Commitment, But No Clear Path to China’s EV Future
I recently returned from a trip to China. Like all dedicated China-watchers, I wanted to discern the direction of China’s plan to grow the electric vehicle sector here by reading the official commentary tea leaves. China is about to change leaders, after all. Will the new administration be committed to growing the number of electric vehicles in China?
What the leaves told me is that China is still committed to growing the EV sector, but there is still no agreement at the top as to the best way to do that. Crucial infrastructure issues remain unresolved. So, anyone who expects China to become the EV capital of the world anytime soon should think again.
Government officials at the NextGen Auto International Summit held in Shanghai on Dec 11 to 13 gave mixed messages. A mid-level official from the Ministry of Science and Technology reiterated the old line that China’s domestic automakers could use electric vehicles to modernize the industry here and grab market share from foreign brands.
Despite decades of development and partnership with foreign automakers, China’s domestic brands still hold only 30 percent of the market. But his advice was unrealistic, to put it mildly. Chinese automakers should concentrate on quality rather than quantity, invest more in R&D, and not just “rush for the gold,” he said. Yeah right.
He did recognize that developing EVs had turned out to be harder than anticipated, and that there was no shortcut to transitioning to electrified models. He concluded with the current government line that plug-in hybrid electric vehicles would be a good starting point for growing the EV sector.
Better Living Through (Battery) Chemistry
A vice president from the Development Research Center of the State Council (China’s cabinet) said development of the EV sector was about reducing the income gap and improving Chinese people’s lives. Not only would growing the EV sector reduce dependence on foreign oil, it would improve people’s quality of life, he said. And growing the EV sector was a good way to help reach the government’s goal of doubling the GDP by 2020, and doubling people’s salaries in the process, he added. I’m not sure how that would work given the small size of the EV sector—but the government is nonetheless touting it as an official goal.
There was some realistic discussion of the state of China’s EV development. There’s wide agreement that government subsidies were still needed to grow the sector, though one participant pointed out those couldn’t go on forever. “The market must decide,” he said. He was connected with a quasi-governmental think tank. China’s quality standards are not up to global standards, said several speakers (some from industry or academia rather than government).
And China needs to come out with standards for batteries and charging station plugs, some speakers pointed out. This is where China faces real challenges. Despite years of talk, China has yet to produce a national plug standard. That is because fundamental items, some of them involving safety, are yet to be determined, sources here tell me.
Just when those issues will be resolved is uncertain, however, because numerous parties, including the State Grid, one of China’s main electric utilities, and SinoPec, a large state-owned oil company which also owns gas stations, can’t agree on what the standard should be.
The good news is that China’s government is still committed to the EV sector. The bad news is that China’s government is not monolithic, and there are many players in the decisions involving EVs and related infrastructure. That will slow development down more than all the technical issues.
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