(Chinese Version)

Electric vehicle market is one of those markets that are on the rise, but still not prevalent yet.

Recently, the Ministry of Industry and Information Technology of the PRC issued a report on the production data of new energy vehicles in the first half of the year in China. The report shows that the number of new energy vehicles manufactured in the first half of the year rose to 78,500, a 300% increase year-on-year. To be more specific, the number of pure electric passenger vehicles manufactured was 36,300, an increase of 300%; the number of hybrid-power passenger vehicles was 20,400, a 400% increase; the number of pure electric commercial vehicles manufactured was 15,500, an increase of 500%; the number of hybrid-power commercial vehicles was 6,406, an increase of 74%.

It seems as if the electric vehicle industry is indeed gathering momentum in China. However, when you look deeper, you might find that the truth is quite the opposite.

Chinese government set a goal in the Planning for the Development of the Energy-Saving and New Energy Automobile Industry (2012-2020) that the production and sales volume of pure and hybrid-power electric vehicles in China rise to 500,000 in 2015, and that the production volume of electric vehicles hit 2 million and the sales volume reach 5 million in 2020. The Chinese government had expected that China would catch up with the advancing new energy vehicle industry and international giants by then.

Were China to achieve this goal, 400,000 more electric vehicles would have to be sold this year.

In cities such as Beijing and Shanghai, while the demand for electric vehicles is significant, the government is also advocating electric vehicles through various subsidies. Yet, the sales volume of electric vehicles remains low. How so?

In my point of view, the following four reasons might help explain why Chinese electric vehicle market isn’t developing fast enough?

1. Chinese automakers lag far behind their overseas counterparts in terms of core technologies

Regardless of the appearance, decoration and comfort level of new energy vehicles, especially electric vehicles, battery, motor, and electronic control system are some of the most crucial technologies of any electric car, where Chinese automakers still lag far behind their global counterparts.

According to a report from Financial Times, Chinese automakers lag far behind Korean and Japanese automakers in terms of EV battery technology. “The average battery density of Japanese EV batteries is 30% to 40% higher than those made by Chinese automakers, and the cycle life of EV batteries made by Japanese automakers is several times longer than those by Chinese automakers,” the report suggests. At present, Japanese and Korean EV batteries take up over 70% of the world lithium battery market.

Moreover, Chinese automakers haven’t developed their own technology in manufacturing powertrain, a system of mechanical parts (including the engine, transmission, driveshaft, differential and clutch, etc.) in a vehicle that produces energy and then converts it to propel the vehicle. In this case, Chinese automakers, including SAIC Motor, have to cooperate with overseas automakers and develop new car models through sharing the intellectual property with them.

Anyhow, electric vehicles developed by Chinese automakers are widely-recognized as “low-end”. Thus, Chinese customers are held in a dilemma between Chinese EVs and overseas EVs, since on the one hand, they can’t afford high tech EVs such as Tesla; on the other hand, they are not willing to buy “low-end” EVs developed by Chinese automakers, though the subsidies for these EVs could be really high.

2. It is difficult to charge EVs in China

Unfortunately, this remains a great problem for the spread of EVs in China.

For one thing, there is a lack of charging piles in China. In Beijing, over 1500 charging piles have already been set up within the fourth ring, but compared with the large demand, 1500 is far from enough. In Shanghai, the ratio of new energy vehicles to charging piles reached merely 1:0.32 by the end of last year, much lower than the goal (1:0.64) set up by Shanghai municipal government last June.

For another, it takes too much time to get EVs fully charged in China. While it takes only half an hour to get an EV fully charged via Tesla’s charging piles, it will take over an hour to get an EV fully charged in China via charging piles powered by State Grid. Worse still, it would take 4 to 5 hours on average to get a passenger electric vehicle fully charged in China.

A research conducted by Carnegie-Tsinghua Center over the layout of charging piles and charging time suggests that: “Even if there is a public charging pile within 10-minute walk to the work place, EV owners still may find it hard to charge their cars, since they have to pay the parking fee, charging fee, wait in queue, and even make room for other EVs after getting their EVs fully charged.

