ELECTRIC CARS IN CHINA | Facts and Details

CHINESE ELECTRIC AND HYBRID CARS

BYD duel mode engine Chinese manufacturers are the biggest producers of electric vehicles (EVs) worldwide, making 43 percent of the total in 2016, according to consultancy McKinsey & Co. Electric cars have been aggressively promoted by the Chinese government. In many ways they are well suited for China, where long distance travel is still rare and most people use their cars to make short city trips at low speed — so that a car will only a 100 or 200 kilometer range is not all that much of a set back. Some of today's EVs have rangers between 300 and 500 kilometers.

In 2009, the Chinese government introduced policies to increase sales of all-electric vehicles to 500,000 by 2015 and 5 million by 2020. In 2010, the Chinese government began promoting eco cars in earnest by offering subsidies of around $8,000 for the purchase of electric cars, covering almost half of the $20,000 purchase price of such vehicles. The aim of the subsidies is to boost the local eco-car industry. The subsidies are generally available only for domestically-produced vehicles not foreign-produced ones. Beijing also encouraged local governments and bus and taxi companies to buy electric vehicles.

Fang Yan and Don Durfee of Reuters wrote: “To bolster China’s energy security, Beijing has pronounced electric vehicles a top priority. It has earmarked $1.5 billion annually for the industry for the next 10 years in the hope that it can transform the country into one of the leading producers of clean vehicles. China’s investment in the electric-vehicle industry has no comparable counterpart in the United States, although the U.S. Congress is considering a bill that would allocate $2.9 billion for a program to help develop the infrastructure for widespread use of electric cars.” [Source: Fang Yan and Don Durfee, Reuters, July 3, 2011]

China surpassed the U.S. in 2015 to become the world’s biggest market for new-energy vehicles — comprising electric vehicles, plug-in hybrids and fuel-cell cars. A total of 507,000 such vehicles were sold in China in 2016 according to the China Association of Automobile Manufacturers. China’s electric vehicle market began to take off in the mid 2010s. By 2019, 3.5 million EV cars had been sold and Tesla stood out as the most desired brand. [Source: Echo Huang, Quartz, September 18, 2019; Bloomberg News, June 5, 2017]

Some of think the fate of electric vehicles lies in China’s hands. Jean-Francois Belorgey, an expert with consultancy EY, told AFP: "China is perhaps the one place in the world where the automobile industry can achieve the economy of scale needed to bring down costs." Laurent Petizon, a specialist on the auto market with AlixPartners, added: "If there is a market where electric (cars) can hit enough of a critical mass that batteries will start to be reasonable in terms of price, it's China." But Ben Scott, an expert in electric cars with IHS, said that recharging infrastructure remained in its infancy, in a "classic chicken and egg problem".[Source: Tangi Quemener, AFP, April 24, 2016]

Issues with Electric Cars in China

Obstacles in the way of widespread electric car use include the fact that more Chinese live in apartments than private homes, making it difficult to set up rechargers; the bad reputation that lithium-ion batteries have in China, where counterfeit ones in cell phones occasionally explode; and the high cost of electric vehicles, which are beyond the means of most Chinese who are better off with a small, fuel-efficient vehicles. Electric cars will probably have only a limited effect on cleaning up the air and reducing carbon emissions in that three quarters of China’s electricity — which will ultimately power these cars — comes from coal. A report by McKinsey Co estimated that by using electric cars over gasoline cars, China will reduce its greenhouse emissions by 19 percent. The switch could significantly reduce urban smog with clean vehicles in the city and the coal plants that produce electricity used to power them on the fringes of urban areas.

