cars with batteries, hybrids with the possibility of recharging batteries and cars in which fuel cells are present in addition to the battery will amount to about seven million units - approximately fifth of the Chinese car market. To collect this many electric cars you don’t need to attract all five hundred Chinese companies that produce them (and they will probably become more and more), because such a plan involves about 14 thousand electric cars per manufacturer per year, which is completely insufficient for profitability .
A shortage of demand is likely to lead to the survival of the largest, and small companies will leave the market, says navagates.com reviews.
How quickly the Chinese electric car market has grown is largely due to government support. As far back as 2016, Chinese authorities introduced a subsidy program for electric car companies, which made it possible to keep prices low, but in the spring of 2019, subsidies were cut in half. Earlier, the subsidy for an electric car with a running stock without refueling more than 400 kilometers was about 50 thousand yuan (7.5 thousand dollars), but now it has dropped down to 25 thousand. In addition, the lower limit has also increased for those cars that could qualify for subsidies, now the power reserve without additional refueling should be at least 250 kilometers (as opposed to the 150 km limit that stood earlier), according to Navagates broker.
State authorities in China have announced that cutbacks in subsidies will continue, and are likely to completely fade away after 2020. Representatives of the Ministry of Finance say that this should stimulate the carmakers of China and make them rely more on their own innovation, and less on government assistance. Those funds that will be freed up by reducing subsidies will be used to improve the network of charging stations and the rest of the infrastructure necessary for the operation of environmentally friendly transport. There are already about 800 thousand charging stations for electric cars currently in China (most of them are concentrated in large cities like Beijing and Shanghai), and in the near future, according to the Navagates review, their number is expected to grow to 5 million.
Foreign companies are also trying to keep up, imposing fierce competition on Chinese manufacturers. In 2018, Tesla sold more than 14 thousand electric cars in China, and in the near future expects to complete the first stage of the construction of a new factory in Shanghai - Gigafactory 3. This giant factory will be the base for the assembly of not only batteries, but also cars such as Tesla Model 3 and Model Y as a whole, and production volumes are expected to be about half a million electric cars annually. Also, Fiat Chrysler, Honda and Toyota are trying to get into the Chinese market, according to Navagates forex, but it is assumed that they will not sell their own developments: their product will be the model developed by the GAC Group, with some modifications.
Foreign manufacturers are serious rivals, and given the upcoming reduction in subsidies, it is likely that only the largest manufacturers in China, who have both experience and customer base, and a wide range of products, will be able to survive in such an environment. One such company may be BYD funded by Warren Buffett. Those who have no such experience and support yet are at serious risk, according to Navagates scam analysts.
The so-called “green credit system” was introduced in China last year; those manufacturers that produce more than 30 thousand cars annually must collect a certain amount of so-called loans. In fact, these are points that are assigned to models of electric cars. The more energy-efficient the new environmentally friendly car is and the higher the rated power of its fuel cell systems, the more points the company that released it will receive. In 2019, the environmental plan was as follows: for a hundred cars with an internal combustion engine, the company should have ten “green loans”, and in 2020 their share, according to the Navagates broker review, increased to 12%. Companies that for one reason or another could not achieve the desired indicator should buy the missing loans from the outside, or pay fines.
Also in 2019, a reform of the rules was carried out according to which foreign investors can own electric car manufacturers in China. This year we should expect concessions for the commercial vehicle market, and two more years later for the Chinese car market as a whole. Thus, the country's government demonstrates its support for the free market and competition: they do not impose direct prohibitions on ownership, but use more complex regulatory mechanisms.
Green loans, which navagates.com reviews wrote about earlier, can be an excellent tool for the Chinese government to influence foreign companies. At present, the share of green loans in the country is about 18 percent, which significantly exceeds the required rate of 10%. It is worth noting that this number is provided mainly by large manufacturers of Chinese cars, which are successfully gaining more and more points for the production of electric cars. Almost 96% of green loans come from Chinese companies, such as BYD and SAIC, and it becomes very difficult for foreign companies to reach the required indicators. For example, the Navagates review writes that the state-owned SAIC company has already received more than 300 thousand loans, and only about 30 thousand of them account for joint projects with General Motors and Volkswagen. In addition to the aforementioned, there is also a calculation of loans for fuel efficiency in China , and in this regard, foreign enterprises also cannot be compared with the Chinese.
Theoretically, major auto manufacturers in China can use the accumulated loans to pressure foreign partners. The automobile market looks promising for foreigners, but attempts to expand are constrained by the inability to get the right number of loans. The Chinese can play by their own rules - local companies can always maintain a larger share and influence thanks to loans. In particular, Navagates broker reports that Toyota has already issued a statement stating that it is not able to collect the required number of loans on its own, and has agreed to produce a car for the GAC Group in exchange for the missing ones.
In parallel, German companies such as Daimler and Volkswagen are making plans to deepen cooperation with manufacturers from China. Volkswagen believes that China will gain the role of the largest automotive market in the future and, as Navagates forex believes, they count on long-term success there. In particular, negotiations are underway with the JAC Motors company, which is owned by the state, regarding the joint production of light vehicles (including electric vehicles).
The Chinese market inspires many leading car manufacturers around the world. There are a lot of people, but not as many cars, which provides excellent opportunities for market growth, according to Navagates scam analysts. General Motors is very actively planning implementation; in the last decade, things were not going very well for the company, a set of problems forced them to withdraw more than three million cars. As a result of this, the monetary statistics of the enterprise sagged very much, the company owed a large sum of money to the United States government, their production dropped, and the market share fell sharply. The Chinese market can be a real salvation for General Motors.
However, problems arose not only for GM, in one form or another they are inherent to almost all car manufacturers: in 2018, shares of companies such as BMW, Toyota and Ford sank significantly, according to the Navagates broker review. Representatives of the companies say that the main problem for them is technology, that they need to significantly reduce production costs and search for fresh technical solutions. In 2019, the President of General Motors said that the company will focus on the electric car market, and that China is at the center of their strategy.
GM already has a rather large share in China - more than three million cars are sold there annually (the usual ones this far), and by 2023 the company representatives promise to provide about twenty new models fully electric. The main idea for such a shift in emphasis is the fact that electric cars require significantly less components than ordinary cars, however, in this light, a very low localization of production for them can become a problem.
At the same time, the Chinese themselves are trying to keep up with the market: according to analysts, more than $ 18 billion of investments have been collected by startups in the field of electric vehicles since 2011, and most of the largest are Chinese, such as NIO and Youxia Motors. Analysts estimate their combined production capacity at approximately 4 million electric cars per year; at the same time, Chinese car manufacturers still mainly worked in the domestic market. The Chinese successfully lured major global manufacturers such as BMW into their market, but they did not seriously enter the world market themselves. For this, preconditions may arise in the future when the electric car market in the country consolidates and becomes saturated, as a result of which large enterprises with the necessary experience will be formed; but while China is still at the stage of state subsidizing of the industry, even leading professionals from navagates.com reviews are in no hurry to talk about it.
I have been trading Forex for more than 5 years, mostly with manual and automatic trading. I set up advisors for round-the-clock automated trading. I'm sure I can help to establish your trading skills....