1 Wang et al (2017)

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol
Short communication
China's electric car surge
Yunshi Wanga,⁎, Daniel Sperlinga, Gil Tala, Haifeng Fangb
a Institute of Transportation Studies, University of California Davis, Davis, CA 95616, USA
b New Energy Vehicle and Fiscal Policy Research Group of China Automotive Technology and Research Center, Tianjin, China
A R T I C L E I N F O
Keywords:
Plug-in electric vehicle
China's EV Policy
Auto industry
Local protectionism
A B S T R A C T
China's plug-in electric vehicle (PEV) sales, comprising both battery electric and plug-in hybrid vehicles, surged
343% in 2015, and are expected to reach 2 million by 2020. Two factors are crucial to this sudden
transformation: 1) massive central and local government subsidies, and 2) huge non-monetary incentives via
exemptions from restrictions on vehicle ownership in Beijing, Shanghai, and elsewhere. Innovative business
models and greatly expanded vehicle offerings, especially by local Chinese manufacturers, also helped accelerate
PEV sales and infrastructure deployment. However, continued sales growth is threatened by persistent regional
protectionism, the unsustainability of these large subsidies, and widely reported cheating by some automakers.
We suggest some innovative policies that China might pioneer and transfer elsewhere.
1. Introduction
China surpassed the United States in both annual and cumulative
plug-in electric vehicle (PEV) sales in 2015. PEV sales jumped 343% in
2015 to about 331,000, three times the number sold in the U.S. (See
Fig. 1). This dramatic increase suggests that the national goal of 5
million PEVs on road by 2020 is achievable. The rapid market uptake
catapulted Chinese automaker BYD to No. 1 PEV producer in the
world, edging out Tesla and Nissan, with another six Chinese auto-
makers also ranking in the top 20 PEV automakers in the world (D1ev
2016). It was China's surge that prompted Bloomberg to project that
PEV sales will account for 35% of the new global vehicle market in
2035, with an average annual growth rate of 30% (Bloomberg, 2016).
The Chinese government believes that PEVs are one of the best
strategies to reduce air pollution, oil imports, and greenhouse gas
emissions, as well as leapfrogging international automotive companies
(Xinhua, 2016; Wang and Kimble, 2011).
Just two years ago in 2014, we wrote about “China's EV frustra-
tions”—how PEV sales in China were stagnating, despite massive
subsidies and incentives (Wan et al., 2015). What happened in such
a short time?
First, monetary incentives by both central and local governments
were boosted still higher. Second, several megacities, in particular
Beijing, Shanghai, and Shenzhen, adopted aggressive non-monetary
policies in 2014 and 2015 to boost PEV sales to reduce local pollution—
with the result that PEV sales (D1ev, 2016a) in the three cities soared
to 37% of total PEV sales in the entire country, even though those cities
accounted for only 4% of the population. Third, led by local companies
such as BYD, BAIC, and SAIC, automakers greatly expanded the supply
of new PEV models, providing 832 approved models1 as of June 2016
(compared with 28 PEV models available in California). Fourth,
Chinese entrepreneurs started to experiment with innovative PEV
deployment and infrastructure business models.
1.1. Monetary Incentives from the central and local governments
Previous studies found that high purchase price plays a central role
in discouraging PEV sales (Egbue and Long, 2012). In 2015, the central
government provided as much as $8.4 billion in PEV incentives to
consumers (Table 1), about 10 times more than the US government.2
Together with subsidies from local governments, the direct financial
incentives can amount to as much as $16,000 per car in China. On top
of that, the 10% sales tax on vehicles is exempted, and homeowners in
many cities receive subsides for home chargers.
Many local governments match central government subsidies, often
on a one-to-one basis. Among the most generous are Shanghai (with
16.8% of total PEVs sales in the country), Beijing (9.9%), and Shenzhen
(10.4%). In Shanghai, some district governments offered still addi-
tional money on top of subsidies from the municipality: as much as
20,000 RMB. These generous subsidies were intended not only to
reduce pollution but to assist local automakers (SAIC in Shanghai, BYD
in Shenzhen, and BAIC in Beijing).
http://dx.doi.org/10.1016/j.enpol.2016.12.034
Received 19 August 2016; Received in revised form 17 December 2016; Accepted 20 December 2016
⁎ Corresponding author.