Fang Yan and Don Durfee of Reuters wrote: “Even with government support and the enthusiasm of electric-taxi customers, challenges remain if electric vehicles are to gain broader acceptance and widespread use. Charging stations are few and far between, repair shops are hard to find....And then there is the cost. In 2011 BYD car costs $27,000, including subsidies, compared with less than $15,000 for the Santana by Volkswagen.”
In the meantime regulators are demanding automakers sell more electric cars at a time when buyers want gas-guzzling SUVs. First-quarter SUV sales soared 21 percent from a year earlier to 2.4 million, while electric vehicle purchases sank 4.4 percent to just 55,929. [Source: Joe McDonald, Associated Press, April 17, 2017; Fang Yan and Don Durfee, Reuters, July 3, 2011]

20111106-Wiki com Byd_e6_interior.jpg
BYD E6 interior Jonathan Watts wrote in The Guardian, “Officials in Beijing have urged the auto industry to improve technology for years. Auto executives from domestic and foreign automakers alike have said they would do more to adopt advanced technologies, although domestic Chinese automakers tend to have modest research budgets and rely on multinational partners for their vehicle designs. Recently the government has shifted its tone in calling for curbs on the industry’s overall growth in sales and production. In a report earlier this week, IHS Automotive a Shanghai-based consultancy, said the sales increase for such vehicles is far behind the government's timeframe. It noted too the poor performance of the Prius, which notched up a sole sale in a year when 13.8m new passenger cars were registered in China. Among them were 850,000 SUVs, a rise of 24 percent. [Source: Jonathan Watts, The Guardian August 23, 2011] .

According to The Economist barely 8,000 electric cars were sold in 2011, almost all going to government fleets, and there were only 16,000 recharging stations installed that year, a tenth of the official target. At that time, around Shanghai, a metropolitan area with a population of more than 20 million, there are only 10 registered electric cars, while the number in Hangzhou is only slightly higher at 25, according to China Business News.” William Russo, an industry veteran who runs Synergistics, a consulting firm in Beijing, told Reuters. “Consumers are less concerned about government interests. They are more concerned about the economics and the real practical side of what it means to own an electric vehicle. They are not going to buy an E.V. to save the planet.They will buy it only when it saves them money.” Michael Dunne, president of the industry consulting firm Dunne & Co. in Hong Kong, told Reuters: "I think it’s going to be a very, very long time, because the Chinese consumer, at the end of the day, is very pragmatic and wants a reliable car with a gasoline engine. They don’t want to be the ones experimenting.

Development of the Chinese Electric and Hybrid Car Industry

The Chinese government developed a plan to make China one of the leading producers of electric and hybrid vehicles by 2012. The goal mees two basic needs: 1) to improve the environment and save energy at home; and 2) make Chinese automakers major player in the global automobile industry. China has many things going in its quest of this goal: abundant cheap labor and a solid manufacturing base. One of its biggest shortcomings in the auto industry is its outdated gasoline engine technology. Making a move to electric cars in a big way could allow it to leapfrog the West.

China is also world’s largest producer of electric motors and it many of the world’s best electric motor engineers, . Just as importantly it the world’s second largest producer of electric batteries after Japan. It cheap labor supply is an advantage when its come towering together the 100 or so batteries needed to power a car — a task not easily achieved with automation, China had hoped to manufacture 500,000 electric and hybrid cars and buses by 2011, up from 2,100 in 2008. To boost sales taxi fleets and local government are being offered subsidies of up to $8,500 for purchasing hybrid or electric vehicles.

As part of its goal become a world leader in green technology, the China government said in 2010 it would invest as much as $15 billion over the next few years to develop electric and hybrid vehicles. It said a group of 16 big state-owned companies had already agreed to form an alliance to do research and development, and create standards for electric and hybrid vehicles. The plan aims to put more than a million electric and hybrid vehicles on the road over the next few years in what is already the world biggest and fastest growing auto market. [Source: David Barboza, New York Times, August 19, 2010]

China’s Aim to Dominate the Electric Car Market and the Alarming Tactics It Uses

Electric cars are an industry in which Beijing hopes to use China's fast-growing market as leverage to develop its own technology and global brands. Beijing sees electric cars as a field where it can take a global lead, helping to transform China into a creator of technology. In May 2011, Beijing released a 10-year industry development plan for "new energy vehicles.” [Source: AP, April 20, 2011]

Electric cars offer a fresh start in a field with no entrenched leaders."They see it as a big opportunity. They want to be dominant in some vehicle market and the old technologies have already been taken," said Deborah Seligsohn, a researcher in Beijing for the Washington-based World Resources Institute. Electric cars also are a key part of China's efforts to curb its voracious appetite for imported oil and gas, which communist leaders see as a strategic weakness. "The energy security advantages for them are enormous," said Seligsohn. "Switching people to electricity that you can produce domestically is very appealing." Beijing is trying to generate demand by promising subsidies of 60,000 yuan ($9,200) per electric vehicle. Cities are being given grants to buy electric buses and taxis.

