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Half a million NEVs by 2015: mission impossible or accomplished?

China sold 17,642 new energy vehicles (battery electric vehicles and plug-in hybrid electric vehicles) in 2013, up 38 percent from 2012, according to data released by China Association of Automobile Manufacturers (CAAM) on January 9.

Nice tally in terms of growth, which is nearly three times that of auto sales, up 14 percent to an unprecedented total of nearly 22 million units.

But the growth is irrelevant considering the low base number of NEVs in the previous year (12,791 units) and the fact that NEV sales accounted for merely 0.08 percent of the 22 million vehicles sold, negligible from a mathematical standpoint.

Which means, if China were to reach its target of selling half a million NEVs cumulatively by the end of 2015, as envisioned in the country’s Energy-Saving and New Energy Vehicle Industry Development Plan (2012-2020) released in 2012, it needs to sell exactly 461,408 more over the next two years counting the 8,159 units sold in 2011.

After selling a total of less than 40,000 NEVs in the last three years, can China somehow sell more than 460,000 units in the next two years?

Looks like mission impossible.

Even Ye Shengji, deputy secretar-general of CAAM, questioned the 2015 target, declaring it “unrealistic” at a recent forum. “It would be nice if 200,000 NEVs were sold by then,” said Ye.

There is one way for China to reach the 2015 target: have annual sales of the so-called micro or low-speed EVs counted toward the remaining volume. Roughly 350,000 such vehicles, which are popular in rural areas because of ease of their operation and affordable pricing over a traditional car, were sold last year, according to industry estimates, and sales of these vehicles alone could reach the 500,000-unit mark this year.

But the problem is that they are not officially recognized as “automobiles” because they are not listed in the official national automobile catalogue and according to Ye, the country is unlikely to lower the entry-barrier for EVs so that their sales can be counted toward the 2015 goal.

There has been a lot of opinion lately that NEV sales in the next couple of years will take a shot in the arm because of a series of favorable policies released last year, such as new subsidy schemes both on a national and local level, as well as 28 cities and regions chosen to promote NEVs. Beijing, Guangzhou and Tianjin, which all have vehicle restrictions in place, have allocated a combined 42,000 quotas exclusively for NEVs in their license plate lottery system for 2014.

If these 42,000 units are realized and combined with additional sales from elsewhere, China theoretically would have another banner year for NEV sales: 100,000 units seem not out of question.

But the reality is, consumer reaction and acceptance to NEVs remains lukewarm, for the simple reasons that NEVs are still expensive even after subsidies relative to comparable traditional vehicles. Lack of charging infrastructure, safety concern and range anxiety continue to plague the industry. Furthermore, there are just frankly not enough available models to choose from in the first place.

In fact, there is not one NEV model that is available for sale nationally. In Beijing, for example, the local NEV purchase catalogue only includes the locally made BAIC Motor E Series EV and Chang’an C30 EV, even though China requires cities to have non-locally made NEVs account for at least 30 percent in sales. The BYD Qin plug-in hybrid, for example, is out of luck despite its 6-year/150,000 km warranty and lifetime battery pack warranty.

Both U.S. President Barack Obama and Renault-Nissan CEO Carlos Ghosn have retracted from their respective goals of having 1 million EVs on U.S. roads by 2015 and selling 1.5 million EVs by 2016.

It looks like China will have to do the same thing or the 2015 target will simply be an empty goal, unless the government decides to count low-speed EVs into the total. 

 

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