Cadillac advertises its electric car in Shanghai on May 23, 2023. A female traffic policeman stands below.
Hugo Hu | Getty Images News | beautiful pictures
BEIJING — Electric car subsidies aren’t enough to spur growth in China’s slowing economy.
One of the few detailed stimulus plans Beijing has announced this year is an extension of tax breaks on electric car purchases, according to documents released Wednesday.
The incentives – which are set to expire this year – will now be in effect until the end of 2027.
Authorities expect consumers to save an additional 520 billion yuan ($72.43 billion).
However, the tax cuts do not address the underlying reason why Chinese people are not buying more electric cars: concern about mileage.
Battery charging challenge
Craig Zeng, CFO of online car information and shopping website Autohome, said charging a car battery is still “relatively a hassle”. That’s according to CNBC’s translation of his Mandarin-language remarks.
He’s talking about the electric car market in general.
He pointed out that China’s layout of residential areas means there’s not much private parking and there’s a limit to the number of community chargers that can be installed.
Most people live in apartment blocks in Chinese cities, with some underground parking or in lots around apartment buildings. In the capital, Beijing, having a designated parking space—without a battery charger—can cost almost $100 a month or more than an apartment’s rent.
In such an environment, “after more people buy cars, the issue of battery charging will gradually become more obvious,” said Zeng, noting that the issue will influence the decision to buy an electric car. in everyone’s future.
During Wednesday’s press conference, Chinese officials noted charging problems and called for faster installation of charging infrastructure in residential parking lots – especially in new developments. . That’s according to an official transcript of their review.
Officials point out that the country has rapidly expanded its charging infrastructure over the past seven years, and that in central urban areas, charging stations provide the same coverage as gas stations.
However, China still has a long way to go.
More than 70% of all public fast chargers are located in just 10 provinces, the International Energy Agency said in its report. Electric vehicle prospect report in 2023. That’s only about a third of the country.
Fast charging allows drivers to charge their car batteries in less than an hour, but still takes longer than filling up a gas tank.
The IEA says China remains the global leader in the installation of public fast charging stations – accounting for nearly 90% of the global growth in such charging stations last year.
The growth in electric vehicle sales can only be sustained if charging demand is met by accessible and affordable infrastructure, through private home charging, said the IEA report. either at work or publicly accessible charging stations”.
Wider recession
Driving demand for electric cars also faces challenges from dismal consumer spending.
China’s retail sales in May grew more slowly than expected compared with a year ago.
Auto sales, one of the largest components of retail sales by value, maintained steady year-over-year growth – but fell 8% month-on-month. Many brands also offer discounts This year to promote sales.
Recent meetings of the highest executive body, the State Council, noted the economic challenges and called for further assistance, special for new energy vehicles. But notices and interest rate cut failed to meet market expectations for broader stimulus measures.
“While Beijing could still come up with certain policy measures to stabilize growth in the coming months, the disappointing State Council meeting showed that the stimulus measures have a significant impact on the economy,” he said. may be made gradually, as decision-making is now highly centralized with a focus on ‘security,'” Nomura analysts said in a report on Monday.
Increase market penetration
Analysts still expect growth for electric cars in China, the world’s largest auto market.
China typically lumps electric cars into a broader category known as new energy vehicles, which includes battery-powered cars and hybrid cars.
According to data from the China Passenger Car Association, the penetration of new energy vehicles in total passenger car sales has reached about a third of the market in recent months.
That far exceeds the official target of at least 20% penetration by 2025.
Autohome’s Zeng said he expects the new energy vehicle sales penetration rate to remain between 30% and 40% this year and reach 50% in 2025.
The Chinese government has supported the growth of the domestic new energy vehicle market over the past decade to become a global player in the auto industry.
On the consumer side, cities such as Beijing and Hangzhou have made it easier for motorists to obtain license plates for electric vehicles compared to traditional internal combustion engine vehicles.
