Look no further than Beijing’s taxi fleets to see how governments may foster the emergence of innovative technology.
The city announced plans to prohibit the use of fossil fuel-powered taxis five years ago. Thousands of autos now run on batteries instead. Drivers of these electric cars (EVs) also don’t have to waste time waiting at charging facilities.
Many electric taxis in Beijing and dozens of other Chinese cities simply drive to a battery-swapping facility, where a machine removes the depleted battery and replaces it with a charged one in minutes.
“They want to drive out there and get some money, so they definitely don’t want to wait two hours for EV charging,” National Taiwan University’s I-Yun Lisa Hsieh adds.
This is just one part of China’s increasingly broad and thriving electric car sector. The general population is also purchasing EVs in historic quantities.
In July, the China Passenger Car Association anticipated that 6 million new EVs would be registered in the country by 2022, up from 5.5 million EVs sold this year.
According to the most recent numbers, in September, Tesla had its biggest month in China, selling 83,135 vehicles.
Nearly a quarter of all new cars registered in China are now electric or plug-in hybrid vehicles, putting the country ahead of Europe and far ahead of the United States in adopting these technologies. China sells half of the world’s EVs.
According to Mr. Hsieh, this is mostly driven by government mandates and incentives. The Chinese government has subsidized EV purchases for more than a decade. Although the value of these subsidies has declined over time and is set to expire in 2023, there are still numerous reasons why purchasing an electric vehicle is a financial no-brainer.
Many new fossil-fuel vehicle buyers in China must pay not just for the automobile but also for the license plate. “It’s incredibly pricey,” Mr. Hsieh admits. In Shanghai, a new license plate costs almost 100,000 yuan (£12,500; $14,000).
Other benefits exist if you choose an EV, although they vary by city. Authorities in Liuzhou have authorized EV owners to drive in bus lanes. They also get access to free parking places.
Then there’s the possibly insurmountable cost of some vehicles. The Wuling Hong Guang Mini EV defies the norm of electric vehicles being relatively pricey.
According to Jon Hykawy, president and director of Stormcrow Capital, a consultancy and research firm, the entry-level version of this dinky, no-frills automobile costs just £4,200 and appeals to city dwellers and first-time car owners.
“These are automobiles that may be sold throughout much of Asia,” he adds.
The Hong Guang Mini is the most popular EV in China right now. However, there are several alternatives at the other end of the price spectrum, like Tesla’s Model Y (£49,000) and Xpeng’s P7 (£30,410). Both are among the top ten best-selling EVs in China.
The Chinese EV industry is extremely competitive, with numerous players fighting for a spot. According to a recent Reuters news story, even an airline, Juneyao, wants to start producing electric cars.
“It’s a very ideal environment for these manufacturers to develop technology,” says Pedro Pacheco, a Gartner analyst, noting that some battery EVs in China have outstanding ranges.
In addition, automakers are equipping higher-end EVs with infotainment systems and other gadgetry in an effort to entice consumers.
However, two major issues loom over China’s electric car mania. First and foremost, will it last? Second, how will it influence the worldwide EV market?
Ana Nicholls, director of industry analysis at the Economist Intelligence Unit, says she has been startled by how quickly EVs have been flying out of dealerships in China recently, but she believes that with the withdrawal of subsidies for new car consumers, the enthusiasm for EVs may wane.
“It’s difficult to see how the EV industry can continue to grow at this rate in the future,” she says.
Charging infrastructure is still unevenly spread and prone to supply concerns; for example, some charging stations were recently stopped due to a drop in electricity generation induced by China’s megadrought.
Mr. Pacheco contends that for battery swapping to become widely used in Europe, more major automobile manufacturers must adopt it. However, he emphasizes the popularity of ultra-low-cost EVs in China, such as those produced by local brands Wuling and Chery.
“They already have inexpensive EVs in China,” he claims. “We’re not there yet in Europe.”
These are the kinds of vehicles that could catch on in emerging markets. Is it time to take on the world? Maybe. But another school of thinking holds that the world can wait.
“As long as the Chinese market is thriving,” Ms. Nicholls says, “they might as well just sell domestically.” “After all, why wouldn’t you?”
Analysts generally agree that seeing what happens after the subsidies expire will be fascinating. This could propel Chinese EV manufacturers into other markets, and perhaps we’ll all fall in love with EVs as a result of Chinese government policy. We’ll have to see what happens.