Foreign automakers are alarmed by China pressing them to hand over know-how and limit access to its market. Beijing requires that for a foreign manufacturer to produce an electric car in China, its local joint venture must own the technology for one of the three "core components" — the battery, the motor or the power-management system. Draft investment rules issued in March 2011 would allow foreigners to own only a minority stake in Chinese manufacturers of electric car components.

In 2017, China set goals for electric and plug-in hybrid cars to make up at least a fifth of Chinese auto sales by 2025, with a staggered system of quotas beginning in 2018 that demanded firms sell electric or plug-in hybrid vehicles to generate "credits" equivalent to 8 percent of total sales by 2018, 10 percent by 2019 and 12 percent by 2020. The strict new rules were to be accompanied by harsh penalties for non-compliance, such as the cancellation of licenses to sell non- electric cars in China. The auto industry, especially foreign companies, cried foul and asked for China to reconsider some of the penalties. Foreign automakers said the rulers were unfair and gave Chinese automakers makers and advantage..[Source: Jan Schwartz and Adam Jourdan, Reuters, July 13, 2017]

Foreign Automakers and Electric Cars in China

Foreign manufacturers are concerned Beijing might require them to hand over valuable technology and help local partners create "indigenous brands" as the price of being allowed to sell electric cars in China. The Ministry of Industry and Information Technology developed the plan. The proposal that foreign automakers could only be minority partners in electric car ventures, less than the 50-50 partnership allowed for conventional autos, might give Chinese partners control over technology that could be used to create competing products.

Foreign automakers were initially reluctant to sell electric cars in China because regulators required them to transfer valuable intellectual property to local partners or face import duties of 25 percent even if the vehicles were produced at a Chinese factory. Late Beijing eased those requirements in an effort to attract foreign participants. In 2017, foreign automakers complained final ground rules for electric vehicle production were still not clear. [Source: Associated Press, April 22, 2017]

Both Chinese and non-Chinese automakers see China as an important center to develop electric technology as well as a huge potential market. Ford Motor Co. has provide three hybrid and all-electric vehicles to government agencies and later on to consumers to study how Chinese drivers use them. Ford has recruited Chinese engineers to work on alternative cars. Fang Yan and Don Durfee of Reuters wrote, “Local automakers like SAIC Motor and Dongfeng Motor Group have pledged large investments in greener vehicles. Global automakers, including BMW and Nissan Motor, are also working with local governments to roll out such vehicles — in these two cases the Mini E and the Leaf, respectively.” [Source: Fang Yan and Don Durfee, Reuters, July 3, 2011; AP, April 20, 2011]

The relations between Chinese automakers and foreign companies that provide advanced technology are complex as both partners and potential rivals. Dongfeng Motor Co.'s plug-in Shuaike is produced in a joint venture with Nissan Motor Co. Dongfeng says the vehicles have been sold to government agencies and future public sales might be possible. But Nissan plans to import its all-electric Leaf rather than produce them in China, possibly to avoid having to share more advanced technology. [Source: AP, April 20, 2011

Incentives, Quotas and Gluts in the Chinese Electric Car Market

In the mid 2010s, the central government gave buyers subsidies of up to 55,000 yuan ($8,500) for each car. In addition, electric vehicles were exempt from sales tax and license plate quotas Beijing, Shanghai and other cities aimed at curbing congestion and smog. The incentives and subsidies that are being were schedules to be phased out over time and stopped by the year 2020. The Chinese government has expanded China's network of charging stations to reduce "range anxiety," or buyers' fear of running out of power. In early 2017, it announced a goal of having 100,000 public charging stations and 800,000 private stations operating by the end of the year. [Source: Associated Press, April 22, 2017]

