Tuesday, September 11th, 2012...6:32 pm

China’s EV Outlook – Shanghai to Roll out Additional Subsidies

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In September, Shanghai officials announced that it would soon establish municipal subsidies for alternative fuel vehicles (AFVs): vehicle buyers can receive up to 40,000 RMB (US $6,310) in local subsidy and 60,000 RMB ($9,465) in national subsidy, and a free “green” vehicle license. The new municipal subsidies may be in place as soon as October this year.

Note that a vehicle license is about the most expensive piece of metal in a major municipal like Shanghai because of the enormous demand for new cars and a limited number of licenses given out every month in auctions. As a result, the average price of a vehicle license is around 65,000 RMB ($10,254).

This means that Shanghai AFV buyers can receive up to around 165,000 RMB ($26,000) in subsidies, even higher than buyers from Hangzhou, who now enjoys the most generous AFV subsidies at above 120,000 RMB ($18,930). Guangdong has a similar free vehicle license policy, but since the demand for new vehicles in Guangdong is lower than that in Shanghai, the license price averages at around 22,822 RMB ($6,300).

As early as 2010, Ministry of Finance, Ministry of Technology, Ministry of Industry and Information Technology, along with National Development and Reform Commission have decided to make five municipals – Shanghai, Changchun, Shenzheng, Hangzhou, Hefei – the testing ground for municipal AFV subsidies. EV charging stations have also been constructed in Beijing, Hangzhou, Shanghai, Chongqing, Wuhan, Guangxi and over 22 cities. (Li Ling, 2010) By the end of 2011, China has constructed 243 charging and exchanging stations, and 13,283 charging poles. (China Automotive Energy Research Center Tsinghua University, China Automotive Energy Outlook 2012, Science Press, Beijing, 2011, p. 237.) Each charge station contains 40 – 80 spots for individual EVs, and they can charge an EV in 10-30 minutes. This impressive infrastructure is a a result of the government’s $15 billion investment (compared to US $2.4 billion in EV development). (Andrew Meggison, 2012) Despite the infrastructure investment and subsidies, China only sold around 8,000 EVs in 2011, (China Electric Vehicle Report, 2012) compared with 17,345 sales of Nissan Leaf and Chevrolet Volt in 2011 in US, first year they are on the market.

The Chinese government obviously felt that the EV market needed another bump. On July 9th, State Council published the 2010-2020 Development Plan for Fuel Efficient and Alternative Fuel Vehicle Industry (in Chinese), which set the sales goal for electric vehicles and hybrid vehicle sales at 500,000 nationwide by 2015; set the production goal at 2 million and cumulative sales at 5 million by 2020. That’s why we are seeing municipalities competing to roll out additional subsidy for AFVs.

However, there are remaining ambiguities about such municipal subsidies.

1. What are the covered alternative fuel vehicle?

When the subsidies were first introduced in China, the emphasis was on pure electric vehicles. Then the national policy expanded the definition to include hybrid vehicles, which are now the most active kind of AFV taking advantage of the free license in Guangdong.

2. Available to private car owners?

Are these subsidies only available to public transportation vehicles, i.e. electric buses, etc. ? Or would they be made available to privately-owned cars as well? This remains unknown until the guidelines are published.

3. Local manufacturer bias?

In Guangdong, de facto only three models were eligible for the AFV subsidy, among which the hybrid model from Guangzhou Auto Corp.-Toyota was the biggest winner. Therefore the Guangdong policy has been criticized for its bias towards local manufacturers. It’s yet to be seen whether the Shanghai subsidy will favor its local SAIC Motor models.

 

Given the overall policy environment, here are the projections for the fuel mix of the passenger vehicle fleet in China:

(China Automotive Energy Outlook 2012)

 

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