China: Central govt gives a jolt to new-energy auto industry

Auto industry experts expect sales of new-energy vehicles, which have been rising as of late, will surge after China prioritized promoting the industry in its next five-year plan.

The Central Committee of the Communist Party of China approved a document that emphasizes boosting technological innovations in the manufacturing of new-energy vehicles and promoting the use of electric cars, plug-in hybrids and fuel cell vehicles and which will be drafted into China’s 13th Five-Year Plan (2016-2020).

Consulting firm PwC estimates the sales of new-energy vehicles in China will rocket to 1.4 million units by 2020, about 20 times the total number of sales in 2014, and about 3.75 million units by 2025.

Statistics from the China Association of Automobile Manufacturers show that less than 140,000 units were sold in the first nine months of this year.

“The Chinese market has been growing significantly since 2014. We predict that the next five to 10 years will be an important phase for the industry,” said Jin Jun, a PwC China advisory partner.

He said one important driving force behind the industry’s momentum is the government’s favorable policies.

In late September, the State Council gave orders that local governments shall not restrict the sales or use of new-energy autos.

That same month, it issued a document that aims to improve battery charging networks and infrastructure. Inadequate charging stations have been seen as a major hurdle to the sales of new-energy vehicles in China.

According to the State Council document, China will finish building a charging network that can meet the demands of 5 million electric cars and plug-in hybrids by the end of 2020.

The document also stipulates that all parking lots at newly built apartments must offer charging facilities or ensure that such facilities can be installed later. Additionally, 10 percent of public parking lots must be able to install charging facilities.

BJEV, the new-energy vehicle arm of Beijing Automotive Industry Corp, is planning to build 10,000 charging posts in the capital by the end of this year, as reported by Beijing Suburbs Daily.

Shanghai Automotive Industry Corp said it has established a company called Anyue, which is dedicated to building and operating charging posts. Anyue plans to build 50,000 charging posts nationwide by 2020.

In early September, LeTV, a Beijing-based Internet company, invested in a new-energy vehicle charging station producer, Beijing Dianzhuang Technology Co.

The startup has set up five centers across China and built charging stations in more than 30 cities, including Beijing, Shanghai, Guangzhou and Chengdu.

Shenzhen-based telecom maker ZTE is working on wireless charging. Chinese reports said the technology has been put into use in several cities and ZTE will invest another 350 million yuan ($55.1 million) on the technology over the next two years.

Easier access to charging infrastructure will help the demand shift from public transportation to private passenger cars, said Wilson Liu, automotive industry leader of PwC China.

He estimates China will have the largest charging network worldwide by 2025.

Experts also expect China to step up its research and development in the new-energy vehicle industry.

Ouyang Minggao, a professor at the department of automotive engineering at Tsinghua University, said battery and power management, electric motors, plug-in hybrid systems, fuel cell systems and smart electric cars will be among the R&D priorities over the next five years.

PwC said new business models will also help promote the industry’s development, like Daimler’s car-sharing program and BMW Brilliance’s lease plan for its electric car Zinoro.

“This will be another boost to the new-energy vehicle industry. We expect this will lead to a range of promotions. For instance, we anticipate leasing will be popular, at least in the short term,” said Jin.

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