If you listen to the news in the United States, you will hear some people complain about government incentives for electric cars. “Why should my taxes go to letting some liberal egghead buy an electric car? It doesn’t do anything for me,” they say. Hold onto that thought.
You may have read recently about the Wuling Hong Guang MINI EV, an electric mini-car that is selling like crazy in China. Produced by a consortium owned by SAIC, GM, and Wuling, it is proving very popular in smaller Chinese cities. The car starts at just $4,200 (upmarket versions cost more than $5,000!), making it affordable to a whole new category of buyers who never could afford a private vehicle before.
In the southern Chinese city of Liuzhou, 30% of new car sales last were electrics — 5 times the national average — with the MNI EV leading the way. As a result, the city is a quiet zone. “Missing is the incessant noise of throbbing engines and clashing gears that provides the backdrop to daily life in most metropolises around the globe,” says Business Standard.
“At the beginning, people had many concerns about EVs, such as safety or the convenience of charging,” Gou Yi, a deputy chief at Liuzhou’s branch of the National Development and Reform Commission, China’s top economic planner, said in an interview. “What we did was to make sure our citizens felt it’s very comfortable to use EVs. People have realized how economical and easy electric cars are, and how much cleaner our air has become after more and more EVs hit the roads.”
Ah, there’s the connection we teased at the beginning of this story. Even though Liuzhou is an industrial city, the water quality of the Liujiang River that flows through the city was ranked No. 1 among China’s inland rivers last year. Daily air quality was rated excellent about 97% of the time in 2020, compared to just 76% in the capital Beijing.
The upshot is all those EV incentives confer a tangible health benefits on the community from clean water and clean air. Those who rail against incentives might just as well inveigh against public expenditures for airports because they don’t fly or interstate highways because they don’t drive long distances.
A Coordinated System Of EV Incentives
Liuzhou’s main motivation for embracing EVs was to strengthen the local auto industry, which accounts for about half of the city’s industrial output. The strategy worked. Last year, industrial activity related to auto manufacturing surged 64%.
The city began by introducing skeptical residents to electric cars. Joint venture SAIC-GM-Wuling conducted a 10-month ride and drive campaign in 2017. More than 15,000 people took the JV’s Baojun E100 for a spin, providing the company with 12,000 items of feedback. The trial was so popular that available slots ran out within minutes and 70% of test-drivers bought one of the vehicles.
Wuling then studied residents’ needs and driving habits, tailoring the Baojun E100 for a daily commute of less than 30 kilometers (19 miles). The micro-size 2-seater — about half the length of a Tesla Model X and similar in appearance to the Smart car — costs about $5,000. That not only helps lower the bar for ownership, but reduces operating and insurance costs as well.
In a further incentive, drivers can earn cash rewards of up to 1,000 yuan ($160) a year for driving up to 10,000 kilometers. Hua Yong, an official in charge of EV promotion, says he earned 500 yuan the first year he had his EV and 400 yuan the next.
Banker Zhang Jiageng says the cost of using his Baojun E200 is almost unnoticeable. He pays about 0.1 yuan, or 2 cents, per kilometer for charging and gets unlimited free parking at the designated electric vehicle parking lots or two hours free in regular car parks. Zhang says today he barely drives his other car, a Subaru SUV.
“If you make EVs that are affordable and convenient, then they will replace peoples’ bike, scooter or whatever else they might be commuting on,” says Bill Russo, chief executive officer of advisory firm Automobility Ltd. in Shanghai. “Smaller cities in China typically lack public transport options and an affordable EV can extend the range of people in a city by extending the commuting range of residents.”
Steering people toward electric cars without mandates is a challenge, Jochen Siebert, managing director at JSC Automotive in Singapore, tells Business Standard. Authorities in the province of Guangxi, where Liuzhou is located, are anxious to expand the strategy to other cities in the province and across China. “Cities should support the light-weight and small vehicles coming into the city as those vehicles can fit into everywhere and not using too much energy,” Siebert says. “That should be the future.”
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