In July 2014, China told government officials to use more electric and plug-in hybrid cars as part of its drive to cut pollution with the aim of putting 5 million such vehicles on the road by 2020. Reuters reported: “So-called new-energy vehicles must account for at least 30 percent of all cars or vans purchased annually by central government agencies and some city governments from 2014 through 2016, with the proportion set to rise after that, said the National Government Office Administration. Government agencies will be offered subsidies to buy new-energy vehicles, which the government defines as all-electric vehicles, plug-in electric hybrids and hydrogen electric fuel-cell cars. Under the new step, those government offices are also required to build charging stations and improve other infrastructure for green vehicles. The new rules came days after China scrapped a purchase tax for new-energy vehicles, fearing that it had fallen far behind in meeting a target of putting 500,000 new-energy vehicles on the road by 2015. [Source: Reuters, July 14, 2014]

In 2017, China upheld strict sales quotas for electrically powered vehicles. The draft, posted on the website of the Legislative Affairs Office for China's cabinet, maintains that automakers must sell enough electric or plug-in hybrid vehicles to generate "credits" equivalent to 8 percent of sales by 2018, 10 percent by 2019 and 12 percent by 2020 — criteria many in the industry deem too ambitious. “The number of credits per car is based on the level of electrification. [Source: Michael Martina and Norihiko Shirouzu, Reuters, June 13, 2017]

Around the same time China said it planned to halt issuing permits to produce electric vehicles because of concern additional approvals may lead to a glut.The National Development and Reform Commission, which oversees new investments in the auto industry, wants to evaluate the program after handing out 15 production licenses since March 2016, officials told Bloomberg. A suspension of new permits may delay plans by companies such as Internet entrepreneur William Li’s NIO and Jia Yueting-backed LeEco’s electric-car unit that have said they intend to apply.[Source: Bloomberg News, June 5, 2017]

Reuters reported: EV startups in China proliferated after the government, looking to fuel a more determined switch to electricity as the ultimate alternative to petrol, liberalized and opened its automotive industry to allow deep-pocketed tech firms to invest as long as they dabble in electric cars. Chinese tech giants like Baidu, Alibaba, Xiaomi and Tencent funded more than half a dozen EV start-ups, which include NextEV and CH-Auto. Le Holdings, also known as LeEco and formerly as LeTV, was seen as a promising start up. ,[Source: Norihiko Shirouzu, Reuters, April 20, 2016]

Chinese Electric Car Exports

In 2021, exports of new energy vehicles, comprising mainly electric and hybrid vehicles, from China soared fourfold to 310,000 units as automakers began to target more developed markets, including Europe. Around half of these were produced at Tesla’s Shanghai Gigafactory, but domestic startups such as Nio, Li Auto and Xpeng and the more established automakers including SAIC Motor, Geely, Chery and Great Wall are also beginning to take on leading global brands in their own domestic markets. [Source: just-auto.com April 26, 2022]

In May 2022, China's exports of cars recovered thanks in parts to robust electric vehicles sales. Car manufacturers in China shipped $1.2 billion worth of electric passenger vehicles, up 122 percent from May 2021 earlier and almost triple the level in April, when car factories in Changchun and Shanghai such as those run by Telsa Inc were closed or barely open because of coronavirus restrictions. Electric vehicle exports were 21 percent of China’s total shipments of passenger cars. [Source: Bloomberg News, June 21, 2022]

Stephen Dyer, managing director at Shanghai-based consultancy AlixPartners, told Bloomberg: China’s current excess EV production capacity and low domestic sales mean it will continue to be a significant exporter in the medium term. China made up almost 60 percent of global exports of electric vehicles in 2021 and the trend continues in 2022, although Tesla’s new factory in Europe may slow exports from China, he said.

