The Strange Political Economics of the Chinese Auto Industry
This is a case study of one country’s relationship with private companies in a major industry. The central government has made the production of EVs a national priority with massive subsidies. The provincial, county, and local governments compete to attract an EV assembly plant. All levels of government entice new companies with a wide range of incentives and subsidies. The result is that in a short period of time about 100 new plants have been built; a few new ones are planned. The industry may have a total capacity of around 25-30 million cars. Current production was 12.4 million cars in 2024; 2025 will probably be higher. Growth rates in the future will probably be lowered than in the past. This is a common pattern for a new technology. In the United States, about 500 companies intended to produce cars. The difference with the current Chinese program is that most didn’t start production or produced very few cars. Only a few companies built a p...