Recharging China’s Electric Vehicle Policy Tao Wang | Oct 30, 2013 Resident Scholar, Energy and Climate Program

About Carnegie-Tsinghua Center The Carnegie Endowment was founded in 1910, and established the Carnegie-Tsinghua Center in 2010 with the International Relations dept. of Tsinghua University “The Global Think Tank” is headquartered in D.C., with five centers in three continents, and an Indian Center coming in 2013 A private, nonprofit organization dedicated to advancing cooperation between nations. Its work is nonpartisan and dedicated to achieving practical results Energy and Climate Program aims to 1) enhance mutual understanding; 2) promote cooperation; 3) provide independent and constructive policy analysis for energy and climate policies

Outline International efforts on Electric Vehicle development Policy comparison among China, Germany and the US Lessons learned in pilot cities Policy recommendations

Benefits from EV Development in China Energy security Environmental Protection Climate Change Mitigation Industrial Growth (leapfrogging in automobile industry)

Global Attention to Electric Vehicles (EVs) Total Investment in Public EV Infrastructure, e ($m) Global EV Sales, 2012 (units) Source: Bloomberg New Energy Finance Source: International Energy Agency

Pilot Cities in China Adapted from China’s Electric Vehicle Policy and Industry Plan, Xu Changming, State Information Center 2010 年 6 月， 6 个私人补贴试点城市： 北京、深圳、上海、杭州、合肥、长春 6 个私人补贴试点城市

Policy Comparison: Targets & Plans ChinaGermanyUS Targets by ,000 BEVs & PHEVsN/A 1 million BEVs by 2015, back off by million BEVs & PHEVs by 2020 with $16 billion investment (EU) 5 million BEVs & PHEVs by 2020 EUR 500 million in R&D funds, 1 million BEVs & PHEVs by 2020 after 2020 N/A 6 million BEVs & PHEVs by 2030, sound electric network in urban area by 2050 N/A Industry development plan Special Plan of EV Technology in 12th Five- year Plan National Electromobility Development Plan. Battery, Electric drive, Smart Grid American Recovery and Reinvestment Act (ARRA ’09). Batteries Energy Saving and New Energy Vehicle Industry Development Plan showcase projects & flagship projects American Clean Energy and Security Act (ACES ’09). Smart-grid technology EV Everywhere & Working Place Charging Challenges. charging stations

Policy Comparison: Incentives ChinaGermanyUS Incentive Mechanisms Purchase subsidiesRoad tax exemption Tax credit for cars and charging stations free electricityCompany car taxationFree parking purchase limit exemption （？） Special parking places and traffic lanes Free registration free installation of charging poles access to bus lanesAccess to HOV lanes Emission-freeEmissions-free Other measures Public procurement of taxi and bus fleets Public procurement plan Low-interest bank creditFleets fuel efficiency Insurance Electric Companies Car Dealers

Policy Comparison: Sales ChinaGermanyAmerica EV Sales in ,800 BEVs & PHEVs (11,400 BEVs) Less than 3,000 BEVs & PHEVs 53,000 BEVs & 473,000 PHEVs Total Car Sales19.3 million6 million14.5 million Percentage0.06%less than 0.1% 0.3% for BEVs 3.3% for PHEVs

Lessons Learned in Pilot Cities Lagged innovation results in an innovation capacity and technology gap Insufficient impetus for Chinese automakers to focus on electric vehicles Lack of infrastructure and incentives to use electric vehicles instead of conventional ones; purchase subsidies not in use Relying too much on public finance support; lack of a sound business model

The government will provide subsidies for public transportation and official vehicles. These subsidies will decrease by about 10% in 2014, and then 20% in 2015  encourage automakers to reduce prices of these vehicles in the longer term In addition, 30% of new vehicles for municipal fleets must be electric. Importantly, 30% of these newly subsidized purchases must be transacted with companies outside of the local region  discourage protectionism

Policy Recommendations: Open up the electric vehicle market to leading international automakers

Policy Recommendations: Promote electric vehicle use in commercial operations with priority

Policy Recommendations: Create an environment that encourages electric vehicle use Average Annual Total Cost of Ownership

Policy Recommendations: Develop a self-sustaining business model

Thank you!