Recharging China's Electric Vehicle Policy

POLICY
OUTLOOK
AUGUST 2013

Recharging China’s Electric Vehicle Policy
Wa n g Ta o
Resident Scholar

SUMMARY
Electric vehicles offer China an opportunity to reduce its reliance on foreign oil, improve air quality by curbing emissions from the burgeoning transportation sector, and enjoy the future economic benefits of being a global pioneer in an emerging industry. While the government has prioritized the development of electric vehicles, more can be done to ensure success.
Recommendations
1. Open the domestic electric vehicle market to leading international automakers to promote technological development. 2. Prioritize promoting electric vehicle use in commercial operations that rely on large numbers of vehicles, such as car-rental and car-sharing services, business distribution networks, and taxi companies in city centers, and as official government vehicles rather than concentrating on individual consumers. Public procurement and corporate fleet orders will help establish the electric vehicle market.
3. Create an environment that encourages electric vehicle use, including building the necessary infrastructure and providing incentives to stimulate demand, instead of handing out hefty subsidies for purchasing electric vehicles. This effort should be better integrated with ongoing urbanization policies and the entire transportation system.
4. Focus on developing a self-sustaining business model for electric vehicles instead of setting specific targets for quantities sold.

2

Carnegie–Tsinghua Center for Global Policy

It is not difficult to see why promoting electric vehicle technology is appealing to the Chinese government. There are three primary benefits to developing a strong electric vehicle industry.
First, the widespread use of electric vehicles will allow China to rely less on oil imports, improving the country’s energy security.
Second, it will mitigate carbon emissions from the fast-growing transportation sector, which will improve air quality. And third,
China can enjoy the economic advantage of being one of the first movers in the industry and enhance its competitiveness as the market develops in the future.

about the author

Wang Tao is a resident scholar in the

Energy and Climate Program based at the Carnegie–Tsinghua Center for
Global Policy. His research focuses on
China’s climate and energy policies, with particular attention to transportation and urbanization development, the country’s energy transition, and international climate negotiations.

then kicked off the Ten Cities, Thousand
Vehicles Program in 2009 with large-scale pilot projects. By the end of 2010, this program had expanded from ten to 25 cities.
Six of these cities were also identified as pilots for subsidizing private purchases of new energy vehicles. And China’s support grew further when the State Council, the highest government body, identified new energy vehicles as one of seven strategic new industries in 2012.

In fact, China has more reasons than other countries to promote electric vehicles, and it has a better chance of being successful.
Apart from having the largest auto manufacturing capacity and market in the world,
China already enjoys surprising success in the electrification of transportation.

Several billion dollars have been spent on research and development programs so far, and the government also provides substantial subsidies to private purchasers of electric vehicles. In the case of Hangzhou, the most generous of the six pilot cities in terms of these subsidies, consumers can receive nearly $20,000 from central and local governments for buying batterypowered electric vehicles or slightly less for plug-in hybrids.

More than 120 million electric bicycles are used in Chinese cities because they cost less and cover longer distances than gas-powered scooters and because they can be easily charged at home. Although electric vehicles do not currently possess these same advantages, China believes the success of electric

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