E-mail address: yunwang@ucdavis.edu (Y. Wang).
1 Many Chinese car companies just sell a few PEVs.
2 We simply assumed that each of the total 115,262 PEVs sold in the U.S. in 2015 received a federal tax credit of $7500 to reach a total of $864 million in maximum.
Energy Policy 102 (2017) 486–490
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1.2. Non-monetary incentives
The most effective incentive for PEV sales appears to be the offering
of free license plates (i.e., permission to purchase a vehicle), an
incentive that jumpstarted the sales of PEVs in several cities. In
Shanghai, for example, conventional (gasoline) vehicle purchasers
must bid through the “controlled auction” to acquire a license plate.
As indicated in Table 2, the average auction price in 2015 was RMB
80,686. The bidding success rate in 2015 was only 5%, because a
complicated and opaque formula was used to only accept a portion of
the high bids. PEV buyers can bypass this controlled auction system,
thus saving $12,434 and potentially a long waiting time.
Beijing instead conducts a lottery for the right to register new
vehicles. The probability of success was only 0.15% in early 2016
(Financial Daily, 2016), Buyers of battery electric vehicles (BEVs), but
not PHEVs, can bypass the lottery system–gaining a huge non-
monetary incentive to purchase a BEV. This incentive is especially
valuable in Beijing, the most car-dependent city in the country, with an
extensive network of limited-access highways, cold winters, and high
levels of pollution for those not in cars (Campbell et al., 2016).
PEVs receive another non-monetary incentive in Beijing: they are
not subject to a rule banning cars from roads one work-day per week—
adding an additional 1/5 or 1/7 premium to the PEV license plate.
Combining the direct and indirect subsidies at both the national
and municipal level, the incentives in Pudong district of Shanghai in
2015 amounted to about US$25,000 for a PHEV and US$28,600 for a
BEV (Table 3). The magnitudes are comparable for Beijing for a BEV.
1.3. Innovative business models
Even with generous government subsidies, sales of PEVs are limited
by high price, lack of charging infrastructure (Sathaye and Kelley,
2013), and conservative buying behavior (Bjerkan et al., 2016). To
overcome these early barriers, many Chinese PEV makers have formed
car-leasing and shared mobility businesses. These businesses create a
new market for PEVs and have the added marketing benefit of exposing
potential buyers to otherwise unfamiliar technologies.
The most successful innovator is Kandi. The company launched a
car sharing service in Hangzhou City in September 2013 using BEVs.
As of April 2016, it had deployed 9851 BEVs in Hangzhou. Kandi cars
are parked in stations mostly near hotels, business centers, and
residential communities(See Fig. 2). Customers can lease those cars
on an hourly or yearly basis. For each BEV, Kandi receives up to RMB
120,000 (US$ 18,493) in direct monetary subsidies. In 2015, the Kandi
EV Group received RMB 364.6 million from the central government
and RMB 200 million from Hangzhou City government. Kandi is likely
making a profit on these low-cost, simple BEVs, even without gaining
revenue from car sharing usage. Since 2013, Kandi has sold 38,000
BEVs nationwide. 74% of those were sold to its car-share and leasing
company (Global Time, 2016).
These various innovative business models have accelerated the
deployment of PEVs, but they have also brought unintended conse-
quences that could potentially slow market growth, as discussed below.
2. Case studies: Shanghai and Beijing
Beijing and Shanghai present contrasting case studies on car and
0 
50,000 
100,000 
150,000 
200,000 
250,000 
300,000 
350,000 
U.S. China U.S. China 
2014 2015 
PHEV 55,357 29,715 42,959 83,610 
BEV 67,851 45,048 72,303 247,482 
An
nu
al
 P
EV
 sa
le
s 
Fig. 1. China and U.S. PEV Sales.
