SHANGHAI — China's government is set to wind down a subsidy program for electric vehicles and plug-in hybrids by the end of 2020 after cutting the incentives more than 50 percent last month.
Yet there are no signs that the EV craze created by Chinese brands has been affected, judging by what they will display this month at the Shanghai auto show.
EV sales in China have remained explosive for years. In 2018, they jumped 62 percent to almost 1 million, nearly all from domestic brands.
For sure, the generous government subsidies of the past several years have enticed domestic automakers to invest heavily in EVs. But that alone doesn't explain why they have been so bullish on the technology.
When it comes to EV development, Chinese brands have a powerful motive that their foreign rivals do not.
Sensing that they have little chance to beat global brands in the conventional vehicle market, domestic automakers in general believe EVs offer them a rare opportunity to establish competitive strength.
More evidence of their efforts to cement this leadership will be presented this week at the Shanghai auto show.
State-owned BAIC Motor Co., China's largest EV manufacturer, will launch an electric crossover and an electric SUV under its BAIC brand. It will also display the ECF concept crossover unveiled under its Arcfox premium EV brand last month at the Geneva auto show. The company expects to start selling the production Arcfox ECF in the second half of 2020.
BYD, China's largest electrified vehicle maker based on sales of EVs and plug-in hybrids, won't let BAIC steal the limelight. BYD, partly owned by Warren Buffett, will introduce its SA2 compact crossover, which will offer gasoline, plug-in hybrid and battery-electric versions.
It will also kick off sales of the e1 subcompact electric car. The e1, developed on BYD's new EV platform, was unveiled in March in Beijing. As small as it is, the e1 has four doors, five seats and a range of about 190 miles.
Even more impressive is its price: starting at 60,000 yuan, or less than $9,000, after government subsidies.
Geely Automobile Holdings, the largest domestic Chinese carmaker, has only two electric models — a compact sedan and a compact crossover. But it is on track to quickly expand its lineup by unveiling a separate brand for its EVs and rolling out the first product, a sporty compact sedan, under the new marque.
Dozens of EV startups have emerged across China in the past few years. Some, including Nio, WM Motor, and Xpeng Motors, started selling their first products last year. Next week in Shanghai, they will roll out second or third products. Many of the other EV startups are expected to show their first production models.
By contrast, global automakers have been slow to introduce EVs to China. To date, only a small number — General Motors, Nissan Motor Co. and Hyundai Motor Co. — have launched EVs in the market.
Volkswagen, the largest auto brand in China, won't start selling its first batch of EVs until the middle of this year.
All this means that at least in the near future, domestic brands will continue to command a lion's share of China's EV market.