From path creation to path transformation: the geography of new energy vehicle production in China

Abstract

Although the new energy vehicle (NEV) industry is providing new impetus for China's regional development, a deeper understanding of its conditions and processes remains imperative. This study extends path creation theory from evolutionary economic geography to explore the enabling environment for both path creation and subsequent path development. Challenging the conventional thinking that view the emergence industry as a new path, this study posits that the NEV sector's development is shaped by the dynamic interplay of multiple paths, including the headquarter, three-power, and vehicle assembly path. The inter-path interactions drive the industry transform through different development phases. Accordingly, this study proposes a framework comprising three-phase path transformation (selection, competition, and integration) and five-component enabling environment (strategic resources, industrial base, innovation environment, market competition, and institutional support). Empirical results, based on the Lotka-Volterra model and fixed effects models, show that: (1) enabling environment for path transformation varies across paths and phases; (2) while industrial base initiate path selection, its influence diminishes in later transformation phases; (3) vehicle assembly path exhibits dual technology-push and market-pull characteristics, while three-power path is policy-driven and subject to strategic resources. This finding suggests challenges for endogenous path development, as subsidies are phased out from 2023 onwards.