Chinese Electric Car Batteries

20111106-Wiki com BYD_M6_2010.jpg
BYD M6 A decade ago, Japan dominated the world of lithium-ion batteries — the powerful, lightweight cells that hold promise for an electric-car future — but in 1998 the Chinese government launched a push to catch up Developing powerful but safe batteries has been a key challenge for Chinese automakers. Batteries in Chinese cars have exploded more than 10 times during development, the business magazine Caijing reported in April 2011. [Source: AP, April 20, 2011]

Evan Osnos wrote in The New Yorker, “The race to make the first successful electric car may hinge on what engineers call “the pack” — the intricate bundle of batteries that is the most temperamental equipment on board. If the pack is too big, the car will be too pricey; if the pack is too small, or of poor design, it will drive like a golf cart. “Batteries are a lot like people,” Phil Gow, Coda’s chief battery engineer, told me when I visited the Tianjin factory, a ninety-minute drive from Beijing. “They want to have a certain temperature range. They’re finicky.” At one of Lishen’s production lines, similar to the car-battery line that will be fully operational next year. Workers in blue uniforms and blue hairnets were moving in swift precision around long temperature-controlled assembly lines, sealed off from dust and contamination by glass walls. [Source: Evan Osnos, The New Yorker, December 21, 2009]

Chinese Electric Car Battery Production

Describing a factory that made a variety of lithium batteries Evan Osnos wrote in The New Yorker, The workers were making laptop batteries — pinkie-size cylinders, to be lined up and encased in the familiar plastic brick. The system is similar for batteries tiny enough for an iPod or big enough for a car. Conveyor belts carried long, wafer-thin strips of metal into printing-press-like rollers, which coated them with electrode-active material. Another machine sandwiched the strips between razor-thin layers of plastic, and wound the whole stack together into a tight “jelly roll,” a cylinder that looked, for the first time, like a battery. (Square cell-phone batteries are just jelly rolls squashed.) [Source: Evan Osnos, The New Yorker, December 21, 2009]

“A slogan on the wall declared “Variation Is the Biggest Enemy of Quality.” Gow nodded at it gravely. A bundle of batteries is only as good as its weakest cell; if a coating is five-millionths of a meter too thin or too thick, a car could be a lemon. The new plant will have up to three thousand workers on ten-hour shifts, twenty hours a day. “When you get down to it, you can have ten people working in China for the cost of one person in the U.S.,” Mark Atkeson, the head of Coda’s China operations, said.

It was easy to see China’s edge in the operation. Upstairs, Gow and Atkeson showed me America’s edge: their prototype of the pack. For two years, Coda’s engineers in California and their collaborators around the world have worked on making it as light and powerful as possible — a life of “optimizing millimeters,” as Gow put it. The result was a long, shallow aluminum case, measured to fit between the axles and jam-packed with seven hundred and twenty-eight rectangular cells, topped with a fibreglass case. It carried its own air-conditioning system, to prevent batteries from getting too cold or too hot. Czinger said only his American engineers had the garage-innovation culture to spend “eighteen hours a day for two years to develop a new technology.” But only in China had he discovered “the will to spend on infrastructure, and to do it at high speed.” The result, he said, was a “state-of-the-art battery facility that was, two years ago, an empty field!”

Electric Taxis in China

20111106-Wiki com BYD_Electric_Taxi.jpg
BYD electric taxi In the late 2000s and early 2010s, the Chinese government began requiring taxi drivers in several Chinese cities to use electric vehicles rather than gasoline-powered ones. Reporting from Shenzhen, Fang Yan and Don Durfee of Reuters wrote: “A pioneering electric-taxi project in this city, China’s southern economic powerhouse, seems to be a success by most accounts. Riders are enthusiastic, there have been no accidents and drivers are termed “gracious” — not a term usually applied to mainland drivers. The pilot project, which could be replicated in other cities, underpins China’s ambitious plans to put at least half a million electric vehicles and plug-in hybrids on the road by 2015. [Source: Fang Yan and Don Durfee, Reuters, July 3, 2011]

The Chinese government picked Shenzhen, along with 12 other cities, in 2009 to lead the migration to green vehicles. Shenzhen and Hangzhou are the only ones attempting to establish e-taxi fleets. The state-controlled Pengcheng E-Taxi, partly owned by BYD, was incorporated in March 2010. Fifty e6 cabs made by BYD hit the roads in the city three months later. “Taxis are definitely a smart way for people to gain the kind of practical hands-on, in-the-field experience, but it will be very closely watched,” said William Russo, an industry veteran who runs Synergistics, a consulting firm in Beijing.

