An exciting ride is about to begin

But the electric car industry needs to tackle a few problems to ensure things go smoothly

The electric vehicle industry in China has grown rapidly in recent years, but is still far from fulfilling its potential. That point is illustrated no better than by the fact that several years ago a target was set for the country to have 500,000 electric vehicles on the road by the end of this year, but it is clear that this target cannot possibly be met.

There are many factors that conspire to keep the industry in low gear, and the main ones are as follows.

First, there is a fundamental imbalance in the product lineup. At present, 80 percent of Chinese electric vehicles on the road are public transport vehicles, meaning very few are private cars, which are considered to have the greatest potential for growth in sales.

In addition, most electric vehicles in China are low-end, whereas elsewhere they tend to be aimed at middle and high-end markets. So the fledgling electric car industry in the country needs an urgent transformation that recognizes the importance of these markets.

Second, there is a dearth of core technical know-how. This is holding back systemization and innovation in the Chinese industry, says Qu Guochun, deputy director of the equipment department of the Ministry of Industry and Information Technology. China is fortunate to have the industrial foundation of electric vehicle components such as batteries, electric motors and electrical control system at the low end. But bringing these up to date to suit middle and high-end markets remains to be done.

It should come as no surprise that the lack of high-quality batteries is a considerable impediment to the capability of manufacturing electric vehicles. In a recent survey by a battery manufacturer in more than 20 provinces, 70 percent of respondents said it was the issue of batteries that was the main deterrent to their buying an electric vehicle.

Third, local protectionism due to uneven economic development is a recurring problem as the industry tries to popularize its vehicles. This keeps sales numbers down, which severely undermines any confidence manufacturers may have in the market growing.

Fourth, there is a woeful dearth of adequate support facilities. This includes a paucity of charging posts, a lack of standardization and charging that is at best poorly executed.

The number of charging posts has not kept up with the number of vehicles being sold. Last year there were about 90,000 electric vehicles in China that had to rely on just 723 charging stations and about 37,300 charging posts. At the other end of the spectrum, there are regions in which there is a glut of charging posts, some of which are not even used.

The National Energy Administration has enacted a plan to have 12,000 charging stations built and 4.5 million charging posts installed by 2020. Guidelines on standardization in connectivity were issued in August.

However, if electric vehicles really are to supplant petrol-driven vehicles, the issue of unsatisfactory charging must be dealt with.

In all of these matters, the interests of all stakeholders such as battery makers, carmakers and distributors need to be taken into account. In 2013 most state-run charging stations and charging posts were running at a loss, and in May last year State Grid Co announced that private capital would be introduced in building the stations. Distribution of electricity for the networks of stations would also be open to various forms of investment.

If things are done properly, it would be easy for anyone interested to be involved in the industry in a way that contributes to the rapid development of the industry chain.

With state strategic targets and intensive policy support to the industries, more than 10,000 vehicles were sold in China in 2012, double that number were sold in 2013, and 80,000 were sold last year. The numbers continue to climb, and if they keep up for the next nine weeks, China will officially become the world's biggest market for electric vehicles.

Chinese carmakers, as beneficiaries of government support, a regulated market and an improved industrial base are gradually giving a clearer idea of where they think things are heading and what they plan for the journey ahead.

Lifan Auto, Great Wall Motor, Jianghuai Automobile and BYD have invested a total of 36.5 billion yuan ($5.7 billion; 5.2 billion euros) in technology innovation and supporting programs for electric vehicles.

The high-end model of BYD's electric vehicle, the Zhidou, received European certification in 2012 and has been exported to Europe.

Sales of electric vehicles in China are likely to top 200,000 this year. Next year, the number may well top 500,000.

The current Chinese electric vehicle market features a diversity of participants and foreign capital. The Internet corporate LeTV and the car parts maker Wanxiang have entered the fray.

Traditional domestic motor vehicle brands have taken up leadership positions in the market, too, and foreign capital is beginning to pour in.

One trend already becoming apparent is that there will be fierce rivalry between high-end brands. In 2020, will the current industry leader BYD still be in first place or will it have been overtaken by others? Will more Chinese manufacturers join the race?

Put your seatbelts on for a fascinating ride.

The author is executive deputy director of the Center of Policy Studies for the Automotive Industry in China, Tianjin University.

(China Daily European Weekly 10/30/2015 page9)