China’s Electric Car Revolution

It may seem shocking, but China is the world’s leading consumer in electric powered vehicles. In fact, the Chinese drive more electric cars than “the rest of the world combined.” The fast-growing industry, like many in China, is held up by government funding and subsidies. The Chinese want to lower their fossil fuel usage and output, and more importantly they want to severely cut down on the public-health crisis that is Beijing’s air quality.

The Chinese government is spending over a billion dollars to replace the 70,000 gas powered taxis that run daily in Beijing. These taxis are responsible for a large amount of the pollution that now regularly results in road blockages and airport closures. The government is buying electric taxis, at approximately $20,000 each. Critics note that this would only result in a dent in the problem, and wouldn’t affect the smog that drifts north to Beijing from steel factories.

Even without government purchases, the electric car market is huge in China. The market is growing each year; one estimate pegged last year’s market growth at 27%, and many expect this number to keep growing. Chinese automakers like Chery and Geely are cashing in on the trend and heavily investing in newer and more affordable electric models. These cars aren’t comparable to the luxurious and speedy Tesla models available in the US. Analysts say that these Chinese EVs “sell on price.”

These endeavors are finally becoming profitable, and government subsidies will be reduced to zero by 2020. So it appears the investment on behalf of the government is a success. Investors around the world, including Warren Buffett, are taking notice in the massive market growth and the potential for the Chinese automakers to expand to the international market. GAC Motors brought one of their electric vehicles to the Detroit Auto Show in January, and announced plans to enter the American market as soon as 2019. The American electric car market has been seeing weak growth and investment, especially as a result of the oil supply glut that has bottomed out energy prices. So it will be interesting to see if American consumers embrace Chinese vehicles, or electric ones at all for that matter. One survey (accuracy debatable) suggested that as high as 60% of Americans were not aware of the consumer availability of electric vehicles at all.

 

Sources:

 

http://www.reuters.com/article/us-usa-autoshow-china-electric-idUSKBN14V1H3

https://cleantechnica.com/2017/01/25/china-electric-car-sales-demolish-us-european-sales/

http://www.curbed.com/2017/3/9/14867380/china-beijing-smog-air-pollution-electric-cars

http://www.curbed.com/2017/1/4/14169632/beijing-air-pollution-highest-red-fog-alert

https://cleantechnica.com/2017/01/01/survey-60-americans-arent-aware-plug-electric-vehicles/

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13 Responses to China’s Electric Car Revolution

  1. gristt18 says:

    Based on your blog post and knowledge from Hessler, it seems that the vast majority of vehicles operate in large cities, like Beijing. You wisely point out to the disparity of Chinese investment in electric cars and American investment in electric cars. Could the large concentration of vehicles in large cities – and the accompanying emissions which have enshrouded larger cities in smog – be causing the larger push by the Chinese government? Clearly the US is not emitting nearly as much as China, but it is worth questioning whether the incentive to push for electric cars is coming because the emission effects in China are so much worse or simply because the effects are more recognizable in smog-covered cities.

  2. knapkes18 says:

    To me this provides another example of China’s commitment to create an effective climate policy. The gap between the United States and China’s electric car market is indicative of the gap in cohesive climate policy between the two nations. If the United States wishes to compete with the Chinese market, a committed effort to foster growth must be undertaken by both policymakers and private companies. It will be interesting to see how the Trump Administration’s dismissive climate policy will affect the US market going forward.

  3. bonesc18 says:

    The idea of an electric car is strange to many American consumers without an intense interest in the environment. People seem generally baffled by the Tesla. The Volt was subject to a numerous news reports for its propensity to catch on fire. Even the prius, championed as environmentally friendly, is regularly ridiculed. In part the American consumer on the whole is so use to the old way of doing things, in any product, that change is met with resistance. As we discovered in Hessler, the widespread availability of the car is relatively new in China. Maybe they won’t be so resistance to a shift to electric?

    • the prof says:

      Wasn’t it the Tesla that repeatedly caught fire?

