As we had shared with you earlier in our report about the future of urban transport, China has emerged as the main hub for electric vehicles. More electric cars are sold in China than in rest of the world combined. These electric cars are mostly locally-branded and thus, they are also cheaper than other cars provided by foreign companies like Nissan and Tesla.
The electronic vehicle market in China is backed by the biggest government authorities with an aim to make the country a pollution-free country through promoting electric vehicles which ensure cleaner and safer driving.
Billions of dollars have been spent on subsidies by China to support the electric vehicle industry. China has helped companies such as Warren Buffett-backed BYD and BAIC Motor to achieve large scale production of their plug-in vehicles. These cars have greatly attracted the attention of customers from the urban areas as well as taxi drivers and government organizations.
From January to November, there has been a remarkable upsurge in sales of battery-electric and plug-in vehicles. Sales have gone up to 60% which approximates to 402,000 vehicles. China is now aiming to bring 5 million plug-in cars on its roads by 2020.
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During an auto show in Detroit, General Motors put their latest car Bolt EV on display with a price tag of $30,000 after a federal tax of $7500. In Shanghai, a two-door electric car, Chery eQ was also showcased which had a price of 60,000 yuan ($8655) after subsidies. An additional amount of 100,000 Yuan would have been added to the actual price if the subsidies were removed.
Xie Chao, a chemical factory worker in Shanghai was interviewed about the electric cars. He commented:
“EV cars are very cheap (in China). You’ll only spend a little money to buy a car. If you just go to work or use an EV in the city, it’s OK … for using within 100 kms (62 miles)”
Xie already owns three EVs as he has been buying them since 2015. He owns an Anhui Jianghuai Automobile iEV4, a BAIC EV160 and a Geely Automobile Emgrand EV. He has rented out one of them while the other two are used by him and his wife.
Cost-Efficiency
Most of the electric cars have the same specifications and the only difference between them is the price. Hence, price is the deciding factor here. The Chery eQ has been a great vehicle as sales for the vehicles have gone really high in the last six months. In addition, it is a car with an affordable price and handsome quality, said Dawei Zhang; CEO of EVBuy.
He further stated:
“It’s a transport tool. It’s purely for mobility rather than for showing off, having a big car for all the family, or for any technology factors”
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Advantage of License
Most of the cities in China have been strict on the issue of giving out license plates for vehicles running on gas. License plates for electric vehicles are easy to obtain and are freely awarded by the authorities. This is also the main reason why most people in Beijing and Shanghai have shifted to EVs so they can easily get their license plates.
When a government worker was asked about his point of view on electric vehicles, he answered:
“I only considered BYD and BAIC. I definitely can’t afford the 300,000-600,000 yuan price of a luxury-style Tesla or Denza”
Qu Lijian, the government worker said that these cars come with different prices but their functions are almost the same. Consequently, price is the key factor in the business of these vehicles.
According to China’s pro-electric policies, foreign automobile manufacturers can acquire subsidies only if they have a contract with local partners. This policy has been a great hurdle for foreign manufacturers as they have to produce cars under Chinese brand names such as Denza. It is a Chinese brand which was formed by joint efforts between Daimler and BYD.
An executive was told that low priced electric cars will disturb the market shares and have a negative impact on future contracts. As a reply, he said:
“The lowest price wins the contract. That’s the process, no questions asked. And when you win, they come back and ask you for another price reduction”
It was told that the latest version of the Leaf released by Nissan’s joint venture with Dongfeng Automobile hasn’t been selling very well. As the vehicle is too expensive and the electric cars buyers don’t want to spend much, sales for the Nissan Leaf have declined, said Carlos Ghosn, Nissan’s global chief.
Removal of subsidies
By the year 2020, subsidies will be discontinued and the playing field for foreign manufacturers will gradually even out. In the year 2016, there has been a reduction in subsidies, increasing the price of Chery eQ to 15,000 Yuan. Subsidies for 2017 have not been disclosed yet.
Subsidies have helped local manufacturers to build their sales as they reduce the cost of each unit. As a result, this has allowed them to spend more on research and development of new electric cars.
Li Yunfei, BYD’s deputy chief of branding and public relations stated:
“By 2020, China will have no subsidies, but your scale has expanded, your costs have come down, and you’ll be able to hit a price that consumers can accept”
Automobile manufacturers all around the world are now starting to enter the electric cars market. As China has already been in the EV world, it will have an advantage over other global manufacturers. At an auto show in Detroit, GAC Motors presented its pure electric GE3 vehicle. GAC Motors is now looking to step in the United States by the year, 2019.
Read More: Low Speed Electric Vehicle – The Future of Urban Transport
Another Chinese company BYD has already started to sell its EVs in South America, Europe, and Africa. The company also has a factory in the United States. BYD is also engaging with other countries to enter the foreign passenger car market.
Stella Li, Senior Vice President of BYD stated:
“Because Chinese companies have this large Chinese market, when they have big enough scale and their power grows, their products improve and they increasingly understand foreign markets. In the future, they will definitely take the world stage. The potential is huge”
Don’t you think the future of automobile is now electric cars?
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