EV growth lead by China thanks to subsidies

According to a media report, China expects 2 million EV sales by 2020 and is targeting 7 million sales by 2025. One of the reasons behind the growth in EV sales is government subsidies.

An average subsidy of US$ 10,000 is offered per EV in China. The expenditure on the subsidies would total US$ 20 billion in 2020 and US$ 70 billion in 2025. In congested cites like Beijing, local authorities restrict the number of car sales to 3,000 every month, however EVs are exempt. Other subsidies include increased access to carpool lanes.

At present, China is the largest electric vehicle market with total sales over 4 times the number of EVs sold in USA. In 2017 alone, 7,70,000 EVs were manufactured and sold in the country, an increase of 53% compared to the 2016 numbers. Not just cars, but electric bus sales also increased from 1,000 units in 2011 to 1,32,000 units in 2016. Currently, over 99% of the world's 3,52,000 e-buses are in China, with over 30 companies making them locally.

Earlier this year, China announced removal of foreign investment cap for carmakers, beginning with electric and hybrid manufacturers from 2018.

Last year, the country announced phasing out of internal combustion engines in the future along with an emission cap and credit-based system for car makers. The new rules, which are expected to come in to force by 2019 are designed to improve fuel efficiency of conventional vehicles and promote EV development. As per the rules, automobile manufacturers selling more than 30,000 cars will have to achieve a corporate average fuel economy (CAFE) of 14.86 km/l by 2020 and 19.29 km/l by 2025. Companies that fail to meet these norms will need to buy positive credits from other companies or cut down the production of fossil fuel-powered cars.

Source: Forbes