Battered by pollution and seeking to cut back on fossil fuel consumption, China is moving into the new energy car business dramatically, with a wave of new policies including lifting purchase restrictions through the usual lottery systems in place in some major cities and removing traffic controls while retaining curbs on fossil fuel-powered ones to stimulate EV sales as well as accelerating construction of electric charging infrastructure.

 

As an indication of the government’s resolve, a commitment to green energy vehicles is to be a major theme of the next Five-Year Plan along with a continued push to clean coal and closure of obsolete, polluting coal-fired plans. These new moves aim to resolve the key issue of lack of charging poles, which the government is working to standardize so that one size fits all. Further green policies are expected from both the national and local governments as well. Pure electric vehicles have gained favor over hybrids. All new residential developments are mandated to have corresponding charging stations to take care of electric vehicles.

 

The entire EV chain, from upstream makers of batteries electric systems to downstream EV makers and charging stations, is expected to benefit, with new energy annual car sales skyrocketing upwards. Annual sales grew at a 123 percent clip between 2011 and 2014 and are expected to rise at a compound annual growth rate of 40 percent through 2020, followed by a 25 percent rate through 2025. Some 136,733 new energy autos were sold in the first three quarters and annual sales are supposed to reach around 200,000 units by year end. To cater to the growing demand, domestic electric or hybrid automakers introduced a full 51 vehicles at the recent Shanghai Auto Show.

 

Fully electric buses have also enjoyed explosive annual growth, of 328 percent over the first nine months of the year to 8,876 units. Sales are expected to advance rapidly given generous purchase and operating subsidies offered by the government. On the foreign front, EV bus contracts have been signed so far in 2015 by the manufacturer BYD in the United Kingdom, Argentina and Malaysia. Chinese brand electric buses will have a presence in both emerging and developed markets.

 

Government policymakers, unnerved by the smog choking almost all of the country’s major cities, have been seeking to formulate other new measures aimed at relieving pressure on the environment. The Shenzhen mayor, Xu Qin, plans to convert all public transport to green vehicles within the next three years. More regions are expected to strengthen their environment-friendly plans in the wake of the State Council’s policy guidance.

 

Existing green car policies should persist in major cities as well. For example, Shanghai is expected to continue offering free license plates in the next year. Tianjin is expected to carry on exemption on electric cars from plate lottery while Wuhan, plagued by noxious air, also needs to maintain its green vehicle policies.

 

The State Council released guidelines on Oct. 9 to build a nationwide charging network and is seeking to push charging infrastructure deployment to outpace electric vehicle expansion. The statement stipulates all new residential parking lots must be equipped with charging facilities, and 10 percent of public parking area must be saved for charging pole installation. By 2020, 12,000 charging stations and 4.5 mn poles are expected to be installed to meet the power demand for five million EVs at most, with 2,000 EVs supported by each charging station.