Table 1
2015 Central Government Subsidies Estimated.
Source: Vehicle Sales Date from China Association of Automobile Manufacturers
(CAAM).
Vehicle type 2015 sales Subsidies per
vehicle
Received
Passenger vehicle 207,382 8,513,239,500
PHEV 60,663 31,500a 1,910,884,500
BEV 146,719 45,000 6,602,355,000
Commercial
vehicleb
123,710 46,041,950,000
PHEV 22,947 250,000 5,736,750,000
BEV 100,763 400,000 40,305,200,000
Total 331,092 54,555,189,500
Total in US dollars (6.489 RMB=1 USD) 8,407,333,873
a The subsidies rate for PHEVs is slightly smaller than that of BEVs, but they must
have an electric range of 50 km or above to receive subsidies.
b For simplicity, we assume that all the commercial trucks and buses are between 8 m
and 10 m in length.
Table 2
The Successful Auction Price of A License Plate for a Private Car in Shanghai.
Source: http://www.bitenews.cn/shchepai/
2015 No. Lic.
plates
Bottom
price
Average
price
No. of bidders Success rate
January 7990 74,000 74,216 98,203 8.14%
February 7653 76,500 76,618 103,224 7.41%
March 7406 74,600 74,830 132,690 5.58%
April 8288 80,600 80,759 152,298 5.44%
May 7482 79,000 79,099 156,007 4.80%
June 7441 80,000 80,020 172,205 4.32%
July 7531 83,100 83,171 166,302 4.53%
August 7454 82,600 82,642 166,939 4.47%
September 8727 82,100 82,172 165,765 5.26%
October 7763 85,300 85,424 170,995 4.54%
November 7514 84,600 84,703 169,159 4.44%
December 7698 84,500 84,572 179,133 4.30%
Average/
Total
92,947 80,575 80,686 1,832,920 5.07%
Note: To cap the bidding price, the system only accepts the bids that hit the right price
level at the earliest time after opening of the bid each month. Since the average success
rate is only about 5%, it means, on average, a bidder has to try 20 months to win the bid.
Table 3
Direct and Implied Subsidies in Shanghai (Pudong).
PHEV BEV 150–250a
National 31,500 45,000
Shanghai 30,000 40,000
Pudong (Financial District)b 20,000 20,000
Sub-total 81,500 105,000
2015 License Plate Price 80,686 80,686
Total Subsidies, RMB 162,186 185,686
2015 Exchange Rate 6.489 6.489
Total Subsidies, US$ $24,994 $28,615
a We listed the typical BEV range of 150–200 km; for those above 250 km, they
receivedmore subsidies: 54,000 RMB per vehicle.
b We selected Pudong District, which provided additional support.
Y. Wang et al. Energy Policy 102 (2017) 486–490
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PEV policy, resulting in sharp differences in car and PEV sales. Each
city has about twenty million people and both are among the nation's
richest cities. But Beijing has promoted car ownership and use more
than Shanghai. Shanghai adopted a vehicle restriction policy as early as
1994, when there were only 8 passenger vehicles for every 1000
persons in China, and private ownership of vehicles was non-existent.
Learning from Singapore, the city adopted an auction system for
license plates. It now has a vehicle population of 2.72 million or 118
per 1000 persons, including 1.41 million privately owned vehicles,
ranking 5th among Chinese cities.
Beijing is less dense than Shanghai with more than twice the space.
It chose to expand the road network beginning in the 1990s. Today,
Beijing tops Chinese cities in vehicle ownership per capita, with 207
vehicles per 1000 persons, almost 4/5 privately owned.
With respect to PEVs, Shanghai embraces both BEVs and PHEVs,
while Beijing promotes only BEVs, asserting that it is concerned that
PHEV owners may not charge their vehicles. Few PHEVs have been
sold in Beijing.
