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Chinese electric cars: moving into the fast lane?

chinadialogue

Readinch

Guest post by Paul Carsten, London-based intern for chinadialogue

Car companies are feeling pretty upbeat about the future uptake of electric vehicles (EVs) in China, according to the results of a new sector survey. But how reliable are these findings?

Asked for their predictions on EV penetration rates in the Chinese market by 2020, automobile manufacturers gave Asia-focused business consultancy Solidiance a range of 5% (“realistic”) to 10% (“optimistic”). Since the industry consensus is that this market will comprise around 40 million cars, that would mean between two million and four million EVs on China’s roads by the end of the decade.

Given the ever-rising numbers of auto manufacturers and green tech companies investing in the Chinese market, their strong faith in the potential for growth in EVs makes sense. Not only BYD, a Shenzhen-based domestic firm, but also international companies VW, GM, Nissan, Saab, Audi and BMW have all announced joint-ventures with Chinese firms to produce EVs. Combined with efforts to improve the charging infrastructure and government incentives to make EVs viable alternatives to conventional cars, it’s easy to see why optimism abounds.

But it’s still early days. Chinese manufacturer Geely was hesitant about predicting even 5% penetration by 2020, admitting the company believes “the growth of the EV market will be limited in the next decade.” Necessary infrastructure is lacking, while sluggish 2010 sales figures suggest Chinese consumers are yet to be convinced. According to China Business News (by way of Reuters), there are currently only 10 registered EVs in all of Shanghai, a focus area for the technology along with Beijing and Shenzhen.

Additionally, the Solidiance report relies on an Ernst & Young survey, in which 60% of Chinese participants said they would purchase an EV (the next highest region was Europe where 22% said they would). Of the 1,000 people interviewed for each region (US, Europe, Japan and China) the Chinese group was the only one to contain people who didn’t already own a car, making the data less meaningful when compared to the other regions.

The report further noted that “while China’s drivers are the least familiar with all of the technologies presented, they are the most willing to purchase a vehicle with an alternative powertrain.” This lack of familiarity could be a significant factor in their willingness to buy EVs; they may not fully understand the issues that concern many participants in other regions, like the battery drive range (China was fourth least concerned out of seven countries), the need for a developed infrastructure (fifth least concerned) and the increased cost of these vehicles (the least concerned country, and the one with the lowest average wages). 

In the end, some reports clearly need to be taken with a pinch of salt. But it’s difficult to deny that China seems most open to the adoption of EVs. If a significant take-up is going to happen anywhere, it will probably be China.

UPDATE: It is also worth reading this New York Times blog piece on how EVs provide little benefit to CO2 emissions reduction, due to their reliance on a power grid dependant upon fossil fuels.

UPDATE 2: Although the Chinese government's aim is 1 million EVs by 2015 (see this and this (both in Chinese) from government websites), not 1 million each year as the NYT piece suggests.

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