China Adapts Its Electric Vehicle Plans to Challenging Realities

By · October 28, 2013

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EV charging stations ring the offices of the Shanghai International Auto City, an expo for car manufacturing and research. But no electric cars are plugged in.

Four years ago, China boldly announced it would produce 500,000 “New Energy Vehicles” annually and that sales would account for five percent of total passenger car sales. New Energy Vehicles in China include plug-in electric vehicles and hydrogen fuel cell vehicles. Making lithium ion batteries for electric vehicles turned out to be more difficult than making mobile phone batteries. China’s government is not blind to the fact its initial goal was unachievable.

The most recent policy, issued in September 2013, called for 10,000 New Energy Vehicle to be sold in each of Chia’s megacities by 2015. For smaller cities, the sales goal was 5,000 cars. Despite the downshifting of EV sales targets, China’s central government hasn’t abandoned its dream of being an EV—or rather a New Energy Vehicle—powerhouse. It has merely adapted. My visit to China this month illustrated that.

“We must let the market play its role, but also the government will give guidance,” Qian Minghua, director of the division of automotive industry at the Ministry of Industry and Information Technology told the audience at the U.S.-China Clean Truck and Bus Forum in Shanghai on October 21. “A lot of issues are still pending. This will be a long and winding road.”

If that sounds a bit like the U.S. approach, it is. But the government “guidance” in China is a lot bigger.

Like Washington, Beijing is also subsidizing electric vehicles. That policy, too, is evolving. Since Chinese consumers are not buying plug-in electric vehicle – like American consumers, they are leery of the higher price, relatively short driving range, and lack of charging infrastructure—the near term focus has shifted to electrification of fleets. The latest EV subsidy policy subsidizes fleets more heavily, and for a longer period, than passenger cars.

Go Local: Shanghai’s EV Zone

Shanghai EV Zone />

The EV Zone spurs electric vehicle adoption, through EV test drives, sharing, rentals and purchasing. It also collects data about the market and the experiences of drivers.

Local governments are also taking practical steps to learn more about how consumers use EVs. On the outskirts of Shanghai is the Shanghai International Auto City, located in a district that is home to a huge Volkswagen plant, an F-1 race track, and numerous automotive supplier company R&D centers. It is also home to the EV Zone, an EV demonstration area, dedicated to “seeking the best integration between city, life and new energy vehicles.”

The EV Zone includes EV car sharing, an EV rental plan, an EV service center that can import EVs without having to go through cumbersome customs procedures, a network of charging stations, and free EV test drives to the public. To date some 80,000 people have tried out an EV, Lucas Cao, project manager in the New Energy Cause Department, told PluginCars.com.

The EV Zone surveys those who take the test drives about their likes and dislikes regarding the vehicles and their purchase intents. It also has a fleet of 160 EVs that is collects usage data on. That data, and the user survey results, are shared with the automakers—both foreign and domestic—that are shareholders of in Shanghai International Auto City Group Co. Ltd.

Different business models for selling EVs are also studied, and the area has an EV-only dealership, all in the pursuit of finding the best way to have a viable EV market, said Cao.

Like the central government, the Shanghai International Auto City has discovered that its initial targets for EV usage may have been a bit high. The demo base will have a 10,000 EV capacity by 2015. But it is likely only about 2,000 will actually be on the road there, said Cao. But that miscalculation is no problem.

“As a pilot city, it is an experiment,” he said. “We have different ways to get to the target. Even if it is the wrong way, this is good.”

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