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Aug 2014

Electric Vehicles Starting To Take Off In China

07 August 2014 | Posted by Zachary

China initiated some pretty considerable electric vehicle incentives several years ago and expected electric vehicles would just fly off the lots as a result. It set a target of 500,000 electric vehicles* and hybrid electric vehicles on Chinese roads by 2015. However, only about 18,000 electric vehicles were sold in China in 2013. In other words: the target was way too high for reality.

It has actually been quite surprising how slow electric vehicle adoption in China has been. But a number of things tell me that the story may now be changing. I think we're at an important pivot point, and not just because of one factor, but because of several.

Tesla Display in China, with Hanergy Solar Panels Above

One of the more obvious factors is that Tesla Model S deliveries have just begun in China. The Model S is in high demand around the world, but it could do especially well in China. Luxury vehicles sell quite well in China, and the Model S is the hottest kid on the block. Also, Tesla is taking a unique approach and it's not increasing the price of the Model S substantially for the Chinese market. It's typical of manufacturers to sell at a much higher profit in China, but Tesla has decided that just isn't right. The Model S has a higher price in China because of shipping costs, taxes, and duties, but not from a greater profit cut from Tesla. Naturally, this makes the car affordable for more people, and it could result in Tesla taking a very large portion of the luxury vehicle market in China. One of the Chinese Tesla showrooms is reportedly Tesla's busiest in the world, and the company is expecting a large percentage of its sales to be in China by the end of the year. In one of Tesla's recent financials calls, CEO Elon Musk said that there's already a four or five month wait in many Chinese cities for the Model S. One Chinese investor has actually ordered 100 customized Tesla Model S convertibles!

But Tesla isn't the only name in town. China-based BYD has a number of electric vehicles on the market that are starting to do quite well. The BYD Qin plug-in hybrid electric car is apparently very hot. The Qin can go from 0 to 100 km/h (0 to 62 mph) in a very respectable 5.9 seconds. It was also quick to find customers when hitting the market in December. Within “two seconds (of being available) via its online site,” 100 BYD Qins were sold, according to BYD. BYD also stated that over 4,000 people tried to buy the car at that time (but it's not clear why they weren't all able to do so). This is certainly a sign that 2014 will be a much bigger year for electric car sales. (In 2013, the top-selling electric car was the JAC iEV with only 2,500 or so sales.)

BYD also sells an all-electric car very popular with taxi and rental companies. The BYD e6 has proven itself in many pilot taxi programs. Now it's starting to get ordered in much bigger numbers. BYD recently announced that 1,000 had been ordered by the city of Hangzhou. I expect we'll see a lot more large orders like this in the coming year or two.

However, the 1,000 BYD e6 electric cars weren't even half of that Hangzhou order. The city also ordered 2,000 BYD electric buses. And that order followed orders totaling 1,800 buses from other cities and agencies in previous weeks. Like the e6, BYD's electric bus has succeeded in numerous pilot programs. In North America, South America, Europe, and China, the electric bus has shown that it can compete financially with conventional buses but without the emissions. The director of a Barcelona transit agency that had been trialling the electric bus told me in November that it seemed the electric bus was comparable with their typical buses on a lifetime cost estimate... but without the pollution. Again, we're just starting to see big orders, but expect to see more orders like that in the coming year or two.

Aside from cars for consumers, taxis, and buses, there are also electric carsharing and rental services. Electric car rental services are apparently still few and far between, but they are able to offer renters a much better deal thanks to the government's electric car incentives and the great efficiency of electric cars, and initial customers seem to be very happy with the cars.

A more innovative approach, Kandi Technologies is piloting public electric car-sharing services in some Chinese cities. The Kandi electric cars are housed very efficiently in garages that are reminiscent of giant vending machines. The service builds off of the very successful bike-sharing programs that are running in 19 Chinese cities and many more globally. "Kandi’s plan is to build with both Government and “outside” support, 750 of these garages in just the City of Hangzhou over the next four years through a 50-50 joint venture with Geely Automotive, China’s largest passenger automaker, which would require some 100,000 Kandi electric vehicles to stock them. This model is slated to spread to other cities and regions like Shanghai, Shandong, and Hainan." The first two garages were completed just at the end of 2013. Here's a video about this model:

Cars and buses aren't the only parts of the story. The charging infrastructure for electric cars is also key, and it is now growing very fast in China. 2014 Zayed Future Energy Prize winner ABB has announced that it will be rolling out the "world's largest EV fast charging network." ABB and Shenzhen BYD Daimler New Technology Co. are beginning to offer wall-mounted chargers through DENZA dealerships. 

“The Chinese government has introduced a direct current (DC) fast charging ‘GBT’ standard to encourage technical innovation and stimulate market acceptance of EVs. The urban charging infrastructure will be a key driver for EV adoption. The GBT standard will give Chinese consumers the opportunity to conveniently charge their vehicles at home or at public charging stations. Public DC fast charging is expected to be rolled out in China in the near future,” the ABB press release stated.

With tremendous air pollution challenges and the growing threat of global warming, there's a lot of pressure to clean up transportation fast. One Chinese resident even sued the Chinese government earlier this year for the continual smog. He's the first to do so. At around the same time, China extended tax incentives for 100% electric vehicles as well as plug-in hybrids. The subsidies are up to $9,800 for an electric car, $5,800 for a plug-in hybrid, and over $80,000 for an electric bus. The subsidies will last at least through the end of 2016. Notably, however, the subsidies are only for China-built vehicles.

With policy security, a growing number of good electric options from which to choose, successful pilot programs completed, growing infrastructure, and growing awareness, I expect to see the electric vehicle market take off in China in the coming year or two.

*While bicycles are classified as vehicles in many places, the term "vehicles" is not inclusive of bicycles in this article.

Image Credit: Hanergy Solar Group

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