2025 DHS Paper 1

1 Name: Index Number: Class: DUNMAN HIGH SCHOOL Preliminary Examination Year 6 Economics (Higher 2) 9570/1 Paper 1 Case Study Questions 15 September 2025 2 hours 30 minutes No Additional Materials are required READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 9 printed pages including this cover page. [Turn over

2 Question 1: The market for electric vehicles Figure 1: Projected global sales of vehicles (2018 – 2030) Source: Electric Vehicle Outlook 2025, BloombergNEF.com, 20 July 2025 Extract 1: The manufacturing process for electric vehicles Electric vehicle production combines traditional car assembly with advanced electrical systems. The process starts with design and engineering such as battery layout, motor placement, and chassis structure. Manufacturers then produce battery packs by assembling lithium-ion cells with cooling systems, whilst creating electric motors and other electronics. During assembly, workers build the vehicle body, then install the electric drivetrain, battery pack, and interior components like seats and infotainment systems. After assembly, each vehicle undergoes quality control, software calibration, and testing including charging tests and range verification. Source: Adapted from imarcgroup.com, 20 July 2025 Extract 2: Electric vehicle market in Norway Electric vehicles (EVs) are pretty much everywhere you look in Norway. The wealthy Nordic country, which is known for its massive oil and gas reserves in the North Sea, has long been blazing a trail in the transition away from internal combustion engine cars. A steady stream of measures to support the uptake of EVs, from tax exemptions to reduced fees, has now put the country on the cusp of completely erasing internal combustion vehicles from its new car market. It is perhaps no surprise then that standing at a crosswalk in Oslo’s city center means waiting for a near-constant stream of fully electric models to come to a stop. “It is very visible. And I think some people do not even really realize how good this is because it has happened quite fast,” Christina Bu, secretary general of Norway’s EV Association

3 said. “The air is cleaner, it is quieter, and this is a change that hasn’t really cost consumers that much,” Bu said. Norway’s sales of EVs have increased from less than 1% of total auto sales in 2010 to 88.9% last year — and this trend doesn’t show any sign of slowing. “Norway has had strong policies for many years to encourage EV adoption. It is not just about value added tax1 exemptions for EVs but also higher and higher taxes on internal combustion engine cars.” Bu said. Source: Adapted from Sam Meredith, CNBC.com, 15 July 2025 Table 1: Market Share of Top 10 EV Manufacturers in China (2024) Manufacturer Market Share (%) BYD 34.0 Geely 7.5 Tesla 6.7 Chang’an 6.6 SGM – Wuling 5.5 Li Auto 4.3 AITO 4.3 GAC 3.9 GWM 3.0 Chery 2.7 Source: China Passenger Car Association Extract 3: Price wars in China’s automotive industry China called for its automotive industry to halt brutal price wars, as it was threat to the sector's health and sustainable development. The industry ministry said it would join hands with law enforcement agencies to tackle unfair competition and take necessary regulatory measures. "There are no winners in a 'price war', let alone a future," it said in a statement, vowing to safeguard consumers and promote high-quality development of the industry. The remarks came after fresh incentives offered last week on more than 20 models by electric vehicle giant BYD, that prompted several rivals, such as Geely and Chery, to follow suit. The ministry's comments echo a similar call on Saturday by the China Association of Auto Manufacturers (CAAM) for a truce in the price wars, saying they affect profitability and efficiency. Source: Channel News Asia, 31 May 2025 Extract 4: Consumers’ concerns and expectations about EVs Globally, battery range is the most important factor for consumers considering an electric vehicle (EV) purchase. To appeal to EV buyers, manufacturers may need to provide more information about driving range, because many consumers mistakenly 1 Value added tax (VAT) is an indirect tax applied to the sale of goods and services.

4 believe their daily routine must involve frequent recharging, even if they travel short distances. EV price and charging speed are also major purchase priorities. Source: McKinsey.com, 20 July 2025 Extract 5: The Chinese electric vehicle market EV sales in China have risen year -on-year. In 2023, China sold a total of 8.9 million pure EVs and plug-in hybrids. The boom is largely driven by the Chinese government’s substantial supportive policies. China’s government began subsidising what they refer to as new -energy vehicles (NEVs) in 2009. China is the world's biggest EV market, accounting for about 60 per cent of global sales. The affordability of China's EVs plays a massive part. Their average retail price has fallen over the years to just over US$34,000 as of 2022. This is 33 per cent less than the average price of a gasoline car. “China’s focus has been to ensure that EVs were accessible for the masses, and it has done so to great success, developing its low - entry segments, and allowing demand to shift as smoothly as possible from (internal combustion engines) to EVs,” a CEO of a research firm said. Besides increasingly fierce domestic competition from new entrants such as Xiaomi, Chinese EV firms also face challenges trying to expand globally. For one, the government's substantial subsidies to the EV sector have come under scrutiny. China’s Minister of Commerce has said however that the rapid development of Chinese EV manufacturers is a result of constant technological innovation, a well - established supply chain system and market competition instead. The European Commission has begun an investigation to determine whether to impose tariffs on exports of Chinese EVs to protect European car makers. Source: Adapted from Channel News Asia, 12 April 2024

5 Questions (a) Compare the projected sales of battery -electric vehicles and internal combustion vehicles between 2018 and 2030. [2] (b) With reference to Extract 1, explain one way in which electric vehicle (EV) manufacturers can enjoy cost savings from an increase in scale of production. [2] (c) With reference to Extract 2, explain how the use of electric vehicles (EVs) may result in positive externalities. [2] (d) Extract 2 highlights how Norway has transitioned away from internal combustion engine vehicles to EVs. Using a demand and supply diagram, explain how the government policies mentioned in Extract 2 have led to more electric cars on the roads. [6] (e) Discuss whether a “price war” (Extract 3) is the best strategy for EV manufacturers to raise their profits. [8] (f) The European Commission began investigations to determine whether to impose tariffs on exports of Chinese EVs (Extract 5). Discuss whether the imposition of tariffs by the European Commission is justified. [10] [Total: 30]

6 Question 2: (Don’t) cry for me, Argentina Extract 6: Argentina's economy faces recession, soaring inflation The World Bank and the Organisation for Economic Cooperation and Development (OECD) have issued stark warnings for Argentina’s immediate economic outlook, warning that a recession lies ahead in the coming months. Both the World Bank and the OECD pr