Cleantech Market Intelligence
Why China Will Lead in EVs
Former VW Chairman Carl Hahn told a group at the Seoul Forum that China has the capability to dominate the electric vehicle (EV) market. This did not come as a surprise, not only because many Chinese manufacturers are pushing EVs to market, but also because there have been others in the auto industry who have been stating this possibility. GM’s European president Nick Reilly made a similar statement in late June. Pike Research’s analysis also points to strong Chinese sales, with Chinese EV sales topping North America and Western Europe EV combined sales by 2015.
There are several reasons that many are bullish on China’s EV market. The Chinese government has been fully supporting the efforts of manufacturers through subsidies, research funding, and big lines of credit. Battery manufacturers in China are already among the most affordable (though some may argue that this is at the expense of quality for many manufacturers). Finally, there is a vast array of Chinese car manufacturers are pursuing “green” vehicle technology, as the government clamps down on emissions in the largest cities.
Another reason to expect fast growing Chinese demand for EVs is often overlooked. That is the fact that many Chinese consumers are already accustomed to plugging in their vehicles. The huge electric bicycle and motorcycle market in China has many customers already with a mindset to understand range limitations, recharging their vehicles, and they have already made these small electric two-wheel vehicles work with their lifestyles. As consumers become more affluent and look to switch from two-wheeled transportation to cars, the switch to EVs can be expected to be a comfortable one for many consumers. Most consumers in the United States and European countries are likely to require more education as the mass market is likely less comfortable with the concept of shorter ranges and having to plug in a vehicle.
While it can be argued that demand will be limited by a lack of charging stations in China for EV cars, this is changing. Rapidly. Companies like ECOtality are committing to build recharging infrastructure in China, and Chinese utilities are currently installing recharging stations in 13 provinces. The Chinese government is providing substantial subsidies for not only recharging infrastructure, but also EV purchases.
China became the largest vehicle market in 2009, and it should not therefore come as any surprise that it would also lead in EVs. The combined economic force of the Chinese government and growing manufacturers, the openness of mass-market consumers to considering EVs, and low cost batteries are likely to help propel the Chinese EV market well ahead of either the North America or European retail markets.