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FORTUNE.COM // SEPTEMBER 2019
Ouyang describes as a “strategic discussion
at high levels” in the Chinese government
about how the country should proceed with
its own clean-technology push. China’s State
Council, the country’s top policymaking body,
ultimately announced nine “strategic” indus-
tries, one of which was electric cars. Govern-
ment subsidies began to flow in earnest and
included hefty subsidies for battery makers,
automakers, and electric-car buyers—with
bigger awards to the companies that ad-
vanced technology most rapidly.
But China’s electric-car effort hasn’t just
been about pushing tech boundaries. It also
has involved manipulating consumer behavior.
In big Chinese cities such as Beijing, Shanghai,
and Shenzhen, municipal policies have severely
constrained people’s ability to obtain license
plates for combustion cars—but have made it
easy for them to get plates for electric vehicles.
China has also capitalized on several charac-
teristics that Ouyang contends make it more
suitable than the U.S. for large-scale electric-
car use. China has relatively cheap electricity. It
has a history of widespread electric-vehicle use,
in the form of scooters. And, thanks largely to
extensive state-sponsored high-speed rail for
distant journeys, it has a consumer driving pat-
tern that skews heavily toward short city trips,
which are easier than long rides to build an
infrastructure of car-charging stations around.
For all these reasons, Ouyang says, “I think the
United States is not the best application” for
electric cars. “China is.”If one city on the globe epitomizes an electric-
car future, it’s Shenzhen. The reality jars
me as soon as I exit the airport terminal
on a steamy evening and, along with a few
hundred other sweaty people, get in line for a
taxi. Every cab in the queue, which stretches
as far as I can see, is electric. What’s more,
each is the same model: a hatchback made by
Shenzhen-based BYD.
The growth of BYD—in Chinese, “bee-YA-
dee”—epitomizes the dizzying speed with
which China’s electric-car enterprise has
matured from a geeky science project into a
dead-serious industry. Founded in 1995, it
early on was a contract maker of cell phone
batteries for Western brands such as Nokia
and Motorola. BYD went public on the Hongrepresent the latest tech-centric industry that
China has targeted to dominate. But this time
China’s influence is likely to play out more
subtly. Because cars are big and thus expen-
sive to ship—unlike, say, mobile phones or
solar panels—manufacturing them is likely to
remain a largely local activity, with factories
in major markets around the globe. But while
China is unlikely to centralize the world’s
electric-car manufacturing, it is defining how
the global EV market develops—that is, set-
ting the rules of the road. In many industries,
Beijing has trailed Washington and Brussels.
In the electric-car sector, Beijing, aided by
some of the biggest Western multinationals, is
leaving Washington and Brussels in the dust.
Industrial strategy in China is never the result
of a single person. But, as much as anyone else,
Ouyang Minggao is the technological father of
China’s electric-car push. From his carpeted of-
fice on the top floor of an automotive institute
at Tsinghua University, essentially China’s Har-
vard, Ouyang has spent more than a quarter
century helping steer the largely government-
funded research-and-development campaign
that has resulted in today’s EV boom.
I meet Ouyang there on a sweltering Satur-
day morning. He’s running late, rushing from
a session at which he helped strategize about
further boosting the number of electric cars
on the road in Beijing. His institute’s stairwells
are lined with black-and-white photos of auto
industry pioneers: Karl Benz, Rudolf Diesel,
Henry Ford, Nikolaus Otto, and Meng Shao-
nong, who—a plaque below his photo notes—
was “the founder of the Chinese automobile
industry.”
When Ouyang came to Tsinghua in 1993,
China had just launched an electric-vehicle
R&D program. Over the years, spending rose.
Then, in 2008, things got a lot more serious.
That year, China showed off 500 domesti-
cally made electric cars and buses at the
Beijing Olympics. More significantly: The
global financial crisis hit. One direct result
of the meltdown was the Obama administra-
tion’s 2009 economic-stimulus plan, which
included billions of dollars in support for U.S.
clean-energy industries.
That spending plan caught the atten-
tion of Beijing. And it led, in 2009, to what
ELECTRIC GOLD RUSH
47%
Leap in
global sales
of electric
vehicles
from the
first half of
2018 to the
first half
of 2019
[SOURCE: WOOD
MACKENZIE]10.9
MILLION
Vehicles sold
in 2018 by
Volkswagen,
only 79,000
of which
were
electric.
By 2050,
VW says
the vast
majority of
the vehicles
it sells will
be EVs.