Turning to electric cars to ease pollution woes

Breakneck economic growth and widescale urbanisation of recent years has transformed China into the world's biggest emitter of greenhouse gases, and choking pollution has seen a major push by city authorities to cut emissions from car exhausts and reduce reliance on fossil fuels.

The Chinese government is particularly interested in electric vehicles and has introduced various schemes, including tax exemptions and subsidies for car purchases, to try to encourage more use of electric cars, and plans to have five million electric vehicles on the road by 2020.

It has offered subsidies for electric cars that have been developed locally and has introduced a requirement for government organisations to buy more new energy cars – electric cars are targeted to make up at least 30 per cent of government vehicle purchases by 2016.

Four years ago the municipality of Beijing started offering 60,000 yuan (€7,402) handouts to buyers of electric cars, but, with battery costs high and with vehicle-charging infrastructure poor, electric vehicles are still rare on the streets of the capital.

Reports this week said that China is considering providing as much as 100 billion yuan (€12.34 billion) in government funding to build electric-vehicle charging facilities and boost demand for clean cars.

China’s production of new-energy vehicles surged 280 per cent year on year in the first seven months of this year, largely on the back of government support, and total production in the period was 25,946 units, according to figures from the ministry of industry and information technology.

Production of purely electric passenger cars rose nearly 700 per cent from a year earlier to 13,829 units, while output of plug-in hybrid passenger cars climbed 10-fold to 5,027 units.

In July the government announced that new-energy cars will be exempt from a 10 per cent purchase tax that came into effect yesterday and which will remain in place until the end of 2017.

The problem is still the gaping need for charging infrastructure. Last month a local businessman, Yi Zong, took matters into his own hands and built a chain of electric charging stations in 16 cities along a 5,700km route from Beijing to Guangzhou for his Tesla Model S. He bought the car in the spring but found he couldn’t drive back home to Guangzhou.

So he contacted Tesla and got on social media, asking property owners en route to provide space for an EV charging station.

He donated and installed the chargers in the spaces and mark them on an online map of his “China electric road.” He left it up to the owners of the parking spaces to decide whether to charge fees or offer the service for free.

“If we install at hotels we can handle everything on our own and avoid dealing with property management, power companies and the government,” Zong told Caixin Online. “Seven hours of charging costs the property owners about 30 yuan (€3.70) in electricity. But if the driver has a meal or spends the night at the hotel, this can become a profit model.”

After receiving more than 500 responses to his social-media campaign, he added more conditions: four-star hotel, free parking, locations that were easy to find. He then chose spots in 16 cities.

His maiden voyage was in May, and he attracted huge interest. He was joined by a friend driving a Qin plug-in hybrid from domestic carmaker BYD, which is partially owned by Warren Buffett's Berkshire Hathaway.

“I think I’m the best sales manager Tesla has,” he said. “There was just so much interest along the way. I must have sold at least 150 cars.”

The recharging facilities are spaced between 100km and 400km apart. Zong said the network had cost him about twice what he had paid for his Tesla e-car. A new Tesla Model S costs at least 730,000 yuan (€90,000).

Late last month, BYD reported a 15.5 per cent fall in net profit to 361 million yuan (€44.54 million), but sales volumes its new-energy vehicles were up sixfold to 2.7 billion yuan (€330 million), accounting for about 10 per cent of BYD’s turnover.

In the second half, Wang said BYD would launch the plug-in hybrid SUV model Tang and the Denza electric sedan, which it is developing with the German carmaker Daimler.

The car is expected to retail at 369,000 yuan (€45,500), although it will be eligible for local subsidies in China.