Low-Speed Electric Cars Swamping Full-Speed in China, Now Subject to Regulations

China will soon be regulating low-speed electric cars, a segment dwarfing full-speed “new-energy vehicles” in sales and causing potential safety hazards.

Small electric cars with top speeds under 100 kilometers per hour (62 mph) have taken off in rural areas of China, but they’re considered to be poorly made and powered by polluting lead batteries. They’re becoming a threat to road safety and the environment, the Ministry of Industry and Information Technology said on its website.

Low-speed plug-in electrified vehicles are selling more than regular PEVs manufactured by BYD, Tesla, and other automakers. In China’s Shandong province alone, more than 330,000 of these low-speed PEVs were sold in the first eight months of this year. During the same time, more than 245,000 officially approved new-energy vehicles were delivered across the country, according to auto association data.

The government will review and legalize manufacturers that meet standards currently governing PEV startups. These manufacturers will be regulated under those rules, along with technical specifications for these vehicles. Those companies not meeting the new benchmarks, once enacted, will be closed down, according to the government statement.

“On one hand, low-speed electric cars meet certain short-distance travel demand, while on the other hand products made by the companies that have been producing without permission have poor quality and low safety performance,” the ministry said. “We will continue to work with other government agencies to speed up introduction of relevant regulatory measures and push forward development of the low-speed electric vehicles.”

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A few long-standing low-speed PEV makers are expected to do well, including Shandong Shifeng Group Co. Some startups may be boosted, too, including Chehejia, whose founder Li Xiang started China’s leading car-buying portal Autohome Inc.

“The move will force existing electric vehicle makers to speed up product development and compete for consumers,” said Cui Dongshu, secretary general of the China Passenger Car Association. “It is great news for low-speed electric car makers as they can finally make cars legally.”

Once transitioned over to the auto industry’s current manufacturing and safety guidelines, low-speed PEVs could support the government’s drive to bring more NEVs to Chinese roads. The number of companies allowed to enter the industry and receive production licenses could be limited, which may happen to startup makers of new-energy vehicles.

China’s government is considering limiting the number of startup new-energy vehicle makers to a maximum of 10. Beijing CH-Auto Technology Co. became the latest startup to win an electric car production license this month, following Beijing Electric Vehicle Co. and Hangzhou Changjiang Passenger Vehicle Co.

Bloomberg