How the Virus Can Stall China’s Electric Vehicle Plan

Before the coronavirus outbreak, 2020 was to be a crucial year for automakers selling electric vehicles in China, with several industry titans opening factories and rolling out new models. The country already has more EVs than any other, thanks to government policies encouraging production and generous subsidies to help consumers buy them. But sales had been sputtering even before the pandemic due to a slowing economy. While electrification may be an irreversible trend, the shift is slow.

Just 1.5% of the 260 million automobiles in use in China at the end of last year were EVs. But President Xi Jinping’s government considers them crucial to the country’s industrial future. The head of a government advisory panel said in September that authorities want new-energy vehicles to account for 15% to 25% of new car sales in 2025 (from 5% in 2019), and at least half by 2035. Chinese companies including BYD Co., backed by Warren Buffett, dominate the market, and foreign automakers have ambitious plans. Volkswagen, General Motors and Daimler are among the global heavyweights beefing up their EV strategies. This year’s new models include GM’s Menlo, its first electric Chevrolet in China, and Daimler’s Beijing-made Mercedes EQC. Tesla Inc. in January began deliveries from a new factory in Shanghai, its first outside the U.S.; CEO Elon Musk forecast it could eventually produce 1 million cars a year. VW is rolling out a test fleet of its premium electric SUV model, the Audi e-trons, in the eastern city of Hefei.