Policy to increase charging stations for new-energy vehicles

2015-10-08 09:21Global Times Editor: Li Yan

For years, authorities have been trying to encourage sales of new-energy vehicles in an effort to combat pollution and control fossil fuel use. However, uptake of new-energy vehicles among consumers has fallen far short of the government's hopes. One of the main reasons for this has been the shortage of vehicle recharge stations. At a recent meeting, the State Council, or China's cabinet, decided to address this problem by encouraging developers to make provisions for charging stations in their new residential complexes, while also stipulating that no less than 10 percent of public parking lots should be equipped with charging facilities. Experts say that this move will encourage investors to put more money into building charging station networks, which in turn will boost uptake of vehicles among consumers. However, experts warn that returns may be slow, and the immaturity of the new-energy vehicle sector as a whole might still prove a challenge.

There are hopes that the market for new-energy vehicles in China will receive a boost thanks to further moves by the government to support investment and provision of recharge stations for vehicles.

China will focus on increasing the number of charging stations, as well as promoting uniform standards for charging ports, Zheng Shanjie, deputy director of the National Energy Administration, said at a State Council meeting on September 25.

At the meeting, the decision was made that all parking lots in new residential complexes should have charging facilities, or set aside space in which such facilities can be installed. Also, no less than 10 percent of public parking lots should have charging facilities.

According to Zheng, the government recognizes that the lack of charging stations has been one of the biggest factors restricting growth of the new-energy vehicle industry in China.

"This is great news for boosting the development of the industry, particularly that the country will focus on building charging facilities on a national scale," Qiao Shengpu, a partner and general manager of the auto department at Adfaith Management Consulting, told the Global Times on September 28.

Slow start

In 2012, the State Council released its energy conservation and new-energy vehicle plan, calling for the production and sale of at least 500,000 units of electric and plug-in hybrid vehicles by 2015, with the number to rise to 5 million units by 2020.

However, production and sales of electric automobiles have fallen far short of these targets. In 2012, production was just 12,552 units, according to data from the China Association of Automobile Manufacturers.

In 2013, the country provided a national subsidy of 35,000 yuan ($5,505) to 60,000 yuan for consumers who buy new-energy vehicles. The subsidy runs till the end of 2015. In 2013, production reached about 17,500, up 39.7 percent year-on-year.

In 2014, the country produced 78,499 and sold 74,763 new-energy vehicles, up 350 percent and 320 percent respectively year-on-year.

The central government announced in July 2014 that consumers who buy new-energy vehicles would be exempt from the 10 percent purchasing tax starting from September 1, 2014 to the end of 2017.

Sales rose to 108,654 units in the first eight months of this year, up 270 percent year-on-year. Of the vehicles sold, the majority were pure electric models.

Lack of charging stations

But the number of charging stations remains woefully inadequate.

By the end of 2013, State Grid Corporation of China (SGCC), one of the two State-owned enterprises managing the nation's power system, had built just over 400 charging stations, according to a report published on February 2 by US-based magazine China Business Review.

Currently, the main operators of charging stations and charging piles are all State-owned enterprises, including SGCC, China Southern Power Grid, Potevio New Energy Co and Sinopec.

In May 2014, SGCC announced that it would allow private capital to participate in the electric vehicle charging sector.

However, private capital has until recently been wary about entering the sector. By the end of 2014, the country had built 780 charging stations and 31,000 charging piles, Zheng said at the State Council meeting.

Experts said this issue needs to be addressed if new-energy vehicles are to be widely accepted by consumers.

"On one hand, consumers are concerned that they will have no place to charge their cars. On the other hand, they worry about the capacity of the battery," Qiao said.

Zhang Hui, a marketing official at Beijing-based Yika Car Rental Service, a firm that offers electric car rental services, agreed.

"Slow construction of charging facilities has been a vital factor restraining the development of our company," Zhang told the Global Times on September 28.

Renewed interest

Experts hope that the new supportive policies for charging stations will reassure private companies and encourage them to commit to the sector.

Indeed, a number of tech companies are already showing great interest in the sector.

In September, Internet entertainment giant LeTV Holdings announced plans to invest tens of millions of yuan in Beijing Dianzhuang Technology Co, a start-up that builds and rents charging posts.

Tencent Holdings, Baidu Inc and Xiaomi Corp are also entering the sector through either partnerships or acquisitions.

Zhang said he sees a bright future for the sector. He gave the example of a charging station at Tsinghua Science and Technology Park that is operated by his company. It was built in 2013 and has 14 charging piles, three of which cost around 100,000 yuan each and can charge a car in an hour.

He said revenue from the station is expected to reach 1 million yuan this year, and is projected to continue to grow.

However, Qiao warned that it will take time for the supportive policies to roll out, and that the sector requires large upfront investment, and as such investors will need to be patient before they see huge returns.

Zhang pointed out that charging facilities also lack a unifying standard, particularly when it comes to payment methods for consumers.

He said that for the long-term development of the industry, authorities need to put forward more detailed policies to guide its development.


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