They are out there but difficult to recognize through the haze of exhaust fumes. When you stroll down a major street in Beijing, it is nearly impossible to pick out the e-cars jammed between the snake-like lines of gas-guzzlers.
Small in numbers but with big potential, electric vehicles are at the vanguard of China’s green transport revolution.
“I love mine,” said Ho Yufei, who works in Beijing’s financial district of Chaoyang and drives a mini-style Zhidou D2. “It is quite powerful for its size and very quiet because it is electric.”
Last year, more than 777,000 e-cars were sold in the country, an increase of 53% compared to 2016, the China Association of Automobile Manufacturers reported. A further one million new models are expected to be on the road by the end of 2018.
Heavy subsidies have fueled the drive toward electric vehicles with Bloomberg estimating that the decision has cost the government 59 billion yuan (US$7.7b billion) during the five-year period up to 2015.
Another 83 billion yuan in subsidies are predicted for 2016 and 2017 although they will be trimmed this year.
Major cities
“Carmakers now expect a gradual reduction in subsidies,” Ron Zheng, a partner with the consultancy firm Roland Berger in Shanghai, told the state-owned China Daily. “Prices will be higher, but it will not have a big impression because most of the people [buying e-cars] live in major cities, where gasoline vehicle license plates are hard to obtain.”
To illustrate the impact electric cars will eventually have on the industry, it is worth putting the numbers into perspective.
Domestic manufacturers have less than 50% of the market share for traditional cars, with American, European, Korean and Japanese brands dominating the highways. But it is a different story when it comes to e-vehicles.
“Chinese companies have almost 90% market share,” said Mark Wakefield, the managing director of AlixPartners, a leading consultancy firm in the United States.
The country also has more e-cars on the road than anywhere else in the world even though it is a fraction of the 200 million registered vehicles.
Still, Beijing is planning to change that. Sales of new energy models are on target to reach two million by 2020 and account for more than 20% of total production and sales by 2025.
The Ministry of Industry and Information Technology rolled out this ambitious “roadmap” last summer. “It’s very clear that China wants to win this,” Wakefield told Associated Press.
“And the risk is if you’re not taking part in that you’re going to get leapfrogged … If you can win in the EV market in China, you are in a good position in all the others.”
Naturally, that will be a tough proposition. Domestic car manufacturers, such as SAIC Motors and Geely, are rapidly changing the global landscape for e-cars. But they, too, will face stiff competition on the home front from a new breed of startups.
“What future cars will look like is going to be very different from today,” Brian Gu, the chairman of Asia Pacific investment banking at JP Morgan Chase, told the South China Morning Post. “It will not only be a transport tool but also a connected personal device for productivity and entertainment.
“There are a couple of new tech names such as NIO and Xiaopeng Motors that are in a position to take the lead,” he added.
Launched more than three years ago by a group of internet entrepreneurs, NIO has been compared to Tesla in certain auto circles.
10,000 orders
The company has already sold out its first batch of 10,000 pre-orders for the ES8 SUV, which was unveiled last month. It is also half the price of Tesla’s model X at around $70,000.
Plans are underway to list the company later this year after it raised more than $1 billion in funding from investors, including the Chinese online giant Tencent.
“Everyone is announcing cars but no one has delivered except for Tesla and now, hopefully, us in the next couple months,” Louis Hsieh, the firm’s chief financial officer, told CNBC television.
But NIO is not the only new kid on the block. Xiaopeng is another wannabe after showcasing the G3 at the glitzy consumer electronics show in Las Vegas earlier this month.
Backed by Tencent’s arch-rival, Alibaba, the auto startup has added some novel features to its e-model, such as a 360-degree video camera on the roof in addition to a pollution monitor.
“From where I stand, the future will definitely be internet-connected smart cars,” He Xiaopeng, the multimillionaire company founder, told the Chinese media. “I am so confident I am willing to bet all my wealth on it.”
He might want to buckle up as it could be a bumpy but profitable ride for the e-car manufacturers that get it right.
Michael Bagala,
I agree with what you have written. I like to suggest that of course this is not a full picture. It is in fact a very complicated picture too difficult to expound or explain in full detail.
Some of my best friends are Indians, admittedly Hindu Southern Indians or Sikh Indians. I could be influenced by conversations with just a small representative section of the ethnic huge diversity that is India. It is not just a simple divide between Muslims and Hindus or fairer skinned Northerners against darker skinned Southerners or Urban Indians and Rural Indians or of different castes and different cults and sects but there is an insurmountable multitude of divides from every angle and dimension.
So we cannot say who is India’s greatest enemy or friend when its greatest enemy is its unwieldy mix of issues if not problems, long term, short term, in fact everyday!
I love India or at least the Indian Hindu culture having grown up in an Indian suburb in Malaysia. I grew up on Indian movies. I am besotted with Bollywood. But it is all a mirage of a mature civilised nuclear power!
Forget about whether India will win in a war with China. Ask whether India will survive even if it wins a war against Pakistan.
As my Îndian mates would say – how can India win against any outsíde enemy when it is being destroyed by rampant cancerous corruption behind the public veil of an educated IT whiz of a democracy!
Really sad, all these monies wasted on nuclear warheads when many still shit in the streets and railway tracks!
E-cars are the way to the future . There will be further advances when they hit the foreign markets. Good for everybody!