Investment Opportunities Analysis Of China’s Electric Automotive Industry

Since reform and opening-up, China’s economic has developed rapidly. More and more cars are being bought by salaried people and farmers. Those cars damage the environment badly and cost lots of energy.During the past few years, fog and haze shrouded central and northern parts of China, leading to big spike in pollution levels. Some cities began to show increasing intolerance of fog and haze.An abundant supply of coal, lack of oil and even less of gas constitutes the energy supplying structure of China. According to the peak oil theory, the oil demand will reach 530 million tons in 2020 and to 650 million tons in 2030 separately. However, the oil supply will decrease after 2015, no more than 200 million tons. This means that we need more oil from other countries. According to the report of CNPC Economics & Technology Research Institute, China’s oil dependency on foreign supply continued to increase - reaching 58.1% in 2013.Those data show that electric cars will greatly alleviate the problems encountered. Increasing the nunber of electric cars will reduce air pollution and decrease the oil dependency on foreign supply. If China’s government support the production of electric cars, the global competitiveness of China’s automobile industries will be greatly strengthened.The study proceeds as follows. First, it reports the state-of-the-art of electric cars industry and identifies the main problems to be solved for China’s electric industry. Second, Porter’s five forces analysis and SWOT analysis are conducted. Considering the threat of new entrants, bargaining power of suppliers, threat of substitutes, bargaining power of buyers and industry rivalry, we claim that China’s electric industry needs government’s strong support. Taking account of strengths, weaknesses, opportunities and threats, we argue that China’s electric industry has great potential maket space. Finally, policy suggestions are given to help seek investment opportunities and to improve the quality of China’s electric industry.