China’s government is taking the electric car market really, really seriously

Photo credit: Wendell Oskay

When it comes to electric vehicles (EVs), China’s government isn’t leaving anything to chance. Although the market for EVs in China grew 400 percent in 2015, China’s State Council announced plans to ramp development up further with five new measures designed to support the burgeoning industry:

1. To promote research and engineering breakthroughs in the field, China’s government will provide financial rewards to companies that break government-set milestones for things like battery capacity or even unit sales.
2. To promote EV charging infrastructure buildout, the government will invest in and financially support local projects relating to charging infrastructure like charging stations, and encourage local governments to offer subsidies for building charging stations and reducing charging fees.
3. To raise the proportion of public transit and logistics vehicles that are powered by electric, the central government will encourage local governments and public institutions to raise the percentage of electric vehicles they buy above 50 percent.
4. To raise the quality of electric vehicles on the market, the government will strengthen industry oversight, promote the development of internet-linked EVs, and create systems for punitive fines and market recalls.
5. To perfect the system of fiscal subsidies and government support, the government will create an investment return mechanism, encourage investors to get involved with charging infrastructure operations, car rentals, battery recycling, and other industry services.

As is typical of these sorts of pronouncements, we don’t have many specific details yet. How effective these policies are could depend a lot on (for example) how large the rewards are for companies that hit the government’s R&D breakthrough targets.

But there’s no doubt that China’s government is taking the move towards electric vehicles very seriously. That could be good news for foreign electric vehicle companies like Tesla, but it’s likely that most of China’s pro-EV policies will be structured to favor domestic companies, and there is no shortage of those. Many of China’s internet companies are getting in on the EV action, and just last week we saw internet firm LeEco partner with British automaker Aston Martin for a joint venture that will see the two of them producing high-end electric vehicles.

As to why the government is so invested in the switch to electric vehicles, there are a number of reasons. But the two biggest are likely China’s extremely serious pollution problems and the desire for China to be at the forefront of what’s likely to be a crucially important global industry.