As electric-car sales flounder, government steps in to get things going

Chinese local governments are once again trying to jump-start the electric-vehicle industry as potential customers remain largely ambivalent to incentives to get them to buy what is billed as the transport of the future.

The strongest performer in the industry, Telsa Motors of the US, says it delivered 4,750 cars in the first quarter of the year, but none of its competitors has been able to come up with a formula for getting many customers to buy their products. Most of the electric cars on the road are run as part of government pilot projects.

The Beijing new-energy development center says the Beijing government has now come up with incentives to lift sales, including a subsidy of up to 120,000 yuan ($19,548; 15,132 euros) and exemption from the ballot system under which number plates are granted. The measures are expected to take effect this year, the center said.

Only electric models are eligible for these favorable policies, not hybrid or plug-in vehicles. The terms are similar to those of previous incentives, but for the first time the government is codifying the rules in legislation.

Local governments have generally accepted that it may take a long time to get people to abandon conventional cars in favor of electric ones, and the approach they are taking varies widely. However, one approach that some see as a solution is to rent electric cars to individuals or government bureaus rather than to sell them.

One of those doing that is the biggest state-company in the capital, Beijing Automotive Group Co. The head of BAIC's new-energy division, Lin Yi, says the company will soon launch a high-end electric car targeting domestic customers and governments.

The company had previously said it would sell 3,000 electric cars in Beijing by the end of this year.

Lin says the company is looking for people willing to test drive the electric vehicles it has produced, the E150 and the C70.

One of the biggest problems with electric cars has been recharging them, and BAIC is working with State Grid to erect charging poles for the test drivers. The catch is that the drivers must own a garage where the poles can be erected. The company says it hopes to soon have "several dozen volunteers".

Charging stations and poles will be built in big communities, near the premises of car rental companies, and in power stations, the government says. The goal is to have at least one charging pole available every 5 kilometers in Beijing.

Central and local government efforts over the past three years to encourage people to buy electric cars have been hampered not only by the lack of charging stations but widespread anxiety about the limited range of the cars, given that a battery can run only 15o km on one charge. A taxi in Beijing usually runs 500-600km a day.

In 2009 the central government launched a three-year plan to introduce electric vehicles in major cities under which 10 cities will be selected every year to demonstrate 1,000 electric vehicles.

But the demonstration projects have aroused little buyer interest, and most of the electric vehicles running on the roads are paid for by local governments, and used either as electric buses, taxis or as city cleaning trucks, running fixed routes and serving limited areas.

Two of the most publicized demonstration projects have been with Foton's 250 Midi electric taxis, serving in Yanqing county in northwestern Beijing, and 800 BYD electric taxis operating in Shenzhen.

Beijing Municipal Science and Technology Commission says the city plans to add another 2,000 electric taxis and try to bring them from suburban areas into the city.

Zhao Jingguang, vice-president of Foton, says Midi is just a "transitional product" for the Chinese market, and the company "will definitely replace it with an upgraded product by 2015".

Zhao declines to give more details about the new model, but voices confidence about the future of electric cars.

"Compared with foreign competitors, Chinese brands have accumulated a bit more experience in electric-vehicle development, so we are not starting from nothing."

Last year the State Council's plan for new-energy vehicles called for the country to produce 2 million electric and plug-in hybrid vehicles by 2020, and the market should have 5 million electric vehicles on the road by then.

That plan has excited many Chinese automakers who are eager to retrieve the ground lost to foreign brands in the field of conventional vehicles.

But some industry veterans are skeptical about this grand plan. John Zeng, the Asia-Pacific director of LMC, says individual purchase is not viable in China because 70-80 percent of customers are first-time car buyers, who are highly unlikely to buy a novel electric model.

"Even the most mature electric models such as Chevy Volt and Nissan Leaf have not found a successful business model, but rely heavily on government subsidies," Zheng says.

"Telsa seems to have found a feasible way to sell its cars, but it is more of a premium sports car than an electric vehicle designed for the public."

An intermediate Telsa model is priced at $67,400 (52,174 euros), about what you would pay for an Audi A6 in the US.

"I'll bet that eventually the government will sell these electric vehicles to taxi companies or government departments, but not the public, as it had hoped," Zeng says.

wangchao@chinadaily.com.cn

(China Daily USA 06/12/2013 page15)