“People are really interested in the car,” Zeng Xiweng, one of the top drivers in the company, told Reuters. “Over 90 percent of customers start asking questions, once they get in.” “And it’s not just me,” he added. “All my colleagues have similar experiences as well.”Daniel Li, a Shenzhen resident, recently took a ride in an electric taxi, one of the red cars with a wavy white band around the body that have been operating in the city for more than a year. “I like the car,” Mr. Li, a 32-year-old software engineer, said as he got out of the taxi. “It’s big and sturdy, pretty much like an S.U.V., but not as noisy. It also saves me the 3-yuan fuel surcharge,” Mr. Li said, using a popular term for renminbi and referring to a charge equivalent to 46 cents. “The problem is, there aren’t many out there.”

Beijing's experiment with electric vehicles started out modestly in 2011 with the introduction of 50 electric taxis in the suburbs. By the end of 2013, there were 1,000. As of 2017, Beijing still planned to replace the city's entire fleet of 67,000 gas-powered taxis with greener ones.[Source: Adam Minter, Bloomberg, March 2, 2017]

Problems with Electric Taxis in China

On the EV taxis in Shenzhen, Reuters reported: For Du Jun, general manager of Pengcheng E-taxi, the operator participating in the pilot project, the project’s hurdles are apparent. The company is still sitting on a big loss for which Mr. Du blames hefty upfront investments, an insufficient number of charging spots and the limited distance that an electric vehicle can travel per charge.”“The electric car is still too expensive, and we ended up paying a lot more than for a Santana, even with government subsidies,” Du said. In Hangzhou, a similar green pilot program stumbled when all 30 of the city’s electric taxis, which appeared on the streets in late January, were pulled from service in April after one cab’s engine compartment caught fire. The fleet resumed operations in June. [Source: Fang Yan and Don Durfee, Reuters, July 3, 2011]

20111106-Wiki com byd not Electric Car Factory in Tianjin.jpg
Electric Car Factory in TianjinAdam Minter of Bloomberg wrote: “Beijing had the best of intentions when it started to promote all-electric taxis in 2011. Not only would the green cars reduce the city's choking pollution, but they'd highlight its commitment to becoming a center of innovation. There was just one problem: cold weather. Electric cars lose their charge quickly when temperatures drop, reducing their range, utility and -- for taxi drivers -- profitability. Just ask the unlucky souls driving them around Beijing this winter. According to local news media, they're shutting off battery-draining heaters and driving in heavy boots that -- thanks to fares lost while charging their batteries -- they can't really afford. [Source: Adam Minter, Bloomberg, March 2, 2017]

As with so many of China's renewable-energy initiatives, the shift to electricity taxis prioritizes symbolism and publicity over planning and practicality. One of the biggest problems is that electric cars are so expensive. In many areas, the favored vehicle was the Beiqi, made by state-owned Beijing Automotive Group Co., which cost as much as $35,000, compared to less than $10,000 for a comparable gas-powered car. Another problem was that the number of charging stations around the city failed to keep up with demand. In 2014, there were 539 of them for 1,150 electric taxis. But thanks to the rapidly expanding number of private electric cars -- Beijing added 51,000 in 2016 alone -- that soon proved inadequate. One result was that taxi fleets spent half their time charging, with a typical wait time of two to three hours.

“That's a real hardship for drivers. According to China's Economic Observer newspaper, a fully charged Beijing electric taxi has a range of about 90 miles. That's not far in a city where a daily commute averages 23 miles. And it gets worse with age: Drivers report that a year-old taxi's range drops to around 60 miles, and some older ones struggle to reach 30. A study last year found that the city's electric taxis average two charges, two trips and a mere 72 miles a day. If China continues to approach renewable energy this way, it isn't going to get very far. A better approach is to be, frankly, a little boring. Start by building up public works, such as power grids and charging stations, before imposing new-energy requirements and technologies.

Image Sources: BYD, Wiki Commons

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, The Guardian, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated July 2022