Anyone concerned about the planet’s future and our ability to bring our climate-disrupting emissions under control, can’t help but regularly steal nervous glances at China. What China, with its massive population and prodigious growth rate does or doesn’t do, will have a significant impact on all of us. So when China said they wantedÂ 500,000 “new energy vehiclesâ€Â on the road by next year and five million by 2020, many of which would be driven by first time car buyers newly entering the middle class, that gave us reason to be hopeful. Many have been skeptical that such numbers could be achieved. Especially since last year, onlyÂ 17,600 EVs were sold. Today, there are approximately 50,000 of them on the road.
But a number of recent developments could be turning up the heat.
First, Chinese EV-makerÂ BYD, which is partially backed by Warren Buffett, has been selling most of their cars in their home city of Shenzhen. Earlier this week, they gained approval to begin selling in Beijing with its population of 11.5 million. Beijing officials will provide a subsidy for EVs and they also commit to installing 100 charging stations in the city by the end of the year with roughly ten charging units per station. This roughly coincides with Swiss electrical equipment-maker ABB’s announcement that it would begin making and marketing wall-mounted home electric vehicle chargers in China. The chargers are being developed for Denza, a new joint venture between BYD and Daimler.
Says Chunyuan Gu, ABB’s top man in China, “Either you believe or you don’t believe. What’s difficult to predict is how fast the volume will come.”
BYD also received approval this week to sell its plug-in hybrid,Â the Qin, in Shanghai
China’s fast growing car market is attracting the attention of automakers around the globe. Last year 22 million cars were sold there, compared with 15.6 million in the US. Major problems like air pollution and gridlock are leading local officials to tighten restrictions on new drivers’ licenses, which will slow the pace of growth. Electric cars, which don’t contribute to air pollution are getting a warmer reception.
Some people believe that were are approaching a point of â€œpeak carsâ€ altogether, but that is clearly still a ways off in China.
That has led Silicon Valley-based Tesla Motors to announce that they would begin selling their Model S sedan in China, starting at around $120,000. This effectively pits Elon Musk against Warren Buffett in aÂ contest for the Chinese EV market.
Given the high prices of these cars, they are going to require subsidies to reach these ambitious targets. The Chinese government justÂ agreed to extendÂ existing subsidies past 2015, which is when they were originally supposed to expire. The current subsidies are for just under $10,000 for all-electrics, or around $5,700 for plug-in hybrids.
China’s number one priority is still economic growth, but that has been tempered with a preference for for low-carbon sustainable solutions. It’s going to be interesting to see how quickly the EV market will take off there.
[Image courtesy of BYD]