Australia debates value of electric vehicles while China pushes ahead
Sydney Morning Herald, 27 January 2018
When Hong Dan, 26, bought her first car six months ago, the choice to go electric was simple. First, in pollution-conscious Beijing, getting a licence plate for an electric car is easier than a petrol car.
Beijing’s annual quota for conventional tail-pipe licence plates was more than halved this year, from 90,000 to 40,000, and the capital is among seven major Chinese cities to restrict conventional licence plates. Would-be drivers wait years in an annual lottery.
Those willing to get behind the wheel of an electric vehicle wait just a few months, with 60,000 plates on offer.
Once she had the plates, Ms Dan went shopping. Government subsidies brought the price of her zippy white car with electric blue hub caps down to 70,000 Chinese yuan ($A13,800).
On Thursday night, she left her car charging at an underground parking station while she went to dinner at a nearby restaurant with friends.
“I will pay 30 Chinese yuan (about $A6) and the car will run for 200 kilometres,” she said, paying the State Grid charging machine with a mobile phone App.
“It is cheaper to run than a conventional car, but the problem is I can’t drive far.”
The car gets her to work and back.
China is the world’s biggest electric vehicle market. It has the most cars on the road (1.38 million), the biggest range of electric vehicle manufacturers, and the biggest charging network of 450,000 charging points (almost half of which are publicly accessible).
In Australia, the Turnbull government is debating the merits of electric cars, with conservative Liberal and National politicians pushing back against the suggestion of government subsidies while complaining about the impact on fuel tax excise and the environmental cost of electric vehicles if they are charged using coal fired electricity. Meanwhile China is simply getting on with converting its enormous fleet.
At Beijing’s largest electric vehicle charging station, underneath the ancient hutong neighbourhood of Qianmen, around 100 electric vehicles glide silently in and out to charge up each day, the parking attendant says.
Taxi driver, Mr Tian, is resting as he waits an hour for his new Beijing Electric Vehicle EU400 to get from 30 to 80 per cent charge. He has to charge every three to four hours while working Beijing’s streets, but says there are plenty of charging stations around and the cost of running the taxi has dropped significantly.
“The performance is better. There are fewer components so fewer problems and it is more convenient to maintain,” he says.
In the parking bay next to him, Mr Zhang, 35, is watching a movie on his mobile phone while he waits to charge a four-year-old electric car. He complains its range of 200 kilometres drops to 150 kilometres in winter because the lithium battery doesn’t like the cold.
In 2017, 652,000 plug-in battery cars were sold in China, up 59 per cent, or almost half of worldwide sales. Chinese electric vehicle sales are expected to grow another 40 per cent this year, to 1 million vehicles.
But the Chinese government wants to go further, with a goal of 5 million electric vehicles to be produced domestically each year by 2020.
Anders Hove, a Beijing-based energy researcher with Columbia University, says the three goals of China’s electric vehicle policy are: an “industrial strategy to dominate an emerging industry”; reduce oil imports because China has replaced the US as the largest oil importing country; and improve public health in urban areas by reducing human exposure to tailpipe emissions and secondary pollutants.
Generous government subsidies kick-started the market in 2010. But as cheaply-made electric vehicles now abound, subsidies are being wound back.
National Energy Administration deputy director Liu Baohua said at a conference last week that subsidies will be phased out because they have been a factor in poor manufacturing quality in the low end of the market.
Automotive journalist Qiu Kaijun, who writes about electric vehicles for social media, said chasing subsidies had even led to fraud and forgery. “The authority has punished 12 carmakers, and put some guys in jail,” he said.
This year, subsidies will only be available for electric vehicles with a driving range of 300 kilometres or more, the most efficient vehicles, and those with better batteries.
The Beijing Electric Vehicle EU400, with a driving range of 460 kilometres, is on sale in a dealer’s yard on the outskirts of the city for 135,000 Chinese yuan after government subsidy, a 90,000 yuan discount.
Subsidies will be cut off completely in 2020.
Qiu says electric vehicles have “three years to catch up” with internal combustion engine cars, by which time the gap in range, price and charging time will be smaller than now.
Two big new government incentives will fill the subsidies gap.
The Chinese government recently said it will ban petrol and diesel cars in the future, but unlike Britain and France, didn’t give a date.
