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China encouraging citizens to buy electric vehicles

29 October 2014 | Chicago Tribune

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China's central and local governments are encouraging people to buy electric vehicles as the country's air pollution grows ever more serious. Many major automakers have released new EV models in China, and the central government began in September a new tax-exemption system for eco-friendly vehicles. Local governments have also encouraged the purchase of EVs with their own subsidies. But many hurdles remain. For example, recharging facilities are vital infrastructure for the proliferation of EVs, but they are in short supply in China. Dongfeng Nissan Passenger Vehicle Co., a joint venture by Nissan Motor Co. and China's Dongfeng Motor Co., released its first EV model, the Venucia e30, on Sept. 10. It was designed for the Chinese market and based on Nissan's Leaf EV. The Venucia e30's cruising distance is 175 kilometers (about 108 miles), with prices starting from 267,800 yuan (about $43,777). "This is the starting point for the future," said Ren Yong, vice president of Dongfeng Nissan.
BMW of Germany also started selling its main EV model, the i3, in the Chinese market in September. BYD Co., a Chinese automaker, jointly developed the new Denza EV with Daimler AG of Germany, and released it in September. BYD was established in 1995 as a manufacturer of batteries and entered the vehicle manufacturing business in 2003. Thus the company has placed great importance on EVs. Also in September, BYD and Guangzhou Automobile Industry Group Co., another major Chinese automaker, began building a manufacturing plant for EV buses as a joint venture. Other major Chinese automakers, such as Shanghai Automotive Industry Corp. and Beijing Automotive Works Co., also sell passenger-model EVs in the market. Scientists assume that about 30 percent of the microparticle substances, known as PM2.5, in the air in Beijing are attributable to exhaust gases from passenger cars. The adverse effects of PM2.5 are feared to overshadow a summit meeting of the Asia-Pacific Economic Cooperation forum to be held in Beijing in November. The Chinese government aims to make eco-friendly cars popular to minimize the number of gasoline-powered cars on the road. It imposed a car purchase tax that amounts to 10 percent of the price of a newly marketed vehicle, but from Sept. 1, EVs, plug-in hybrid vehicles and fuel cell-powered vehicles became exempt from the taxation.
In regions where local governments offer subsidies, the tax exemption lowers the actual market price of the Venucia e30 model to about 170,000 yuan, according to Dongfeng Nissan's estimate. "Because prices of mainstream models in the market are around 120,000 yuan, our model can fare well in terms of pricing," an official of the company said. Some local governments in China offer perks for those who buy eco-friendly cars. For example, to reduce traffic congestion and air pollution, the city governments of Beijing and Shanghai conduct lotteries or auctions for car number plates. This is meant to limit residents' purchases of cars, but those who buy eco-friendly cars are exempt from the restrictions. Sales of EVs in China this year exceeded 20,000 units as of the end of September, nearly double the whole of 2013. However, EVs did not account for even 1 percent of all new car sales from January to September this year, which was about 17 million units.
EV batteries must be recharged to drive the vehicles on city streets. Traffic congestion in urban areas in China is such a problem that EV users cannot drive with a sense of security unless there are many recharging facilities available for the public. The Shanghai city government set a goal of building 6,000 high-speed recharging facilities by the end of 2015, while the Beijing city government aims to set up 1,000 facilities by the end of this year. However, the current numbers are much lower than the goals. In large Chinese cities, most homes are in high-rise buildings, and there are a small number of independent houses. Therefore, it is difficult for EV users to recharge their vehicles at home, making recharging facilities for the public especially important.
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