China’s strategy for building an electric-vehicle industry could still get back on trackAll News, Transportation Industry News
09/01/2017 Leave a comment
Three years ago, the Chinese government unveiled an ambitious road map for expanding the country’s electric-vehicle industry. It believed that moving to a future dominated by electric vehicles rather than cars with internal-combustion engines could deliver a number of major advantages for China.
First, electric vehicles would reduce consumption of oil-based fuels and boost China’s energy independence: the cars would power up with electricity generated primarily from domestic coal. China otherwise faces the prospect that oil consumption will swell by 70 percent between 2010 and 2020, given current expectations for the per capita growth of vehicle ownership. The country would then find itself increasingly vulnerable to global supply fluctuations.
Despite a concerted effort by the government and domestic automakers, the expected surge in electric-vehicle production and sales has not occurred. Automakers produced just 6,000 battery-electric vehicles and plug-in hybrid-electric vehicles in 2011, taking the industry just a fraction of the way to the half-million units of production capacity the government had originally expected for 2015.
The government’s 12th five-year plan targets ownership of five million battery-electric vehicles and plug-in hybrid-electric vehicles by 2020. Yet just 1,000 of these vehicles were registered in the third quarter of 2011, less than 0.02 percent of new-vehicle registrations during this period. Despite investments totaling nearly 10 billion renminbi ($1.57 billion) in battery R&D by Chinese automakers and suppliers, few Chinese vendors are qualified to provide electric-vehicle batteries to the auto industry. Government-sponsored subsidies have failed to stimulate consumer demand. Electric-vehicle buyers in Shenzhen got 120,000 renminbi per vehicle for battery-electric passenger cars—some of the country’s highest subsidies—but automakers sold only about 600 such vehicles there by 2011.
Planned infrastructure rollouts have also failed to materialize. The Ministry of Science and Technology had called for the construction of more than 400,000 charging piles by 2015. Yet the State Grid Corporation of China (the national power provider) and China Southern Power Grid combined built only about 16,000 charging piles in 2011.
As a result, China has fallen behind not only its own goals but also other major automotive markets in its readiness to support an electric-vehicle industry. McKinsey’s electric-vehicle index, for example, assesses a nation’s electric-vehicle readiness in terms of supply and demand. China scores relatively low on both dimensions.1 Furthermore, in overall electric-vehicle readiness, the country fell from third place, in July 2010, to fifth, in January 2012—behind Japan, the United States, France, and Germany . A number of things explain China’s inability to reach its electric-vehicle targets.
Article source mckinseyChinaElectric Vehicle