Serving the World's Largest Emerging Automobile Market
Home > EDITORIAL > Subsidies only one small piece of the EV puzzle

Subsidies only one small piece of the EV puzzle

The Beijing municipal government announced on April 2 that battery electric vehicles (BEVs) will be exempt from driving restrictions.

BEVs will be allowed to operate weekdays while all others must be off the road one day a week based on the last digit of their license numbers, a regulation in place since April 2011.

The move is the latest measure by the capital city to encourage the use of BEVs and is likely to trigger a jump in the demand of BEVs. Additionally Beijing allocates 20,000 license plates for new energy vehicles (NEVs, including plug-in hybrids) in 2015.

Central and local government subsidies have certainly boosted sales of NEVs. According to data from the Ministry of Industry and Information Technology (MIIT), more than 46,000 NEVs registered between September 2014 and February 2015 were exempt of sales tax.

The popularization of NEVs, however, cannot depend on subsidies. More important to consumers is the freedom of usage of a NEV. One individual in Beijing, for example, was quoted by the local media as saying, “If an EV is exempt from restriction in sales and operation, I would buy one right away even without subsidies.”

Subsidy is not sustainable in the long run and it is only a small piece of the puzzle in China’s road to vehicle electrification. Apart from purchase and driving restrictions, the availability, compatibility and convenience of charging stations remain one of the biggest puzzles in helping consumers get over the “range anxiety.”

According to MIIT, China had 28,000 charging poles and more than 700 charging stations by the end of 2014. The city of Beijing alone had about 1,400 charging poles and that number is likely to more than double this year. The Beijing-Shanghai expressway is now complete with charging stations every 50 km in January.

But these are far from enough to relieve consumer range anxiety. For one thing not all of them are in operation or open to the general public. For another many of them are not located in convenient places easily accessible. Charging connectors may not be compatible with different EVs. Moreover, the much bigger issue is whether charging poles can be installed in parking garages in apartment complexes where most people live.

Subsidies and free from driving restrictions no doubt will help increase demand of NEVs in China but the commercialization of NEVs will eventually depend on charging infrastructure.

| | | | |

Leave a Reply