A China Full of Teslas? Not Anytime Soon

on September 10 2014 | in Daily Headlines | by | with No Comments

Chinese leadership appears eager to boost the market for what it calls new-energy vehicles (plug-in hybrids, as well as electric cars and fuel-cell vehicles), a notable effort given the country’s well-known air-pollution problem, not to mention its desire to lessen energy dependence and build a strong domestic auto industry. From new tax benefits to Bloomberg News’s report that “China is considering providing as much as 100 billion yuan ($16 billion) in government funding to build electric-vehicle charging facilities and spur demand for clean cars,” it seems multiple options are on the table. Meanwhile, Foxconn Technology Group is immersing itself in the EV business in China. Will China be the new frontier of EV popularity, as BMW and some analysts seem to believe?

Everybody slow down. The Chinese government has already expended effort in this area — the “new-energy automobile industry” was highlighted as a strategic industry in China’s 12th Five Year Plan (2011-2015) — so far to little success. Conflicts between the Chinese government’s various goals and the regulations that result from them seem destined to doom its efforts. And new pushes appear unlikely to change the underlying problem: EVs are too expensive and limiting, especially for Chinese consumers who are enjoying their first taste of auto-mobility.

Recent news of Tesla’s charging infrastructure deal with China United Network Communications Corp. is hardly evidence to the contrary. China’s new rich represent a hot market for any luxury brand; at the moment, Chinese demand for Tesla is more indicative of demand for luxury goods than for EVs. But it’s middle-class consumers who give the Chinese market its vast scale.

Although the Chinese government could certainly make a huge investment in charging infrastructure, more fundamental obstacles remain. Its national charging standards are unclear — and unfinalized. As David Reeck, a former manager of electrification strategy for General Motors China told China EV blogger Alysha Webb: “By the end of the year China will realize it has really messed up” its charging standards.

Without clear and consistent charging standards, talk of a Chinese investment in a national charging infrastructure seems premature. But even if such charging infrastructure were a fait accompli, there’s little evidence that consumers would be any more anxious to adopt plug-ins. In the U.S., where there are now more than 20,000 public charging points at more than 8,500 charging stations, plug-ins still made up less than 1 percent of new car sales in 2013. China’s inability to persuade consumers to buy cars from its domestic industry champions is a preview of the kind of frustrations it faces in trying to push EV adoption.

Read more at BloombergView.

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