Navigant Research Blog

China’s PEV Market Shows Signs of Life

— October 12, 2015

China is taking its new plug-in electric vehicle (PEV) market strength seriously, weighing policies that would increase availability of charging equipment both in homes and in public to support growing PEV demand. The Chinese PEV market has suffered from a failure to launch, as sales of PEVs have been dramatically lower than both government officials and many automotive industry analysts had projected. Government interest in PEVs in the country is driven both by the desire to put less polluting vehicles onto the country’s increasingly congested streets and the desire to promote domestic industry. However, these twin goals have often worked at cross purposes. The Chinese government set aggressive goals for penetration of new energy vehicles—including pure battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs)—among its light duty vehicle sales. The national government set a target to have 500,000 new energy vehicles in use by 2015 and 5 million in use by 2020. To spur the market, the federal government offered subsidies for BEVs and PHEVs, and these subsidies have curiously tapered down as PEV sales fell far short of the level needed to reach the goal of 500,000 vehicles by 2015. The subsidy was approximately $8,600 for a BEV in 2015 (down from around $9,400 in 2014), and $3,900 for PHEVs (down from $5,500). Additional subsidies are available at the provincial and city level in many parts of China.

However, these subsidies are restricted to domestically produced PEVs. While this policy was designed to support the domestic industry, it left the Chinese PEV market lagging behind other car markets where American, Japanese, and European PEVs were available. The Chinese OEMs have been slow to bring out their PEV models, leaving the market supply constrained.

Infrastructure Deployment the Next Step

The market is, however, starting to turn around. An influx of domestically produced PEV models have finally made it to market, and PEV sales reached 108,654 in the first 8 months of 2015, a 270% increase over the same period last year. A number of foreign automakers have been working on joint ventures with Chinese automakers for many years, and while many remain cautious, these recent signs of life have been encouraging.

The Chinese government may now be looking to build on this success by spurring infrastructure deployment. In a recent meeting with government ministers, Chinese Premier Li Keqiang shared that the government wants all new residential housing and at least 10% of public buildings and parking lots to be equipped for PEV charging. It is not yet clear how the government will pursue this target, but China is set to release its 13th Five-Year Plan in October and is reportedly making infrastructure deployment a top priority. It remains to be seen whether this will take the form of soft measures, such as incentives, grants, or mandates similar to Russia’s recent decision requiring all gas stations to be equipped with EV charging (the PEV market in Russia has stalled, so the need for widespread charging is unclear). Such a mandate will likely lead to poor implementation and inadequately maintained equipment; China would do better to set aggressive targets and match them to areas where PEVs are most likely to be sold. The country could also offer incentives for deployment and create requirements that new builds have the appropriate wiring and power for PEV stations to be deployed as needed.


Carsharing Consolidation and Diversification

— October 7, 2015

When carsharing began in the 1980s and 1990s, it was seen as a sustainable alternative to the dependence on private cars in developed economies like Europe and North America. The concept was viewed—much like carpooling—as appealing to a small niche of environmentally conscious drivers. The market was also pioneered by people committed to the sustainability cause. The carsharing services that sprung up in European and North American cities tended to be local businesses with strong ties to the community. In the 2000s, the market took a leap forward after the launch of Zipcar in the United States. After it rapidly became the biggest carshare company (in terms of membership), Zipcar furthered its reach by merging or acquiring other services—most notably through merging with the other big player in the U.S. market, Flexcar, in 2007.

Today, the carsharing industry is now a major global business, albeit one that is still more popular in North America and Europe. Navigant Research estimates that there will be around 4.7 million carsharing service members worldwide by the end of 2015 and that global membership will grow to almost 24 million by 2024. The market landscape looks quite different than it did in its early days, with more large players like Zipcar accounting for significant shares of global membership. Zipcar is estimated to have around 900,000 members, while Daimler’s car2go service reports having 1 million members. Socar, a service in South Korea, has stated a gain of 600,000 members since opening in 2012, and a Tokyo-based service called Times Car PLUS reports around 430,000 members. Large auto companies have increased their interest in the carsharing market in part because of these numbers. Zipcar was acquired by Avis in 2013; automakers Daimler and BMW are now running carshare programs; Time Car PLUS is run by a large parking lot company; and French conglomerate Bollore launched a successful Parisian carshare service, Autolib’, and has since opened services in London and Indianapolis. Another successful South Korean carshare company, CityCar, is operated by a subsidiary of LG.

Is Bigger Going to Be Better?

Consolidation has been a trend for carsharing recently; Zipcar acquired several smaller companies in Europe and the United States, and rental car company Enterprise acquired the United Kingdom’s largest independent carsharing company, City Car Club. But this market still has plenty of small, local players and will continue to support such services. Small players are more likely to remain in the round-trip carshare service model, however, as the recent trend has been toward more one-way services like car2go and Autolib’. A one-way service requires a larger fleet of vehicles deployed upfront, and thus is more likely to attract larger companies that can afford this investment. Navigant Research also expects to see more large companies acquiring smaller competitors as a means to expand market share. But the market is not likely to move to just a handful of large companies, as small, localized carshare services are banding together to strengthen market position. Although large carshare companies will represent a significant chunk of membership numbers, the market over the next decade will continue to support both large and small operations.


