Recent revelations about Volkswagen’s emissions have focused attention on the environmental damage caused by the auto and fuel industries—and the need for a decisive shift towards genuinely green transport that can cut smog in the world’s major cities.
This is particularly so in China, as the country readies its 13th Five-Year Plan that will include ambitious targets for the use of New Energy Vehicles (NEVs) in China as part of a wider drive for greener growth and improved air quality.
China has long been lagging in its efforts to persuade motorists to shift to greener alternatives, prompting a rethink at the highest levels on how electric vehicles (EVs) can be made more attractive. China will also co-operate closely with California, the biggest car market in the U.S. California has enacted laws that require major manufacturers to build a certain amount of zero emissions vehicles if they want to sell cars there, and Beijing’s municipality may use a version of the U.S. state’s zero-emission vehicle credit trading mechanism in an attempt to spur sales.
Recent data from the Chinese Association of Automobile Manufacturers shows that 28,092 new energy vehicles were sold in September, bringing total sales in 2015 to just 136,733, far below the 500,000 targeted for this year under the 12th Five-Year Plan.
Despite overall spending of 37 billion yuan (U.S.$5.78 billion) on promoting electric vehicles, China might miss a target to have 5 million electric cars on its roads by 2020.
In September, Premier Li Keqiang once again spoke of his desire that electric cars occupy a much bigger share of the Chinese market, but central and local government will have to solve a number of problems if electric motoring is to move into the fast lane.
Caixin Media
06.30.15
Tesla’s Ambitious Quest for Traction in China
Foremost among these is a drastic improvement in very patchy charging infrastructure, which is perhaps the main deterrent to electric car sales in China.
Concerns among potential buyers about the quality and cost of vehicles will also need to be addressed to help spur electric car ownership.
China’s government, belatedly, has switched emphasis from encouraging production (subsidies to manufacturers, suppliers, consumers, and researchers) to measures that encourage demand, such as offering buyers a direct subsidy when they purchase an electric vehicle, explained Huiming Gong, program director of the Transportation Program at Energy Foundation China.
The government has also introduced measures exempting buyers of electric vehicles from the 10% purchase tax normally levied on car purchases and annual registration taxes.
Alongside these national policies, Gong says local governments are starting to offer matching subsidies as well as other incentives. In May 2015, for example, Beijing’s municipal government declared electric vehicle owners would be exempt from the city’s traffic restrictions. Beijing then saw major growth in demand for battery-powered cars.
Local Policies
Local policies have helped particular cities achieve better-than-average uptake of electric vehicles. “Tier 1 cities (such as Beijing, Shanghai, and Shenzhen) have fared the best,” said James Chao, Asia-Pacific managing director for consultancy IHS Automotive. “This is due mainly to certain local subsidies, fewer license plate restrictions, and the generally higher income levels of electric car buyers.”
But across the country, the government’s measures have so far failed to bring about a rapid rise in purchase of electric vehicles. “Current policies have proven not to be sufficient to roll out EVs on a large scale,” says Chao.
An April 2015 report by McKinsey, “Supercharging the Development of Electric Vehicles in China,” examines many of the problems.
Alongside sluggish sales of electric cars, the report shows China has also missed targets for the installation of charging infrastructure and technology development.
Charging Stations
The McKinsey report also recommends that government speed up installation of charging infrastructure by encouraging public-private cooperation, such as that being installed by U.S. electric car company Tesla.
“Governments haven’t been doing enough to address this acute problem,” says James Chao. “Standardization is an issue and clearer guidelines on charging points would be helpful.”
A standard system of charging needs to be introduced to solve the current problem of different types of chargers, compatible only with a select number of vehicles, being built in different places around China.
In the past few months, in a bid to spur investment in the necessary infrastructure, China’s central government urged local authorities to provide tax breaks and cheap land for the private sector to build new charging stations.
Choice and availability of electric vehicles is a problem too, and only in recent months has the problem been acknowledged by local government.
Because of the high import tariffs imposed on foreign models (which make them expensive), and their exclusion from government catalogs of cars qualifying for subsidies, Chinese buyers of electric cars have been limited to domestic models that have been relatively unpopular among brand-conscious buyers.
The authorities have begun to lift purchase restrictions and remove traffic controls for NEVs. However, Beijing’s (municipal) government responded by declaring that electric vehicles made by foreign companies such as Tesla and BMW would, like domestic electric cars, be exempt from its license plate lottery system.
Subsidies
In addition, the high cost of electric motoring in China is also a major deterrent, says research organization GfK, which said increasingly-generous subsidies might be needed to persuade Chinese buyers to make the switch.
Beijing policymakers are currently working on developing different kinds of financial incentives to offer drivers of electric cars, taking their cue from measures previously used in California. These may include a scheme where drivers accrue points that can be redeemed for cash for each mile they drive an electric vehicle.
Other incentives might help, says McKinsey, such as dedicated parking, allowing electric vehicles to share of bus and carpool lanes, and access to low-emission zones. These are areas of the city where heavily polluting vehicles are banned and are being mulled for cities including Beijing.
Scaling up incentives for electric cars, charging infrastructure, and making low-carbon vehicles attractive to the consumer will be essential if China is to ditch fossil-fueled cars.
And while progress has so far been slow, global trends might also help speed up a roll-out, such as the falling prices of big batteries (which would make electric cars cheaper) and new entrants to the market. Apple’s rumored plans for an electric car could potentially have a transformative impact, given the brand’s massive popularity in China.