More pressing for the traditional car industry, China will impose a new rule from 2019 that any carmaker producing or importing more than 30,000 cars must ensure 10 per cent are electric vehicles.
The minimum quota rises to 12 per cent from 2020. Carmakers can buy credits from competitors if they can’t meet the electric vehicle quota.
The move by world’s largest car market to mandate electric vehicles could have worldwide repercussions in lowering the cost of electric vehicles through mass production.
Volkswagen and Anhui Jianghua Automobile Group (JAC Motors) have said they will jointly develop 40 models of electric car by 2025. A senior executive of JAC Motors said a Chinese brand would be developed, made in Anhui, and exported worldwide.
While Tesla showrooms and charging stations are prominent in downtown Beijing, and Tesla will build its first offshore assembly plant in Shanghai, the premium market here is dominated by Chinese companies.
The Arc Fox is the premium brand from Beijing Electric Vehicle (BJEV), which announced a $4.5 billion plan on Monday to list on the stock exchange.
Spanish designer Walter de Silva, the former head of design for Volvo, was hired to design ArcFox models.
In a showroom in trendy Sanlitun, university students Li Peng and Li Hong Bo, were getting behind the wheel of the ArcFox Lite. It has three 8 inch TV screens inside to watch movies, and an LED strip on the outside of the car to emit emoticons to the world.
There are 1000 customisations available, and the car will be delivered within two months of being ordered online.
The students say most government work units have electric charging stations now, so their first car will almost certainly be electric.
The salesman says most ArcFox customers are young and wealthy, fashion conscious and interested in technology.
The showroom is styled as a hipster cafe, with the ArcFox-7 sports car, powered by three electric motors and capable of speeds up to 260 km/h, parked next to a table football game, or foosball.
BJEV sales doubled to 103,199 last year. Its major Chinese rival BYD, backed by Warren Buffett, sold slightly more, and will open an assembly plant for electric trucks in Canada this year.
Analyst Yu Zhang of Automotive Foresight says China is the largest car market in the world, with 29 million new cars on the road each year, so Chinese demand for electric vehicles will dominate the decision-making of traditional car makers.
The market is split between the extremes of the “super mini” electric cars driven by villagers and costing 50,000 Chinese yuan after subsidy, and the luxury “toys” for city drivers such as the Tesla that can cost 700,00 yuan.
For a farmer charging in their own yard with a free charging machine, the product can be “affordable and good enough”.
But city consumers “are not satisfied with the product. They want better quality and longer driving range. But for this, the price is outrageous.”
Traditional car makers looking to move into China’s electric vehicle market are eyeing this middle segment of consumers who are seeking “acceptable design and quality, and acceptable driving range” for around 200,000 yuan.
He expects the driving range problem to be resolved in three years, as battery technology improves.
If the Australian government wants to encourage electric vehicles it “should have subsidies at the beginning, but with a firm plan to phase it out. Otherwise car manufacturers will wait and won’t control their costs”, says Zhang.
Hove says there are simpler things governments can do to encourage electric vehicles that don’t involve subsidies – converting parking spaces for electric vehicle charging and making them available for booking on Apps, for example.
Hove says traditional car manufacturers will meet the Chinese government quotas in 2019 by designing “compliance cars” specific to the Chinese market.
“The real effect on international electric vehicle markets is falling battery manufacturing costs. China will dominate EV battery manufacturing, whether or not the cars themselves … are made in China,” he says.
China produces two-thirds of the global supply of batteries for electric vehicles. The boom in electric vehicles is driving Chinese companies, including auto maker Great Wall Motor, to invest in Western Australia’s lithium mines.
Greenpeace’s China energy analyst Lauri Myllyvirta says the energy source used to charge an electric vehicle has a “tremendous impact” on emissions if charged using coal-fired power.
But he says China is rapidly shifting to green energy in the power sector.
“The share of coal in the electricity mix is on track to fall below 50 per cent by 2030, which is the earliest that you could expect a substantial share of the car fleet to be electric,” says Myllyvirta.
“The popular simplification that China’s power generation comes almost exclusively from coal is no longer true, and emissions from manufacturing and charging an EV – as well as from manufacturing a gasoline car — are falling at a significant rate in China.”