Power play: How governments are spurring the electric vehicle industry

Published: 2018.05.15

Nic Lutsey, Mikhail Grant, Sandra Wappelhorst, and Huan Zhou

This white paper provides a detailed assessment of light-duty electric vehicle sales and manufacturing, including the associated battery production and its suppliers. We analyze where electric vehicle models are being assembled and where their battery cells are being produced, and compare that to where the consumer markets are developing. We also investigate underlying policies that have supported the industrial and market developments to date. In so doing, this work assesses the status of the major electric vehicle markets through 2017, while also identifying policy opportunities for accelerating the transition to electric.

Based on this analysis, we summarize the following electric vehicle, battery production, and policy findings.

Electric vehicle production. China, Europe, Japan, South Korea, and the United States account for nearly all global electric vehicle production. China’s electric vehicle production was highest with 50% of global production in 2017, followed by Europe with 21%, the United States with 17%, Japan with 8%, and South Korea with 3%. Of the top 20 electric vehicle manufacturers, nine have headquarters in China, four in Europe, three in the United States, three in Japan, and one in South Korea.

Electric vehicle battery production. From 2011 to 2015, Japan was by a wide margin the world’s largest producer of battery packs for electric vehicles. By 2016, China’s battery cell production for electric vehicles overtook that of South Korea and Japan. In 2017, China’s battery cell production for light-duty electric vehicles was 11 times that of the United States and 22 times that of Europe. Based on industry announcements of battery cell production through 2022, China accounts for more than half, compared to 12%–17% each for Europe, South Korea, and the United States.

Electric vehicle promotion policy. Several policies are helping to overcome electric vehicle barriers of limited model offerings, cost, and convenience, especially across China, Europe, and the United States. More than 80% of the world’s new automobiles are subject to standards that provide a foundation for industry investments in vehicle technology. In addition, leading market also have direct regulations for electric vehicles, consumer incentives, charging infrastructure investments in place.

Electric vehicle industrial policy. China has comprehensively promoted domestic and foreign investment in batteries and electric vehicles with its central planning and reinforcing local policy. Setting clear volume targets and providing financial incentives ultimately has vested governments and companies in developing an electric vehicle market and a manufacturing base. Policies in the United States and Europe to spur similar electric vehicle and battery investments have been comparatively limited.