In the last few years, China has established its dominance in EV car stock, with its share being onethird of the global stock in 2016. A plethora of research and new investments are making their way to the Chinese market. These include Daimler’s JV with BYD and investments by SAIC, Honda, Toyota, Ford with Anhui Zotye, etc. China has been clear in its intention to lead the EV market. As per the industrial policy, Made in China 2025, it wants to either globally dominate or be a major competitor in 10 high-tech industries. New Energy Vehicles (NEV) and cars that are either partially or fully electric, are a part of that goal. To this end, China has been providing significant support to the industry through subsidies and policy decisions.

Some of the significant ones among them are:

Reduced taxes: NEVs were exempted from the standard consumption tax that consumers pay on new automobiles, in as early as 2008.

  • Manufacturing subsidies: Billions of dollars have been given in direct subsidies to NEVmanufacturers. The quantum of subsidy was such that it contributed to sales quadrupling in 2015. For example, Shenzhen-based manufacturer BYD received USD 435 million in subsidies between 2010 and 2015, making it the state-sponsored champion of electric and hybrid vehicles in China. The central government allocated over USD 15 billion to support the development of energy-efficient vehicles and electric vehicle infrastructure. The generous subsidies and buoyant sales led to 200 companies announcing their intention to make and sell NEVs in China.
  • Customer subsidies: The Chinese government began a consumer subsidy program in 2010 providing approximately USD 8,700 per car. Local governments also created their own subsidy programs that provided additional discounts for NEV purchases through cash subsidies, free parking, or free license plates. Both local and central subsidies together accounted for about 20 to 40 percent of the cost of the vehicle.
  • Government procurement contracts: In 2014, government mandated that NEVs should constitute 30 percent of all government procurement contracts. In 2016, the figure was revised to 50 percent.

One significant area that will require a ramp-up to meet China’s goal of being a world leader in EVs, is charging station infrastructure.

Charging station ownership in China increased from 76 in 2010 to 5,600 in 2016 at a CAGR of 104 percent. The number of public charging piles grew from 1,122 to 150,000 at a CAGR of 126 percent during the same period. In addition to public charging piles, private charging pile ownership reached about 170,000 units in 2016, thus bringing the country’s total number of charging piles to nearly 310,000 (the largest of any country in the world).However, given China’s aggressive goals on charging station infrastructure, there is still a wide gap to be bridged. China aims to build 12,000 centralized charging or battery swap stations and 4.8 million scattered charging piles across the country by 2020 to meet a charging demand of 5 million EVs, with the goal of achieving a ratio of one vehicle to one charging pile. As per the State Grid Corporation of China (SGCC), the aim is to reduce the maximum distance between charging stations to less than 5 kilometers in suburban areas.

3 kilometers in inner suburbs, and 1 kilometer in urban areas. To this end, China needs to3 kilometers in inner suburbs, and 1 kilometer in urban areas. To this end, China needs toinvest approximately USD 19 billion.

Another development to observe are the forthcoming changes in China’s policy around subsidies. While the subsidies facilitated exponential growth in EVs, they also had unintended consequences of distorting the market and prompting carmakers to falsify sales numbers to obtain subsidies. China has begun phasing out direct subsidies and intends to remove them completely by 2021. As per a government announcement, the drop in direct subsidies will be replaced by a dual-credit scheme to be launched in 2019. The new scheme will require individual carmakers to produce a minimum number of EVs. Those failing to meet the minimum production targets will have to buy credits from competitors with surplus credits. Vehicles that meet their range targets will also earn credits. China is also planning to ban the sale of petrol and diesel cars, in line with some of the European nations like UK and France. However, it has not yet decided on a schedule.The China story serves as a good learning to countries like India which have been slow on the road to EVs so far.

Key EV Initiatives by China:

  • Exemption of NEVs from standard consumption tax
  • Manufacturing subsidies
  • Customer subsidies accounting for 20-40% of EV price (to be phased out by 2021)
  • 50% of government vehicle procurement to be EVs

article


Credits: Innovation Norway; India EV Story: Emerging Opportunities

 

 

Our Key Members

  • abb.png
  • ARAI.png
  • ASHOK_LEYLAND.jpg
  • BIZLINK.png
  • BRYAIR.png
  • BUHLR.png
  • CHARGE_IT.png
  • CHARGE_ZONE.png
  • DELTA.png
  • EEE-TAXI.png
  • EUCLION.png
  • FORMCEPT.png
  • ICAT.png
  • INDYGREEN.png
  • INVEST_INDIA.png
  • LORD_INDIA.png
  • MACHINEPULSE.png
  • NUTECK.png
  • PANASONIC.png
  • plug-n-go-logo.png

Most Read

advertisements