China’s electric vehicle pioneer BYD Auto is launching a zero down payment financial plan in an effort to crack the sluggish EV market in the public transportation sector.
With the plan, taxi and bus companies can purchase BYD BEVs and e-buses with zero down payments. Through a monthly installment plan, BYD’s new sales scheme will free institutional clients of the costly initial investment in purchasing electric cars or buses.
The most attractive part of the plan is the profit retained by the fleet operators through the price gap between traditional fuel and electricity.
In Shenzhen, an e6 taxi cab saves up to ¥7,166 ($1,129) a month, calculated based on a five-year lease period, on electricity compared to gasoline. This can more than cover the monthly installment payment of ¥3,576-¥5,960, depending on whether the EVs are subsidized by the government or not.
In this regard, the plan becomes attractive even without government subsidies, which have not been put into place due to government bureaucracy and regional protectionism.
According to BYD chairman Wang Chuanfu, the plan will make EV fleet operations even more profitable in the future because the price gap between fossil fuel and electricity tend to widen based on an analysis of the growth trend of oil price over the past decade.
BYD also offers an extensive eight-year warranty on key components of its EVs including batteries, electric motors and electronic controls, relieving clients of worries about costly vehicle repairs and battery replacement.
But Wang acknowledged that the zero payment plan still faces two major challenges. One is regional protectionism. The other is misunderstanding of the quality and dependability of BEVs.
To bypass regional protectionism, Wang plans to build factories in other cities so that local governments would consider purchasing BYD EVs through installment payment plans.
BYD is blazing a new trail in popularizing EVs in the public transportation sector. If successful, it may set a positive business model in China for EV fleet operations.