Despite Pollution, China Still Isn't Committed To Electric Cars

The images have made for grim viewing even if you don't live within the frame: Pictures and details emerging from China earlier this year showed smog on levels not previously recorded.

Streets were choked and people were strongly advised to stay indoors, and avoid any sort of activity that might see you breathing in greater quantities of the dirty air.

And yet, despite scenes such as these, that greenest of transport options, the electric car, is faring particularly poorly in China.

According to China Daily, the country's Association of Automobile Manufacturers said only 3,000 electric vehicles were sold there in the first three quarters of 2012. That's little more in total than Chevrolet sold Volt plugins in some individual months in 2012, in the U.S.

So why, in a country whose cities are choked by smog, is the electric car doing so poorly in China?

Familiar issues

To an extent, Chinese consumers are rejecting electric cars on the same grounds that their counterparts all over the world are skeptical about them.

Price is the number one concern. Despite China's increasing economy, the average electric car is still significantly more expensive than its regular gasoline counterpart, and consumers looking for a quick return, within the typical ownership period, aren't seeing the benefits.

That's despite some huge discounts and perks, in some areas of China. In Beijing, the city has started offering free license plates and a massive $19,000 rebate on electric cars in an effort to encourage sales. As a fairly recent move it isn't clear how significantly this has impacted sales, but such a deal in any other country would have electric cars flying off the forecourts.

Part of the price issue is down to China's high import taxes, making imported products like batteries expensive, even when used in domestic electric vehicles.

Venucia E30 (Chinese version of Nissan Leaf electric car), Guangzhou Auto Show [photo: ChinaAutoWeb]

Will Chinese firm Wanxiang Group's recent purchase of American battery firm A123 Systems see this change? We'll have to wait and see.

The next reason for China's slow electric car sales is also familiar--lifestyle changes. Existing electric car owners are finding that they might not be making as many compromizes as they initially suspected (and indeed, have the joy of never stopping at a gas station on the way to anywhere) but it takes a leap of faith for most drivers to realize this.

Tim Dunne, director of Asia-Pacific market intelligence at consumer-research firm JD Power and Associates, explains the thought process of many potential buyers.

"It sounds great, recharging half the battery while having lunch... but at the same time, I can drive my car to my local filling station and in five minutes I can put in enough fuel to run it for a week. If you only have five minutes before you've got to pick up your son or daughter from baseball or ballet, then you've got a challenge."

Beijing smog

Green benefits and the increasing proliferation of more economical conventional cars is also having an effect. Coupled with China's relative paucity of electric car charging stations, it makes for a customer base unsure of whether an electric car really offers all the benefits its makers say.

That's particularly true of green benefits, in a country where its electricity generation is part of the pollution problem. Recent figures showed China is second only to India in the pollution and emissions produced by electricity generation. An electric car may be cleaner locally than a conventional vehicle, but if that out-sourced energy generation pushes a cloud of smog over your city every few days, it's not as easy to appreciate the benefits.

A study from Carnegie Mellon University cited by JD Power's Dunne also suggests the emissions cost of a Tesla Model S battery is greater than for the production of a whole regular vehicle--though we'd also point out that production is still a smaller proportion of a car's total impact than usage.

You'll probably be familiar with stressing that point to your electric car skeptic friends--which illustrates how difficult it is to break some of the myths around electric cars. Now try breaking those myths for a country of over one billion people...

Growth for green

The final obstacle is, to a degree, more specifc to China.

The country's economy is growing at a large rate, albeit a rate which is slowing down. The challenge is to convince China and the Chinese to trade some of that growth more more environmentally friendly practices.

"The Chinese government and its leadership are well aware of the challenges with air pollution-- [but] they are now having goods and services that were not available 10 to 20 years ago. People are reluctant to give those up" explains Dunne.

Unusually, China Daily reports that Tesla announced the opening of its first Chinese dealership at the Detroit Auto Show in January. For a company just getting into its stride with selling cars in its home market, it seems odd Tesla is taking the risk to expand into a market unsure of electric cars.

Perhaps Tesla knows something the rest of us don't--but we suspect China's growing demand for luxury products may have something to do with it.

A Nissan Leaf is simply a mode of transportation powered by electricity. But Tesla's approach to tackling other luxury vehicles head-on--and offering a more useful driving range in the process--could be more attractive to the sort of customers able to afford a new Model S.

One thing is for sure--whether Tesla is successful in China or not, the country itself has its work cut out to meet a self-imposed target of half a million annual electric car sales by the end of 2015--or its target of five million a decade after that.

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