Volkswagen calls for new approaches to revive electric car sales

German carmaker Volkswagen is calling on the government for new efforts including non-monetary measures to tackle the downturn in China's new energy vehicle market, despite the segment's long-term prospects being bright.

Statistics from the Ministry of Industry and Information Technology showed that a total of 1.21 million electric cars and plug-in hybrids were sold in 2019, down from 1.26 million in 2018.

It is the first dip in sales since China started to finance the segment in 2009.

The major reason is the subsidy cut in 2019. The subsidies are scheduled to stop by the end of 2020.

"We understand that the time of subsidies is over, as a healthy market cannot be based on financial incentives," said Stephan Woellenstein. The CEO of Volkswagen's operations in China was speaking on Saturday at the annual China EV 100 Forum held in Beijing.

"So let's take a different route to raise customer interest again and show the beauty of e-mobility."

Woellenstein said the carmakers should offer more attractive models while authorities should provide more incentives to buyers, such as free license plates, free parking, no ban days and road privileges.

"These non-monetary incentives are key for a healthy new energy vehicle development in the long run. Those incentives must be intensified and made more appealing to customers," he said.

Besides these measures, many industry insiders are calling for adequate charging infrastructure. They said a lot of people cancel orders because they cannot have private charging devices.

According to Li Zhi, a senior official at the National Energy Administration, there were around 1.2 million charging points by the end of 2019 across the country, with private ones numbering around 700,000.

There are around 3.8 million electric and plug-in hybrid vehicles on Chinese roads so far.

Volkswagen said it has built a charging company with Chinese partners FAW, JAC and StarCharge to develop private and semi-public charging options.

Woellenstein said attractive models, more non-monetary incentives and adequate charging infrastructure will draw customers to e-mobility and bring healthy growth to the Chinese new energy vehicle industry.

"If we all come to the same understanding and begin this joint effort, we will bring e-mobility in China back on the road to success again," he said.

"Volkswagen Group China, together with our partners SAIC, FAW and JAC, has played and will continue to play its part. 2020 will be a decisive year to reverse the current trend," he added.

Volkswagen, as China's most popular car group, has been underlining its efforts in e-mobility. It claims to have offered 14 new energy vehicles in the country by the end of 2019.

Production of models on its electric-only MEB platform will start in 2020 at its Anting plant in Shanghai and Foshan plant in Guangdong province.

Its subsidiaries, Audi and Porsche, have also launched electric vehicles in China.

Volkswagen said it will offer 30 locally produced new energy vehicle models by 2025. Their combined annual sales are expected to total 1.5 million vehicles.

The car group and its Chinese partners will invest more than 4 billion euros ($4.45 billion) into the Chinese market in 2020.

Around 40 percent will be spent on e-mobility in fields such as production, infrastructure, and development and research for electric cars. The company said it foresees spending more on new energy vehicles than on gasoline cars in coming years.

Woellenstein also suggested that the industry focus on electric vehicles instead of fuel cell vehicles that are gaining in popularity in some places.

Studies have shown that regarding energy efficiency, full cell vehicles are not competitive compared with battery electric vehicles, he said.

Over the entire life cycle, a fuel cell vehicle reaches an efficiency of 25-30 percent, whereas a battery car reaches 70-80 percent.

"A substantial amount of energy is lost in hydrogen production, not to mention the lack of infrastructure and the guarantee of safe transportation," said Woellenstein.

Nevertheless, he said Volkswagen will continue to perfect fuel cell technology, especially for commercial vehicles and full-size passenger cars. "But we all have to make a choice which shall be the dominant drivetrain for new energy vehicles in the years to come," said Woellenstein.