For China’s electric vehicle (EV) industry to take off, each of the industry’s key stakeholders—the government, OEMs, suppliers, and infrastructure players—should consider adopting a different strategy. Based on more than 30 interviews with industry leaders and government policy-makers, this report highlights the possible actions that each party should consider if China hopes to become a global leader in electric vehicle innovation.
Despite initial challenges and setbacks, electric vehicles are here to stay in China. EVs will play a critical role in solving China’s formidable energy security and pollution challenges. And because China lags other markets in internal combustion engine (ICE) technology, EVs offer a unique opportunity for China to compete head-to-head with global automakers not only in China’s domestic auto market, but potentially in global markets as well.
There is no shortcut to battery-electric vehicles (BEVs) – Immature battery technology, underdeveloped supply chains and lack of infrastructure standards are just a few of the barriers that have prevented China’s EV industry from taking off. Our research shows that plug-in hybrid-electric vehicles (PHEVs) could provide the right bridge in the short- to medium-term on the road to a future dominated by BEVs.
The ‘Chinese EV’ may be a range-extended electric vehicle (REEV). Our research shows that REEV (serial PHEV) —an electric vehicle equipped with a small ICE whose sole purpose is to recharge the battery on the move—could be far more cost-efficient and easier to implement for China’s relatively nascent auto industry.
Early adopters will be public fleets. In New York, Tokyo, Berlin or Paris, early EV adopters tend to be similar— either technology “aficionados” or environmentally conscious consumers. In China it is unlikely these segments can drive EV adoption, given the overall immaturity of the market. Instead, early adopters will likely be public fleets that have a clear perspective on an electric vehicle’s total cost of ownership. They will drive key value chain players down the learning curve and pave the way for wider consumer adoption.