The last week of 2016 was rather ominous for low-speed EV manufacturers.
First, the Ministry of Public Security called to stop the piloting of a low-speed EV program in Dezhou, Shandong Province on December 22. Then, a wave of ministerial meetings several days later discussing industry standards determined that low-speed EVs would be categorized as electric cars and must be crash tested and use only lithium batteries. To put a low-speed EV on the road would require production licenses, meeting standards, license plates, drivers’ license and insurance in the future.
It definitely was not what the low-speed EV manufacturers expected. When the nation considered standardizing the industry last October, the first idea was to set up a new category of “low-speed four wheeled electric vehicle,” upgrading, standardizing and eliminating batches of enterprises. Then the official attitude took a roller coaster ride and came in the one-size-fits-all idea: upgrade or be eliminated, with no middle way.
Some enterprises did try to fit into the proposed standards. Take one Hebei-based company as an example: by using Chang’an Auto’s Benben body and the company’s own power system, the price of its model rose to some ¥50,000 ($7,267), high above popular models priced at around ¥20,000.
“We could make technology upgrade, but should there be any subsidy after adopting lithium battery? Isn’t it too strict to require vehicles taking crash tests since similar products are not required abroad? There should be no crash tests or test standards should be lowered to accommodate the special usage of low-speed EVs,” one enterprise owner said.
In the European Union, being called quadricycles, the vehicles only need to meet requirements on tires, horns, rearview mirrors, seat belts and lamps, with no mandate for NCAP tests or airbag installment.
The industry has grown widely over the last decade. Bohai Securities even made bond prediction that the market volume will exceed 10 million units with market value surpassing ¥100 billion in the near future. Currently the market volume has already broken 4 million units.
In Shandong Province alone, sales grew at a stunning rate: 196.4, 45.8, 54.4 and 85.6 percent from 2012 to 2015. Sales volume may have reached 1 million units nationwide last year. In 2015, Shandong produced 347,000 low-speed EVs, while the nation produced only 142,800 electric passenger vehicles.
But four things troubled the industry: most manufacturing enterprises are small or medium-sized ones with no auto production certificates; most drivers of low-speed EVs do not own driving licenses; lead acid battery recycling and refinery may cause severe pollution; and local governments’ lack of oversight on vehicle production and use.
The market is already being reshaped. The top five makers produced 346,600 low-speed EVs in the first 10 months of last year, which accounted for nearly three quarters of total production volume. Major players like Yogomo, Levdo and Lichi had poured in money on key car technologies. Small workshops churning out inferior products were eliminated.
Consumers also should not be neglected in the decision making process. Most low-speed EV buyers are residents living in tier-3, 4 or 5 cities. With tight budget, these potential micro EVs, EV or gasoline car buyers can only replace their electric bicycles or motorcycles with low-speed EVs.
For them, the debate does not matter much. What they need is only an economical travel tool.
With still at least 260 million electric bikes and 100 million motorcycles waiting to be replaced, the market will continue its robust growth.
Maybe there will be a tougher period. But it never lasts, only tough people do. Low-speed EV industry will usher in a golden period after this round of restructuring.