Will China and Europe Lead the Way on Electric Cars?

Electric cars and their development were widely discussed technology news at the Detroit Auto Show in early 2017. Fortune reported that U.S. automakers such as Ford heralded electric cars as the wave of the future while discussing a recent $700 million investment in a battery-powered SUV on top of a planned $4.5 billion investment in multiple electric models between now and 2020.

On top of 2016’s announcement that the Tesla Model S has a range of 315 miles before needing to be recharged. That’s good news for proponents of the electric car.

Ford’s chief executive officer believes that more new models will be offered for electric cars than for gasoline-powered vehicles in the future. There was broad agreement that electric cars will be the wave of the future, if not specific agreement over when the wave will arrive.

It shows in the sales figures. Valeo, for example, has experienced a 50% sales increase over five years in electric as well as hybrid and networked cars.

Yet electric car registrations in the U.S. are falling. Electric vehicles command just a 0.37% market share in the U.S. The slow adoption is fueled by several factors, including a relative dearth of charging stations, stringent regulations in states like California, and comparatively low prices for gasoline.

China and Europe Leading the Way

It may be, however, that widespread adoption of the electric car will happen outside the U.S. IHS Automotive forecasts that a million electric cars will be delivered to China in 2019. The U.S. isn’t expected to hit that figure until four years later.

Electric vehicles in China increased by a factor of four in 2015 and increased by another 55% in 2016. Right now, there are 348,000 electric vehicles in China, versus the U.S.’ 138,000.

The overall number is still small vis-à-vis the population, but the growth trend is significant.

In addition, the Chinese government is incentivizing adoption of electric vehicles. China has significant pollution problems, particularly in the larger cities. The government is pairing research and development into electric vehicles with subsidies and regulations discouraging the citizenry from driving gasoline-powered cars in urban areas.

Governments in Europe are also incentivizing the purchase of electric cars. Consumers are offered tax incentives, subsidies, and other benefits. European lawmakers are also de-incentivizing standard cars by passing and enforcing both penalties for driving them and parking bans against them.

Indeed, Ford’s aggressive spending in the electric car is partly designed for its European market.

U.S. consumers are not without incentives. Currently, purchasers of electric cars get a $7,500 Federal tax subsidy. Manufacturers at the Detroit Auto Show expressed a desire for President Trump to continue that policy.

However, It may be easier for China and individual European countries to incentivize the electric vehicle via other methods simply because there are not a plethora of state rules and regulations on the same scale as in the U.S.

The automakers believe a uniform set of national rules regarding greenhouse gas emissions from vehicles would help adoption of electric cars. They have urged Trump to support such a standard.

Currently, California and several other states have adopted emission standards. Their response to a national standard remains to be seen.