Shanghai was the top PEV market in China in 2015, with 44,247
PEV sales (82% PHEVs). Beijing, ranked third in the nation, with about
23,500 BEV sales.
Chinese cities tend to follow Beijing and/or Shanghai in adopting
vehicle policies. Guiyang has followed Beijing in adopting the lottery
system, while most others who are restricting vehicle ownership,
including Tianjin, Shenzhen, Guangzhou, and Hangzhou, are following
a hybrid approach, with about half the license plates granted through a
lottery system and the other half through an auction system. Currently,
only Beijing rewards exclusively BEVs, though others may follow suit.
3. Policy challenges and lessons
3.1. Large monetary incentives are effective, but not sustainable
In Norway, PEV market penetration was over 25% in early 2016
(CNBC, 2016)—heavily influenced by purchase incentives roughly
equal to the sale price, as well as a variety of other parking and usage
incentives. Likewise, in China, large incentives are now motivating
large increases in vehicle purchases, though not accomplishing any-
where near the same market penetration as Norway. In both cases,
though, the huge amount of government subsidies is unsustainable.
Total purchase subsidies in China could double to US$15 billion in
2020, assuming that China meets the target of selling 2 million PEVs in
2020, and that passenger vehicles continue to amount to 80% of total
sales. In a recent speech, China's Finance Minister Luo lamented that
Chinese automakers are “too dependent on subsidies” (D1ev, 2016b).
Large purchase incentives are also not the most cost-effective way to
reduce smog, CO2 emissions, or energy consumption (Huo et al.,
2015).
3.2. Large non-monetary incentives are effective but not sustainable
(in current form)
In both Shanghai and Beijing, few consumers bought PEVs when
the monetary incentives were first instituted, but sales surged when
rules were changed in early 2014 to award license plates to PEV outside
the Shanghai auction and Beijing lottery. In a recent survey we
conducted, 64% of 200 PEV owners in Beijing indicated that the
license plates were the most important factor in their decision to
purchase PEVs. When asked if they would still buy PEVs had the
license plates not been granted, 52% indicated that they would not
(CATARC China Automotive Technology and Research Center, 2016).
These responses suggest that in China monetary incentives are less
important than non-monetary incentives of free and guaranteed license
plates. Even in the U.S., our study found that different PEV model
buyers responded differently to federal tax incentives (Tal and
Nicholas, 2016).
The large non-monetary incentives are also not sustainable, though,
in this case because of the larger goal of restraining growth in vehicle
use. In Beijing, the city government grants license plates to PEVs
(mostly BEVs) largely in place of license plates for conventional
vehicles. The city now has 5.5 million vehicles, with very high levels
of traffic congestion and mammoth parking problems with only 1.8
million parking spaces for those vehicles (according to the
Transportation Administration of Beijing).). Given Beijing's challenge
of accommodating so many vehicles, it cannot continue to allow
continuing large increases in vehicle use, even if they are non-polluting.
In Shanghai, the city government continues to issue the same
number of license platesfor conventional vehicles, in addition to those
for PEVs, raising the same concern about congestion and the failure to
reduce air pollution.
Soon the license plate incentives in Beijing, Shanghai and elsewhere
will become untenable, unless the city governments reduce the alloca-
tions for conventional vehicles while incentivizing more PEVs.
3.2.1. Vehicle charging infrastructure is key but with uncertain
impacts
Another important factor influencing vehicle purchases is avail-
ability of electricity charging. In the same UC Davis survey cited above,
only 45% of Beijing respondents indicated that they had access to a
private charger. Another 13% resorted to using an unsafe “fly-line”
from their home wall outlets, usually through windows. Only 41.5% of
the respondents agreed that “it's easy to find a charging place around
the residential community.” No analysis has been conducted about the
most effective use of government spending, but it is likely that investing
more in public charging would be effective at inducing more PEV sales,
as well as increasing the operation of BEVs and PHEVs on electricity
(versus on gasoline), especially in China where few people have
detached single family houses.