Uber vs. Everyone

— September 17, 2015

Corporate_Restructuring_webRide hailing service Uber has continued on its tremendous growth trajectory in 2015, with the service now available in around 300 cities throughout 60 countries. That geographic spread easily eclipses any competitors in the space, which are more likely to be localized services, although it is likely that Uber’s success helps many competitors by increasing demand for ride hailing services overall.

But its enormous success has also made Uber an enormous target. Stories of Uber’s battles with city officials, taxi and livery companies, and regulators pop up daily in the news. It’s not surprising, given that ride hailing is so disruptive to the existing order of livery services and the long-established relationship these services have had with regulators. The biggest battle for ride hailing is over whether these companies must comply with regulations governing taxi services in each of the cities where they operate. Stories of regulators clashing with Uber are well-known, especially in cases where the company was banned outright. However, the impact that ride hailing has on traffic congestion and on the use of other mobility modes is a critical area of concern for cities. For example, New York City Mayor Bill de Blasio recently accused Uber of exacerbating congestion in Manhattan, based on an analysis showing that traffic speeds had decreased between 2010 and 2014.

Increasing Costs

Right now, it seems unlikely that the ride hailing genie can be put back in the bottle. Too many people have come to rely on the service, and it’s not just the expected demographic of those 30 or younger. What seems more likely is not that Uber or other ride hailing services will disappear, but that it will face ever increasing costs doing business. This is especially true for Uber. Having so many geographic markets means grappling with different regulations in each one, as well as dealing with different business cultures. In Germany, for example, the company launched a new service with drivers who have commercial driver’s licenses after Germany banned Uber for using private, non-licensed drivers. In Philadelphia, the city’s parking authority imposed a $300,000 fine on Uber for operating illegally in the city, although the state’s public utility commission had earlier indicated the company was operating legally. These kinds of costs will only increase in cities where Uber already operates and as the company continues to expand.

More Data, Please

Another likely outcome will be a demand for more analysis of ride hailing’s impacts on vehicle miles traveled, on congestion, and on the use of alternative modes of transportation. For example, an analysis of New York City traffic speed data came to the conclusion that ride hailing apps were not correlated with lower traffic speeds. Ride hailing companies will be increasingly pressed to supply data to help generate high-quality, objective analysis. This analysis is crucial to understand how ride hailing apps fit in to the new urban mobility landscape, and whether they support policymakers’ goals to reduce congestion.


Automotive Mapping: A New Digital World

— September 15, 2015


German automakers Audi, BMW, and Daimler have announced plans to acquire Nokia’s mapping service HERE in a move that seems part of the continued blending of the automotive and digital worlds. HERE is one of a handful of companies that supplies mapping data to a wide range of end users, competing with Google Maps and TomTom. HERE’s strengths lie in the automotive sector, as its service is the most often used in vehicle navigation systems.

It may be that the automakers simply want to secure the availability of this mapping service to ensure that Google Maps won’t be the only game in town. The same could be said for another interested party in the HERE sale: Uber, which has recently acquired mapping expertise and intellectual property from Microsoft. This was seen as partly a defensive move. It appears that Uber is trying to position itself away from Google, which has been signaling through its investment through Google Ventures a desire to launch its own ride hailing app that could compete with Uber. But Uber has also expressed an interest in autonomous vehicle technologies, declaring to Tesla that it would be prepared to buy a fleet of autonomous electric vehicles. As Navigant Research has discussed, high-quality mapping is critical to the autonomous vehicle sector.

Meanwhile, Apple has continued to make moves that suggest it may launch an electric vehicle of its own. After reports in early 2015 hinted that the company was building an electric van, speculation have only increased when the company moved to hire a former quality control executive from Fiat Chrysler Automobiles and to use BMW’s i3 electric vehicles in a trial project.

Blurred Lines

This brings us back to the story of Audi, BMW, and Daimler acquiring HERE. All of these activities demonstrate that the digital and physical worlds are now fully integrated within auto manufacturing, and that the lines between these industries will continue to blur. Auto companies are now well-established in Silicon Valley, and it is apparent to the OEMs that they will have to be more than just car manufacturers in the future, but also mobility providers. German automakers are especially far along in this realization. BMW, for example, has its own smart parking app and carsharing business. Indeed, most automakers are exploring some of these new mobility concepts. Ford’s 25 global mobility experiments include vehicle sharing, carsharing, and smart parking services, while Toyota has its electric vehicle carsharing trial programs. Other OEMs are also launching carsharing services, developments that will be discussed in Navigant Research’s upcoming Carsharing Programs report.

Acquiring mapping expertise plays into the shift from automakers to total mobility providers. What will be interesting to watch is how daring the auto companies are prepared to be in making this transition. So far, much of the OEM activity is labeled as a trial, indicating that some OEMs are still unsure about the real value of these new services. Indeed, some of the services may well be low revenue generators, but they can help automakers stake out their role in the new urban mobility landscape. This is especially the case in the mature and highly regulated car markets of North America and Western Europe, where private cars will be just one more mobility tool among many.


Blog Articles

Most Recent

By Date


Clean Transportation, Electric Vehicles, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Transportation Practice, Smart Transportation Program, Utility Innovations

By Author

{"userID":"","pageName":"Lisa Jerram","path":"\/author\/lisajerram","date":"11\/25\/2015"}