Tag Archives: New Energy Vehicle Program

Making Electric Vehicles Viable

Since 2009 China has been supporting a large-scale pilot market to promote the development of electric-vehicle manufacturing. Initially in ten cities, this is now extended to 25. Electric vehicles are estimated to become a $250 billion market worldwide within 10 years, accounting for one in ten of new vehicle sales by 2020. China is determined to be a leading supplier to this nascent market, committing $15 billion of government funding to develop its industry. The World Bank has just published an initial assessment of the pilot project, outlining some of the challenges that need to be overcome to make electric vehicles a viable commercial market. The main recommendations:

  • Policy momentum: Purchase price subsidies need to be replaced by support for institutional and technology innovation, vehicle-charging infrastructure and manufacturing capacity.
  • Integrated charging: The recharging infrastructure for buses, trucks and taxis needs to be expanded to accommodate private cars. 
  • Common standards: Common, ideally global standards for charging, safety, and battery disposal are needed for both manufacturers and consumers. State Grid, the largest Chinese utility, has established charging standards, but these differ from U.S. and European standards, inhibiting access to global markets.
  • New business models:  Commercially viability must include the cost of charging infrastructure as the industry cannot rely forever on government funding.
  • Customer acceptance: Consumers will only buy electric vehicles if they think them worth the additional cost. Even when lifetime ownership costs become favorable, the initial price of electric vehicles will still be higher than that of conventional vehicles and have a longer payback period.
  • Greenhouse gas (GHG) benefits: Electric vehicles will have significant low GHG emission potential. Longer term, a large electric vehicle fleet also stands to play a role in grid storage which, combined with renewable energy production, can further reduce GHG emissions.

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