      Note the Bolt is coming to Virginia; I got a call from a Roanoke dealership that will be getting the first one in May, trying to pre-sell it.

  4. Ryan Curto says:

    As mentioned above, the push for EV’s by the government will only put a dent in the smog and environmental issues surrounding many of China’s major cities. While its a great start to a progressive environmental policy, much of the smog and pollution China, experiences results from factories on the fringes of the cities, as well as non-renewable energy sources used to generate the electricity used by the EV’s. To fully combat pollution, the Chinese government would have to target these plants and factories for a bigger change.

    • sackettm18 says:

      I agree that this is most likely an empty showing by the Chinese government. It would be interesting to know what the government has in terms of real plans for dealing with the public health crisis that is Beijing smog.

  5. feldsteinp18 says:

    I think that this is a really interesting case study but I wonder if it is analogous to the government spending on solar panels and wind turbines. While it creates phenomenal growth in those industries, it hasn’t really proven to solve the energy crisis that China faces. It seems like it is a good PR move to invest heavily in renewables with large sums of government subsidies to bolster and maintain their high GDP growth figures. At the same time, China has a large population and a massive industrial sector. It will take a while for the advent of renewables to have a noticeable difference but continued efforts such as this could ultimately lead to better air quality and a ‘greener’ China.

  6. hendersonn17 says:

    While there is a steady stream of news from China regarding its severe pollution problem, many people oversee that, if looking it at a per capita basis, China falls below many other developed countries (http://data.worldbank.org/indicator/EN.ATM.CO2E.PC?year_high_desc=true). That being said, it is refreshing to know that the government is encouraging the development and use of electric cars.

    I think that one factor that will inhibit the widespread use of electric cars in the United States is our culture of road-tripping. Electric cars are useful when commuting around cities, but their short battery life is not conducive to long road trips. I will be interested to see how Chinese manufacturers plan to target U.S. markets.

  7. choia18 says:

    I kinda wish I knew this while I was in Beijing because, while I stayed in Renmin University, they built a couple of electric charging stations in front of the dormitory I was staying in. I, at first, did not realize what they were for until they completed the construction (which took only 2 weeks to complete). It ended up being extra parking for gas cars and I rarely saw any electric cars actually charge their cars here. Seeing this article makes me rethink this and having a charging station like that on campus would definitely continue to promote more electric car usage.

  8. the prof says:

    1: If the electricity is generated by dirty coal (there is no such thing as clean coal, only dirty and less dirty), then the net environmental benefit is negative. However, the point source shifts, which is valued in major cities. But it’s trucks not cars that are the worst culprit, though sheer numbers of cars do matter.

    2: All electric cars (including Tesla) are subsidized in all markets. In the US there’s a $7,500 rebate (and ZEV credits that go to automakers). In China the subsidy is around $8,000. It was however poorly implemented, with one carmaker getting millions of dollars when investigation proved it actually didn’t sell any. The early regulations also included lead-acid battery low-speed cars, which we would view as nothing more than golf carts.

    3: Is this technology policy? If so, what matters is who controls the technology, and whether it would lead to any larger global presence. My belief is that it’s a policy that will provide no such benefits.

  9. masonw17 says:

    I would be interested to know whether or not these electric cars are being purchased by consumers or just by taxi drivers and firms who receive incentives to drive electric from the government. Indeed, as you mention, it seems like electric cars alone will not come close to solving China’s massive pollution problem, but this does serve as further indication that the Chinese government is committed to developing an image as the global leader in sustainable technology.

    • sackettm18 says:

      Electric cars are indeed being sold to and purchased by Chinese urban consumers at a greater rate than they are in the rest of the world.

  10. zhengm18 says:

    I did not know that, but given China’s position in renewable energy, it seems likely that China would want to be in a position to expand into electric car vehicles. This transition would greatly benefit China’s emission and pollution problems in the city to a degree. But I think the expansion into autonomous vehicles is the bigger concern for Chinese vehicles, where traffic is a huge problem in the cities and city park is a nightmare. Electric autonomous vehicles would be the perfect scenario, in my opinion.

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