3.2.2. Beware of cheating
One unintended consequence of China's large incentives is cheating
(Sina News, 2016). The surging sales of PEVs towards the end of 2015
were mainly attributed to the explosive growth of micro EVs, which
accounted for 66% of the BEV passenger vehicle market in that year.
After gaining about 100,000 RMB in subsidies, some micro EVs were
sold for below 50,000 RMB, generating a huge profit. This large
potential for profits motivated extensive cheating. The government
caught and punished one passenger car maker and five commercial
vehicle companies for receiving 1124 million RMB ($167.7 million) in
subsidies for 5942 vehicles they sold illegally. A widely circulated
report suggested that the actual cheating was far more rampant,
amounting to 76,000 EVs and 9300 million RMB ($1.388 billion). If
this report is true, which we cannot confirm, then as many as 22.4% of
the 331,000 PEVs produced last year were ghost vehicles, not actually
sold to consumers.
Fig. 2. Kandi Mico-transit EV “Vending Machine”.
Y. Wang et al. Energy Policy 102 (2017) 486–490
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One solution to this problem is, rather than subsidizing auto-
makers, China should follow the U.S. example of subsidizing consu-
mers, which will have the double benefit of letting consumers choose
the cars they want as well as reducing the likelihood of wide scale
cheating. Another approach is to shift away from incentives toward
direct regulation of automakers, as California and nine other states in
the U.S. do (People.com.cn, 2016).
3.2.3. Summary thoughts on incentives
Incentives play a crucial role in developing a market for new
products, especially when the principal benefits are external to the
marketplace. The challenge is to design effective incentives, and then
phase them out. If the PEV market becomes too dependent on
subsidies and non-monetary incentives, it may collapse as soon as
those incentives are removed. In the U.S. state of Georgia, when the
state lawmakers ended the generous tax credit of US$ 5,000, sales fell
by about 90%. Market Place (2016).
Another caution is that the impact of incentives, especially non-
monetary, and the provision of charging infrastructure, can vary
significantly by region and circumstance. For example, granting PEVs
access to carpool lanes has had a large impact on PHEV purchases in
California (Tal and Michael, 2015; Sheldon et al., 2016), but less
impact on BEVs, and very different effects in other parts of the US.
In summary, there is no "best policy" for accelerating the purchase
and use of PEVs. Incentives can be very powerful, but need to be
tailored regionally and linked to desired outcomes.
3.3. Regional protectionism
Is prevalent in China, with many local governments directing
subsidies to local automakers—often with clever conditions applied
that disqualify non-local companies. This is prevalent in many regions
and exercised in many ways, especially so with commercial vehicles
(trucks and buses). In a recent public bidding for PEV transit buses in
Shenzhen, BYD (the local company) won all the orders for 3024 buses
(Auto Business Review, 2016). In Beijing, it is widely believed that the
reason that the local Beijing city government awards subsidies only to
BEVs and not PHEVs is not because of the (unsubstantiated) concern
that PHEV users don’t charge their vehicles, but because BAIC (the
local company) doesn’t sell PHEVs (People.com.cn, 2015). Indeed,
BYD, China's largest PEV maker, couldn’t sell any of its PHEVs in
Beijing. Shenzhen, BYD's home city, set up its own barriers by
imposing a fee of RMB 50 million on outside automakers that sell
their PEVs in the city. Local automakers accounted for over half of
2015 passenger PEV sales in Beijing and Shenzhen. In contrast, they
accounted for only 27% of passenger PEV sales in Shanghai, a more
open market.
This protectionism hurts China's promising EV companies, because
it dampens sales and reduces scale economies. Companies have to
spread their manufacturing operations across cities to gain access to
markets. There is speculation that the central government for indus-
trial policy reasons has so far tolerated Beijing's interpretation of “New
Energy Vehicles” to exclude PHEVs. Some government officials believe
that China can’t compete with multinationals with hybrid-electric and
combustion engine vehicles, and that BEVs are the only way that China
could compete well, aided by the fact that China has control of many
rare earth materials that are needed for batteries and electric power-
train technologies.