“What’s worse, many EV owners begin to find their cars incompatible with some charging piles, since automakers are still in the stage of fierce competition, and there isn’t an common standard for charging piles yet in China. In this case, even if the government makes it compulsory to equip charging piles in newly-built apartments, commercial centers, work buildings, etc., EV owners may still encounter such problem.”

3. Some hybrid-power EV owners will take advantage of the subsidy policy

According to statistics from China Automobile Industry Association, BYD Qin (hybrid-power), sold at the price of less than 150,000 RMB (after subsidized), was the most popular model among all the pure EVs and hybrid EVs in 2014. BYD sold in total 14,700 BYD Qin electric vehicles, 20% of all the EVs sold last year (74,800) in China. Zotye Zhidou (ZD) E20 (pure-electric), whose sales volume hit 7,300, ranked the second. Following are BAIC E150 EV (pure-electric) and GAC Honda Camry Hybrid (hybrid-power), with an annual sales volume of less than 6,000 each. BYD E6, with the sales volume of 3600, ranked the 5th.

To be accurate, among the top five models, only BYD E6 and BAIC E150 EV are pure-electric vehicles. How did they make it to the leaderboard? Government’s support is the ultimate reason. The inconvenient truth is that many car owners will use hybrid-power EV models such as BYD Qin and GAC Honda Camry Hybrid as gasoline cars, while receiving government’s subsidy for EVs at the same time.

Thus, Beijing municipal government limits its subsidy to pure-electric vehicles, and Shanghai municipal government requires car owners of hybrid-power EVs to provide charging information before applying for the free license plate. According to Shanghai New Energy Vehicles Center, the sales volume of new energy vehicles in Shanghai was 10,886, among which 7656 are private-owned. However, only 1,800 car owners applied to have Shanghai State Grid install electrical meters in their residential quarters, and only 1,600 of these meters were put in use. “Some hybrid-power EV owners charge their cars merely with gasoline, which takes advantage of Shanghai municipal government’s subsidy policy for EVs,” an official from the Center explained.

4. Hydrogen-powered vehicles are new rivals of EVs

Although EVs are considered as “zero-emission”, they do pollute the environment, though indirectly.

According to some public data, at present, 70% of electricity is from coal-fired power plants, 20% from water, whereas only the rest 10% is generated from nuclear power, wind, pneumoelectric, etc. in China. In the US, however, pneumoelectric takes up over 40%, while 30% of electricity is generated by coal-fired power plants, and the rest 30% is generated from nuclear power, wind, water, etc.

Although China has been promoting new energy for a while, fossil fuels will still remain the dominant fuel since China is still developing fast and needs cheaper fuels. According to the Development Plan of China’s Electricity, released by National Energy Administration, alternative energies will only take up less than 15% among all kinds of energies by 2020.

If electricity is not generated in an environment-friendly manner, then how can we expect the electric vehicles to be environment-friendly?

Worse still, hydrogen-powered vehicles are quietly challenging electric vehicles.

Mirai, a hydrogen-powered car model debuted by Toyota at the end of last year, will enter the market this year. This so-called “super environment-friendly car”, sold at the price of 270,000, will only emit steam, and getting Mirai charged is as easy and quick as charging gasoline cars. Additionally, Toyota has given up around 5,680 patents on fuel cell vehicles, among which 1970 has to do with Mirai, which could boost the competition and innovation in this new area.

Some analysts suggest that different from EVs, Mirai may win the support from oil industry giants, since they will get to remain profitable by changing their gas station into hydrogen station.

The lack of key technologies, difficulty to get EVs charged, abuse of government’s subsidy policy, hydrogen-power vehicles…all of these factors might contribute to the ill development of new energy vehicles in China. For sure, there is a large need of new energy vehicles, but it seems that Chinese customers are still waiting for a right model.

To overcome these four obstacles, Chinese automakers should work hard, and endeavor to develop car models that really cater to Chinese customers’ needs. Only then can Chinese EVs market boom.

[The article is published and edited with authorization from the author @Zhidxcom, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.