Despite some serious doubts over the viability of electric vehicle (EV) makers, the sector could still have a promising future in China, according to a report published by the Carnegie-Tsinghua Center for Global Policy.
China’s EV sector currently relies heavily on the government to guide its development. But establishing a new, globally competitive industry requires “more than just political will,” argues the report’s author, Tao Wang.
To kick-start a shift towards increased commercialization, Tao Wang argues that the government must do four key things: open the domestic electric vehicle market to international competition; concentrate on promoting the use of EVs within the commercial sector—car-rental, taxi companies, and official government vehicles—before individual consumers; focus on creating a viable business model with better infrastructure and incentives; and reduce the current reliance on providing hefty subsidies and setting sale targets.
Tao Wang’s recommendations come at what could be a critical turning point for the electric vehicle sector. As researching company GFK said earlier this year in its own report, China’s EV industry has been in an “exploratory stage” up until this year. “If the past five years can be viewed as a developing period… then the next five years will be a time for the industry to crack down on key issues,” the report argued.
Success offers China the chance to reduce its oil dependency—it imports over 55% of its oil—and “enjoy the future economic benefits of being a global pioneer” in a new industry, says Tao Wang.
A boom in the EV sector could also reduce pressure on China to curb emissions and improve air quality. In the context of rapid urbanization, China’s “burgeoning transportation sector” has been contributing to the already high levels of carbon emissions. A shift to EVs could instead help to mitigate these problems, says Tao Wang.