The arguments for local protectionism are: 1) local governments
need to support nascent industries; 2) local governments are largely
responsible for providing charging infrastructure; and 3) the auto-
motive industry in megacities such as Beijing and Shanghai are one of
the few large sources of manufacturing jobs for blue-collar workers;
and 4) more time is needed for local automakers to become healthy
competitors.
Public opinion is turning against local protectionism in the city of
Beijing (People.com, 2016a, 2016b), but acquiescence by the central
government is being noted by others. Shanghai, with the most open
market in China, is now beginning to retreat. In a new directive
published in early 2016, Shanghai changed the specifications for which
PHEVs are eligible for subsidies. Only one PHEV model met the new
specifications, the model made by local company SAIC. BYD's PHEV
sales plunged in Shanghai while SAIC's PHEV sales surged (D1ev,
2016c).
3.4. Policies affecting usage of PEVs
BEVs and PHEVs have significant differences that influence their
environmental impact. BEVs do not use combust fuels, and thus do not
produce tailpipe emissions, while PHEVs can be driven on gasoline,
and thus produce emissions during those times. Fueling and charging
decisions by drivers depend on access to charging points, length and
location of trips, electric range of the cars, and other factors. A major
concern with PHEVs, especially in China where most car owners live in
multi-family dwellings, is that drivers of PHEVs will rely on gasoline
rather than charge their batteries—as prominently asserted by a
Shanghai professor (Auto Business Review, 2014). This claim has
some validity but is exaggerated.
Studies in California find that PHEVs with short all-electric ranges
of 10 miles (PHEV10) and those operated in regions with large
incentives indeed are more likely to be driven only on gasoline. In
California, early Toyota Prius PHEVs, with only 10 miles of electric
range, sold well—because they were eligible for financial incentives and
allowed to use carpool lanes. But, it turns out that about 14%were
rarely driven on electricity (Tal et al., 2014). A related concern is that
the frequent starting of PHEV gasoline engines during trips may cause
substantial emissions.
A variety of limited studies and data suggest that concerns about
PHEVs operating mostly on gasoline are overstated, and should
dissipate over time. A local agency (Shanghai Electric Vehicle Public
Data Collecting, Monitoring and Research Center (SHEVDC)), which
has access to onboard data from every PEV registered in Shanghai,
found that 60–63% of total kilometers traveled in 2014 by 1329
monitored Qin PHEVs was on electricity. In the aforementioned UC
Davis survey, we found that 80% of the PHEV users surveyed in
Shanghai had private charging poles and 65% charge their vehicles
between 10 p.m. and 6 a.m. in response to the off-peak tariff. In
summary, most of the surveyed and monitored BYD PHEVs are driven
on electricity, and PHEV users are motivated by economics to charge
their vehicles as much as they can. Assuming that access to EV charging
facilities increases, with more charging infrastructure being available,
more driving would be expected to be on electricity.
In any case, stronger policies, tied to actual usage of vehicles rather
than proxy metrics such as battery size, could be effective at enhancing
the effectiveness of incentives and increasing vehicle operation on
electricity. China is well positioned to pioneer such policies. In
Shanghai, and soon in Beijing, third-party remote data collection
platforms track all PEVs operating in the cities. Those platforms could
provide accurate information on the use of PEVs. With proper
methodologies, one could acquire data on electricity kilometers tra-
veled by PHEVs and BEVs, and therefore provide incentives and
impose penalties based on the use of those vehicles. If a PHEV operates
on gasoline for, say, 50% of its mileage, then the local government
could issue a warning threatening to suspend the owner's license plate
or impose a fine to recuperate the subsides spent. If cheating happens
with BEVs, this would also be detected. Conversely, the local govern-
ment could provide a rebate for PHEVs driven more on electricity.
Moreover, with access to this usage data, China's regulations for
corporate average fuel consumption could be designed to provide
credits based on share of travel on electricity.
