Can China rule the roads of the future?
If you want to see the trend towards electrification in full swing, you only have to go to China. The country is rushing to embrace what it sees as the car of the future – a greener, smarter, vehicle that is more efficient. Sales of electric cars in China are outpacing those in the rest of the world massively, and the Beijing has pledged that the country’s roads will, one day, be free from gasoline and diesel vehicles. It hasn’t put a timeline on that goal yet, but the government has said that it wants 5 million electric cars on its roads by 2020. Based on how they’re selling in the country, that’s an attainable goal.
Kevin Li, a China-based senior analyst at Strategy Analytics, explained the massive growth that the country is expecting to see. He told reporters at CNBC: "Sales volumes for new-energy vehicles exceeded 700,000 last year, and this number is further expected to increase to more than 2 million in 2020, and to more than 5 million in 2025." He sees “fierce competition” between electric and traditional vehicles within seven or eight years.
China’s doing a lot to push electric car sales higher in the country: it’s giving incentives to buyers, and imposing quotas on automakers. From 2019, it will be imposing penalties on manufacturers for producing cars that are not “zero- and low-emission”.
The country wants to be a world leader in the field, and it might have a shot: electric cars are a young industry, Chinese consumers are increasingly wealthy and open to new ideas, and the country is experiencing better growth in car sales than the U.S. (which actually saw a contraction in 2017). Can China win the game? Only time will tell – but it’s in a great position to play from.
Dominion holds a number of companies involved in the trend towards electrification in its Global Trends Managed Fund.
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