China roads ready to go green?

By Wang Cong Source:Global Times Published: 2018/1/1 18:03:39

Government promotes new vehicles but customers hesitate


People walk past Tesla electric cars being charged at a station in Beijing in October. Photo: IC

There was no immediate rush after the Ministry of Finance announced last week that it would extend a tax rebate on purchases of new-energy vehicles (NEVs) until the end of 2020.

Consumers in Beijing seemed happy enough about the idea of tax breaks, but less optimistic about their chances of benefiting from them.

 "To get a tax rebate, I would have to purchase an NEV, right?" a 25-year-old Beijing resident told the Global Times on Friday, "and in Beijing to buy an NEV, I would have to get a license plate."

"I'm told that I would have to wait until 2019 to get a license plate so I don't know what to say. Sounds like a great gift but it's not exactly easy cash."

At first he had hesitated over "all the hassles of having an NEV" such as finding a place to charge, but after failing three years in a row at the city lottery for a traditional license plate, he found the advantages of NEV became clearer: no lottery.

But that didn't work either.

"Apparently, I'm too late for a license plate even for an NEV because the line became so long," said the wannabe eco-driver. He should have bought one a year earlier, he muttered.

However, getting a license plate for an NEV is no problem in Chengdu, capital of Southwest China's Sichuan Province or Xi'an, capital of Northwest China's Shaanxi Province.

Yet motorists in the two cities expressed indifference to NEV tax rebates for another reason. Their chief concern has yet to be addressed: infrastructure.

"I think my biggest concern is not the tax break but about how practical it is to drive an NEV in Chengdu because honestly, I don't see many charging facilities around the city," a 27-year-old Chengdu resident told the Global Times on Friday. Like everyone contacted by the Global Times, he declined to be fully named.

"I guess we are slow adapting to NEVs, in terms of both our mind-set and infrastructure."

A Xi'an resident interviewed had not heard of the tax rebate.

"To be honest, I don't even know about it," he told the Global Times on Saturday. "People don't really talk about NEVs here in Xi'an, at least to my knowledge."

Policy successes

Anecdotal grievances about the perceived impracticality of NEV ownership seem to contradict the headline-grabbing rise of NEVs in the world's largest automobile market.

China has become the world's largest market for NEVs, with a growing list of domestic vehicle makers achieving technological breakthroughs.

Reporting on NEVs by domestic and overseas media regularly reflects a certain national pride in international competition: Finally Chinese companies can lead the auto industry with the most advanced technology or Western observers share fears that China will dominate the new sector.

In the first 11 months of 2017, NEV output grew 49.7 percent from a year ago to reach 639,000 vehicles. Sales jumped 51.4 percent to 609,000 units, according to data released by the China Association of Automobile Manufacturers on December 11.

The association estimates that annual NEV sales could reach about 800,000 units in 2017 and 1 million in 2018, the Xinhua News Agency reported.

Domestic companies such as BYD Co Ltd and Zhejiang Geely Holding Group are expressing confidence in exporting China-made NEVs to overseas markets.

Industrial observers applaud the new, successful market driven by robust government policies, but there are caveats.

"I'm not trying to take away from the success China has achieved in recent years, but I am also not delusional about how we got here," a long-term Chinese auto industry observer told the Global Times on Saturday. 

"I can say without any exaggeration that all of these successes in the NEV industry whether in terms of sales or technological innovation came from a robust, sophisticated State industry sponsorship system," said the observer, who spoke on condition of anonymity.

The tax rebate and other government measures announced in recent months indicated "the Chinese NEV industry has failed to form a purely market-driven industry as policymakers initially hoped for after years of support," he said.

In addition to the extended  rebate set to expire by the end of 2018, the government announced a slew of other measures.

On September 28, the Ministry of Industry and Information Technology announced that starting 2019 China would impose a sales quota on China market NEV makers of about 10 percent of annual sales in 2019 and 12 percent in 2020, according to a statement on the ministry website.

"If market demand was able to drive growth in the NEV sector, I don't think we would need to set a quota on NEV sales or extend the tax rebate on NEV purchases," the observer said.

The teething problems in nurturing a purely market-driven industry will not go away anytime soon, he noted.

Challenges persist

"I don't think we will see much change in NEV trends in 2018 or the next couple of years after that," a Beijing-based auto industry expert told the Global Times on Friday. "We'll continue to see robust sales growth as well as robust government support."

There will be more government measures to promote nationwide NEV sales through measures such as establishing charging facilities, he noted, but "consumers are unlikely to change their views on the practical challenges of operating an NEV."

Whether from Beijing, Chengdu or Xi'an, the drivers interviewed all harbored doubts about NEVs.

 "Look, I'm for going green and all, but it's just not practical at the moment to own an NEV," said the would-be Chengdu driver.

"I don't think I would buy an NEV in the next few years unless there were dramatic changes, which I think is very unlikely."



Posted in: INSIGHT,BIZ FOCUS

blog comments powered by Disqus