Y. Wang et al. Energy Policy 102 (2017) 486–490
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3.5. Adoption of a California style zero emission vehicle policy
Chinese government officials have closely followed California's ZEV
policy through the two ZEV Workshops UC Davis co-hosted with China
Automotive Technology and Research Center (CATARC) in Beijing in
April 2014 and in California in August 2015. They currently are
considering two versions of the policy. The Vice Minister of the
Ministry of Industry and Information Technology declared early in
2016 that they were considering merging ZEV credits with the new
Corporate Average Fuel Consumption standards (Sohu Auto News,
2016), and the National Development and Reform Commission has
proposed a subset category of the Carbon Cap and Trade program for
New Energy Vehicles. Under the second proposal, each automaker will
be required to produce a certain percentage of PEVs with various levels
of credits depending on the electricity ranges of the PEVs. Automakers
could sell or buy credits to meet the mandate. This proposed policy
design is very similar to the California ZEV mandate in that it imposes
a volume requirement, separates vehicles from their upstream fuel/
electricity production and allows trading of credits.
We applaud that the recent proposal by MIIT is a great step
forward, although ideally, we believe that the NEV policy should be
delinked from China's Corporate Average Fuel Consumption (CAFC)
standards to avoid confusion and potential abuse of the rules. NDRC's
policy proposal is very preliminary and we are looking forward to a
more detailed plan from NDRC. In any case, both proposals overlap.
We believe one policy is sufficient. The co-existence of two policies will
only add complicity and confusion in implementation.
4. Conclusion and policy implications
China's mix of government policies has been successful in increas-
ing PEV sales. However, the scale and magnitude of monetary and non-
monetary support is unsustainable. More cost-effective policies are
needed. China is particularly well positioned to adopt innovative
performance-based policies that are based on actual usage of PEVs–
utilizing onboard data monitoring and analysis—to incentivize greater
use of electricity in PEVs and more efficient use of subsidies. With a
new set of policies that reign in local protectionism, curb cheating, and
incentivize consumers and automakers to embrace PEVs that operate
primarily on electricity, China would remain on its trajectory toward 5
million PEVs by 2020, with annual sales of 2 million. The benefits
would be global, greatly reducing the cost of PEVs worldwide and
contributing to accelerated adoption of clean vehicle technology.
For the research community the following questions need to be
studied. Which is more effective: subsidies for vehicle purchase or
preferred access to parking or road use? Are hybrid-gasoline vehicle
technologies less expensive than PEV technologies to meet China's
stated objectives of clean air and reduced dependency on oil? Is
investment in infrastructure more cost-effective than providing mone-
tary subsidies to consumers in increasing PEV sales? Is a free license
plate in sprawling Beijing valued more highly than a free license plate
in relatively compact Shanghai? Given what we understand of tailpipe
emissions of PHEVs and the way they are driven, is Beijing's policy to
restrict PHEVs appropriate and effective? Should China focus more on
electrification of fleet vehicles or personal vehicles? What is the
“optimal” range of BEVs and PHEVs in Chinese megacities?
Acknowledgement
We thank Energy Foundation China and ClimateWorks for their
continued support of our research on PEVs in China, as well as the
consortium members of the China-U.S. Zero Emissions Vehicle Policy
Lab and the China Automotive Technology and Research Center. This
study is also partially sponsored by the Shanghai Pujiang Program
(14PJC058).
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yanfe
Realce
yanfe
Realce
	China's electric car surge
	Introduction
	Monetary Incentives from the central and local governments
	Non-monetary incentives
	Innovative business models
	Case studies: Shanghai and Beijing
	Policy challenges and lessons
	Large monetary incentives are effective, but not sustainable
	Large non-monetary incentives are effective but not sustainable (in current form)
	Vehicle charging infrastructure is key but with uncertain impacts
	Beware of cheating
	Summary thoughts on incentives
	Regional protectionism
	Policies affecting usage of PEVs
	Adoption of a California style zero emission vehicle policy
	Conclusion and policy implications
	Acknowledgement
	References