Three essays on China’s vehicle electrification industry

Abstract

Industry policy is very important in shaping the development of a particular industry. The new energy vehicle industry in China experienced rapid growth in the past decade. Chapter 1 provides a comprehensive investigation of national industry policies related to new energy vehicles regarding the development plan, guiding opinions, subsidy, and tax support policies. This chapter also compares provincial new energy vehicle policies regarding their stated growth, particular focus, and response time. Chapter 2 explains and analyzes the market development of China's new energy vehicle sector over the last ten years in conjunction with the worldwide development trend of new energy vehicles. It separates the evolution of the new energy vehicle industry into three stages based on changes in the industry at the macro-level (total sales, total models, structural changes) and the micro-level (number of models, sales, market share changes, etc.) of each automobile firm: the initial stage (2016 and before), the second stage (2017-2019), and the third stage (from 2020). This chapter also aims to examine the impact of the COVID-19 outbreak on China's new energy vehicle industry. Chapter 3 examines how the market power shapes China's new energy vehicle industry in the setting where the booming ride-hailing services boost hybrid electric vehicles. Using China's new vehicle registration records, this study exploits mobile payment penetration as an instrumental variable to solve the endogeneity issue related to the popularity of ride-hailing services. This chapter finds that the popularity of ride-hailing services significantly increases the sales of hybrid electronic vehicles (HEVs). Moreover, this chapter provides evidence that the prevalence of NEVs and the phase-down of subsidy for NEVs will not crowd out the demand for HEVs. Overall, this study provides substantial policy implications that the emerging market forces can boost the development of an infant industry.