Recently, the manufacturers of alternative energy vehicle shared their sale performance in 2015. According to China Passenger Cars Association (CPCA), BYD, Zotye Auto, Geely Auto and BAIC Motor ranked top 4 in the list 2015 sale volumes of alternative energy passenger cars. The vehicle types like Kandi-Panda, BAIC Motor-E Series, Zotye Auto-Cloud, Geely Auto-Know beans also had great performance. However, the main manufacturers of alternative energy vehicles were not satisfied with the list.
2015 Top 10 vehicle manufacturers in sale volumes of alternative energy passenger cars
Except for BYD, the cheap and small electric vehicles occupied the top. In fact most of the vehicles are just simply revamped by adding the 3-eletronic system (battery, electrical machinery and electronic control) based on the A0 grade cars. That’s to say, the vehicles are 3-low products with low cost of development, low technology and low price, which has squeezed the development of the new alternative energy vehicles with high cost and high technology.
The cheap and small electric vehicles have become the winners in the China alternative energy vehicles market in 2015. They have occupied 66% in the total sale volumes of 130,000 of domestic battery electric vehicles.
Among the Top10 vehicles, the vehicle types of BAIC Motor, JAC, SAIC and BYD enjoy the highest speed at 120-130 kilometers, according to their official websites, while the hot-selling cheap and small vehicles only have the highest speed at about 80 kilometers.
Though the driving ranges claimed by the cheap and small electric vehicles are over 200 kilometers, in reality, it is difficult for them to reach the driving ranges what they claim due to the decline of the battery.
Excessive subsidies from the Chinese government
In fact, there were many controversies in the market when these small electric vehicles were launched. The qualities of this type of small electric vehicles are considered close to the qualities of low-speed electric vehicles.
It is stated clearly by the Chinese government that: “Till 2015, the highest speed of the pure electric passenger vehicles and plug-in hybrid electric passenger vehicles should not lower than 100 km/h”, according to the Development Plan on Energy Saving and Alternative Energy Vehicle Industry (2012-2020).
However, in the subsidy system, the pure electric passenger vehicles can still get the subsidies with the highest speed at 80 km/h. The small electric vehicles can also receive the 1:1 subsidy from the Chinese government and the local government, with the amount up to about USD9,692 per car.
“It is exactly the 1:1 subsidy policy that why the small electric vehicles occupied the top of the list” stated Stanley Wang, Editor of China Li-ion Battery News.
In fact, the 1:1 subsidy policy means that the local government should give the subsidies to the each electric car manufactured as the same amount as Chinese government gives to the manufacturers.
“The subsidy from the local government is a little bit too much, especially for the small electric vehicles. The subsidy from the Chinese government is already enough to make up the cost difference between the traditional vehicles and electric vehicles” said Stanley.
The subsidy from the Chinese government is calculated according to the battery cost, thus it won’t be too much to all types of vehicles. But with more subsidies from the local government, there is no cost or even negative cost for manufacturing a small electric vehicle.
When looking at the alternative energy vehicle policies in Europe, USA and Japan, their subsidies are mainly used in supporting the enterprises to develop and construct public charging piles. As for personal users, the governments will give priority to them in using the roads and parking spots, also, the governments will cut down a bit of taxes on personal users.
Again back in China, the supporting policies for alternative energy vehicle include subsidies, reduction on taxation and no charge of the license fees, which is much too “encouraging”.
The Chinese government is weakening the subsidy policies
Fortunately, the Chinese government has realized the problem and decided to stop being such “encouraging”.
Actually, the Chinese government began to adjust its policies, according to analysts CCM.
The subsidy policy for alternative energy vehicle for 2016-2020 published in Apr. 2015 showed 2 big directions clearly.
Firstly, the government has increased the entry of subsidy: battery electric passenger vehicles should reach the highest speed of 100km/h with the driving ranges over 100km, which has excluded many small battery electric vehicles with low-speech.
Secondly, the government has decreased the amount of subsidy. Compared to the high subsidy in 2015, the subsidy in 2016 has decreased a lot. The government will lower 20% of the subsidy every 2 years. That is to say. In 2017 and 2018, the subsidy will be 20% lower than that in 2016; in 2019 and 2020, it will be 40% lower than that in 2016.
The latest policy – Incentive Policy for Alternative Energy Vehicle Charging Infrastructure during the 13th Five-year Plan (2016-2020) - published by the Chinese government in Dec. 16 2015 again shows another 2 directions in developing the alternative energy vehicles.
Firstly, the government will increase the subsidy for charging infrastructures. In the past, the encouraging policies were all revolved around the manufacturers and vehicles. The latest policy gave priority to the charging infrastructures and clearly stated that there would be incentive standards for constructing charging infrastructures.
Secondly, the Chinese government will clear up the regional protectionism. The latest policy targets the nationwide. In the past, it mainly focused on Beijing-Tianjin-Hebei Region, Yangtze River Delta and Pearl River Delta.
Now, the Chinese government has made different goals for the air-polluted areas, the central areas and other areas. The areas which promote alternative energy vehicle better will be rewarded accordingly.
Take the air-polluted areas as an example, in 2016, the goal for the area is to promote 30,000 alternative energy vehicles. If it can achieve the goal, the Chinese government will offer a monetary reward about USD13.84 million for constructing the charging infrastructures.
“It is very clear that the Chinese government will stop being so general in the subsidy policies in the alternative energy market” said Stanley.
“It is believed that the Chinese government will be stricter in the inspection of the vehicles in next round of promotion”
“The goal setting is actually putting pressure on different local government” he added.
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