Automakers Fear Chinese EV Mandate May Be Unreachable

Auto Shanghai 2017 is a beacon for electrified “new energy vehicle” launches, but automakers fear that Chinese government sales mandates won’t be reachable.

The Shanghai auto show opens Friday and will be a showcase of battery electric and plug-in hybrid electric vehicles offered by global, China-based, and startup automakers. Automakers have been in awe of China’s leading role in plug-in electrified vehicle sales that have been bolstered by generous government subsidies.

But now with Beijing’s proposed rule requiring electric cars to make up a minimum of 8 percent of sales in China as early as next year, automakers are concerned about the penalties of missing that mark.

Consumer taste is heightening their concern. During the first quarter of this year, SUV sales ratcheted up 21 percent over the previous year to 2.4 million units sold; at that same time, new energy vehicles sank 4.4 percent while selling just 55,929 units.

Getting car shoppers convinced of the benefits of electric cars is a tough sell.

“It’s tough for someone with an EV to come and take away market share from SUVs,” said Ben Cavender of China Market Research Group.

Fans of new energy vehicles (NEVs) will have a field day exploring the vehicle displays. Nearly all global and Chinese brand will display an NEV concept and models already for sale. They’ll also show plenty of gasoline engine SUVs and sedans.

General Motors is showing the Buick Velite 5 plug-in hybrid, a revised Chevy Volt. Ford announced earlier this month an all-electric SUV and Mondeo Energi plug-in hybrid for the local market. Audi is launching a battery-powered crossover for a 2019 introduction. Honda will show the futuristic concept car NeuV which make get an electric drivetrain.

Shanghai-based startup NextEv will probably have grandest display of them all with 11 concept vehicles shown through its all-electric NIO brand. That lineup includes the EP9, which the automakers says can hit a top speed of 194 mph.

BYD Auto is the only automaker that can bask in the light of being NEV-focused while seeing strong sales in the China market. Global sales rose 70 percent last year to 100,183 vehicles, making the company the largest electric brand in the world for the second year in a row. Tesla came in second last year at 76,230 vehicles sold.

Other Chinese automakers have been gearing up for NEV sales growth through product introductions and producing them in decent volumes. Sales have been elusive, with several of the majors only selling a few hundred NEVs last year.

Consumers are holding back on mass market sales mainly due to the cost of NEVs being two-to-three times the price of equivalent gasoline models. Government incentives make them competitive, but consumers have a wide range of options to choose from in spending their newfound income including SUVs and luxury models.

Great Wall Motors has become China’s most profitable automaker by making almost nothing but SUVs. The company launched the C30 EV electric compact sedan but has yet to announce when sales will start.

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Range per charge and lack of a charging infrastructure are other issues of concerns to consumers and automakers. Promising up to 120 miles on a charge is asking consumers to spend too much money on too short a distance, industry analysts say.

“The biggest worries for people buying an electric car are lack of convenience for charging and the miserable range most electric cars have,” said Zhang Xin, an independent auto industry analyst.

The government wants to see a charging infrastructure that can support give million NEVs on its roads by 2020. To support that drive, the national government has plans for 100,000 public charging stations and 800,000 private stations in place by next year.

That’s a grand scheme given that there were only a total of 50,000 chargers at beginning of 2016.

The Detroit News