Wealthy Nations Daily Update - China Electric/Hybrid Cars

As Volkswagen comes under increasing scrutiny of its diesel cars, Chinese officials have declared they will continue to push ahead with the policy of promoting electric cars as part of its plan to reduce its dependence on fossil fuels and promote the use of clean energy. Answering a question on Friday in Beijing regarding the VW scandal Zheng Shanjie, vice administrator of China’s National Energy Administration, told reporters “The Chinese government has been paying attention to air pollution prevention given that it affects China’s development and economic structural adjustments,” adding “China is now vigorously promoting development of electric vehicles, which is part of our measures on comprehensively addressing the issue.”

This push for electric cars in China is not new. China has spent billions of dollars promoting research and development and the adoption of both electric and hybrid cars. Like the US, in China diesel cars only make up a very small percentage of the domestic car market. The main reason for this was as early as the 1990s, local governments in the larger cities were already restricting the use of diesel in passenger cars due to the worry of poor quality diesel at the time in China increasing pollution. However for all the money spent, it’s only now that the electric car industry is starting to show promising growth. In early 2000s the Chinese Government declared it would have 500,000 electric cars on its roads by 2011. Sadly that didn’t happen, with only 6,000 being sold. As a result of this poor result a new sales target was set of 160,000 cars in 2014 (for both hybrid and all electric cars) with 500,000 sold in 2015 and 5 million by 2020. Although the 2014 target was also missed with over 74,500 cars sold, this was a rise of over 400% from the previous year.

The last 4 months of 2014 are where the corner seems to have been turned with regards to electric vehicles sales. In December 2014 alone 27,000 passenger and commercial electric vehicles were sold, this was almost 30 times higher than January 2014 sales. If this trend was to continue China will become the largest market for these types of cars in 2015. There are 2 main reasons for this sales boom in the last 3rd of 2014. Firstly was the elimination of the vehicle tax on Chinese electric vehicles, which until September of the same year was taxed at 10% of purchase price. Secondly, many municipal governments, Beijing included, now limit the number of new car registrations, however drivers have a far better chance of getting a number plate if the vehicle is electric or a hybrid.