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HomeBusiness NewsExplaining the explosive growth of China’s New Energy Vehicle market

Explaining the explosive growth of China’s New Energy Vehicle market

New Energy Vehicles

The term “new energy vehicle” (NEV) is used in China to designate all road vehicles that are partially or fully powered by electricity. NEV’s are recharged from external sources of electricity such as wall sockets.

The term EV “electric vehicle” is also commonly appointed to vehicles using electricity as a power source in other parts of the world.

The term also covers:

Battery electric vehicles (BEVs) – Pure electric vehicle, uses rechargeable fuel cells for power.

Plug-in hybrid electric vehicles (PHEVs) – Can be charged through an external source or through its combustion engine internally

Fuel cell electric vehicles (FCEV) – Uses a fuel cell, sometimes in conjunction with a small battery or super-capacitor to power its on-board electric motor.

Benefits of choosing a new energy vehicle over combustion

Cheaper running costs – Electric vehicles don’t use liquid fuels. A 2018 study from the University of Michigan’s Transportation Institute found electric vehicles cost less than half as much to operate as gas-powered.

The average cost to operate an EV in the United States is $485 per year, while the average for a gasoline-powered vehicle is $1,117.

Noise pollution – As electric cars don’t have a combustion engine, the noise in comparison to gas cars is quieter. Along a congested city road, this can have a larger impact on the livability factor for residents.

Lower carbon footprint – One of the more obvious benefits of electric vehicles. Electric vehicles are much greener than conventional gas-powered vehicles. That being said, they are only as green as the energy you charge them with.

Servicing – Electric vehicles don’t need to replace or repair any parts associated with a combustion engine, oil, radiator, coolant, transmission, gearbox, etc. Although one of the largest costs with an electric vehicle is a battery replacement.

Global sales of Electric Vehicles

Global sales of electric vehicles (EV-volumes world sales database)

According to “EV-Volumes” a company that tracks sales data of electric vehicles globally, within the first half of 2021, a total of 2.65 million electric vehicles were sold worldwide. This year’s sales has increased by +168% in comparison to 2020.

During the first wave of the COVID pandemic, sales of electric vehicles stayed -14% below 2019 statistics and vehicle markets declined by -28% in 2020.

By the end of 20201, there were over 11 million electric vehicle units on the road worldwide. According to data from the International Energy Agency (IEA), global EV sales are expected to reach around 15 – 20 million units by 2025.

Growth rates in the first 6 months of 2021 for China reached 197%, Europe 157%, USA 166%, and 95% in remaining markets.

BEV and PHEV sales and %growth EV Volumes

Subsidies and policies

One other contributing factor to the growth of electric vehicles in China and the rest of the world is that electric vehicles have become more affordable and sought after due to supporting policies and subsidies given by governments.

The Chinese government promotes electric vehicles with a variety of policies including, subsidies, rebates, quotas for vehicle manufacturers and tax exemptions.

National subsidies have been a major incentive for consumers to purchase EVs. China’s central government began subsidizing EV purchases for government and public fleets in 2009 and individual car buyers in 2013.

Subsidies in 2013 ranged from RMB 35,000 to RMB 60,000 depending on the vehicle’s electric range, and have been reduced regularly since.

Non-financial incentives such as including exemption from city license plate lotteries or restrictions have also been encouraged. Previously, car buyers would need to enter a lottery for a car plate. In some parts of China, it could take years to acquire a license plate.

In Beijing in 2016, 2.7 million people registered for the license plate lottery with only 90,000 plates available for conventional vehicles. In 2018, the number of conventional vehicle license plates available fell to just 40,000

To promote new energy vehicle consumption in Hainan, consumers considering buying a new energy vehicle may be eligible for a 6,000-10,000 yuan rebate upon purchase depending on the vehicle.

Charging stations

As new policies and subsidies make it easier for citizens to purchase electric vehicles the demand for convenient and affordable publically accessible chargers increases.

The charging of electric vehicles has been a troublesome affair in the past, partly due to the lack of charging stations. In the past, electric vehicles didn’t have the range they have now, so they would need to be charged more often.

2022 Zhiji L7 model

The 2022 Zhiji L7 vehicle will be offered with a 93 kWh battery pack that will have a range of around 382 miles (615 km), but a larger 118 kWh pack will be available in the future, boosting the claimed range to 621 miles (1,000 km).

The Zhiji L7 is the result of a joint venture between SAIC, Zhangjiang Hi-Tech, and the Alibaba Group.

As the charging of electric vehicles is generally done at home or work, building codes in some areas require new construction or remodels to accommodate charging points.

Charging at home or the office makes sense as the wait time for recharging an EV vehicle is slower than filling a conventional vehicle with liquid gas.

The speed that an electric vehicle battery recharges at depends on car battery size and the speed of the charging point. Depending on these factors and the technology used in the vehicle, in general, it takes between 30 minutes to 12 hours to charge a vehicle.

There are some environmental factors that also affect charging speeds. In colder temperatures, it takes a little longer to charge.

As EV charging is cheaper than filling a conventional vehicle with gas (great for the driver but it means less revenue potential for businesses that provide charging), measures such as direct investment to install publically accessible chargers have been made by governments worldwide to support EV charging infrastructure.

Number of public electric vehicle charging stations in China.

At the 2021 World New Energy Vehicle Congress held in Haikou, the Vice Minister of Transport, Wang Zhiqing announced that “China will see new energy vehicles (NEVs) account for 72 percent of its public transport and 80 percent of expressways will be equipped with NEV fast chargers by 2025.

The total number of public electric vehicle charging stations in China from 2015 to 2020 (in 1,000s).

By the end of 2020, the total length of China’s expressway network reached 161,000 kilometers, the world’s largest expressway system by length.

According to data provided by Business Wire, China’s charging pile ownership ranks first in the world. As of the end of 2020, China’s new energy vehicle ownership reached 4.92 million units, and the number of charging piles amounted to 1.68 million units.

By 2020, a total of 2,251 charging stations and 9,065 charging piles have been built on 42 highways, with a service mileage of 54,000 kilometers, accounting for 35% of the total mileage of highways nationwide.

Related article: Why exactly is it so important to protect Hainan’s rainforests?

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