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Electric Vehicles, a strategic emerging industry.

China is already the world's largest manufacturer of electric bicycles and electric tricycles but only 6,900 domestic-brand electric cars (EV`s) were sold in China in 2013, according to a new report on China’s EV production and sales. That’s in contrast to China’s total car sales for 2013 of 22 million, surpassing 15.6 million in the US. Little demand for EVs means the nation is far off it`s target, set in 2012, to sell 500,000 electric cars in 2015 and five million in 2020. The one caveat being in the booming demand for electric busses. Not to be perturbed the Government has released new incentives to promote what it sees as a strategic emerging industry.


Subsidies will continue for at least the next 6 years and from September the 10% purchase tax will be waived on all new EV`s. Whilst the main factor for the slow take up on EV`s is their price, lack of charging facilities and private investment have also been identified as crucial factors. With new partnerships, Tesla is set to build 40 new Supercharger stations across China.


Aside from the pricey Tesla, no foreign car company is selling an EV in China at the moment. Nissan plans to sell a Chinese version of its all-electric Leaf, which will be called the Donfeng-Nissan Venucia e30, in September. The top selling passenger EV in China last year was the BAIC E150 (pictured below), according to the Paglee report. The Ford Fiesta-sized car starts at a pricey RMB 195,000 (US$31,700) for the electric model, as opposed to just RMB 58,000 (US$9,430) for the identically-bodied petrol model with a 1.3-liter engine.



The Warren Buffet-backed BYD is struggling to generate interest in its growing range of EV`s. The auto-maker, known for its battery technology, aims to triple sales of EVs to 8,000 units this year, including 2,000 buses. But most of its electric cars will be sold to taxi fleets.




2014’s EV sales in China could get a much-needed boost from cash incentives put in place in last year and the new announcements. China’s Ministry of Industry and Information Technology (MIIT) introduced hefty government subsidies to buyers of all-electric or plug-in hybrid cars. The largest subsidy option, of RMB 60,000 (US$9,450), is available to buyers of all-electric cars with a range of over 250 kilometers; the smallest is RMB 35,000 (US$5,690) for plug-in hybrid vehicles that go for over 50 kilometers. These are available only to buyers of domestic-brand cars. Many cities around China have also implemented local incentives in addition to the national subsidies to promote electric vehicles in their cities:


  • Beijing: Same as national subsidy + free license plate
  • Shanghai: CN¥40,000 ($6,504) + free license plate (a CN¥70,000 [$11,382] value)
  • Guangzhou: CN¥10,000 ($1,626) + free license plate
  • Shenzhen: Same as national subsidy
  • Hangzhou: Same as national subsidy
  • Hefei: CN¥20,000 ($3,252)
  • Changchun: CN¥35,000 ($5,691) to CN¥45,000 ($7,317)


But fundamental problems remain. One is that China’s urban middle class prefer foreign brands. The top-selling three models in China last year were the locally-manufactured versions of the Ford Focus, VW Lavida, and Buick Excelle. Another is that most urban residents in China live in gated apartment communities, meaning people have no personal garage in which to charge an EV. Homeowners in Shanghai can apply for installation of private charging facilities, but they must actually own a parking space inside their compound – which not all property owners do.


The Shanghai Daily reported earlier this year that Shanghai Power Company has received 140 applications for home-based charging ports, but has so far given the go-ahead for just 30 of them. These charging stations can cost as much as RMB 50,000 (US$8,000), which eradicates much of the savings people make from the EV subsidy. A further barrier is that not all real estate companies are open to such modifications being made to parking spots.


Beijing municipal authorities have published a ‘2014 to 2017 action plan’ for electric vehicles, according to Tencent Tech. The initiative centers around building 10,000 charging facilities across the capital by 2017. The first batch of 1,000 will be positioned within a five-kilometer radius of the city center, focused on major transport hubs. But what of the nation’s other cities? Only once a city has a charging infrastructure that’s even larger than its network of petrol stations might EV`s stand a chance of being seen as a viable alternative to petrol driven cars.



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