Joaquim Oliveira

The recent Beijing motor show showcased an exponential increase of new vehicles premiered with some kind of electric propulsion (fully electric – EV - or plug-in hybrids) as a reaction to the handsome federal and regional incentives conceded by legislators which, in some cases, reduced the public price by no less than 50%. No harm done so far, as the new car sales have only thrived where consumers were financially encouraged to turn to battery powered vehicles.

The government´s intention was to encourage automakers to become technology leaders and to return the blue ink to the mainly smoggy skies over most megacities in China and one with be tempted to think it was actually happening as license plates given to EV cars more than tripled last year (compared to 2015) but now it is of public knowledge that a good deal of these sales didn´t really happen. Instead, they are frauds. Government investigation is still under way but the first news of suicides from dealer´s manager´s have emerged: business men who did not resist the temptation of taking the fast way to making a fortune and crashed as a result. Fake sales and registrations that are now being brought to light and that would send dealers bosses to jail, some of which have preferred to take their lives. One examples: Liu Peng (former owner of a BYD dealer in Nanjing, Eastern China) hanged himself in the store days after having confessed to investigators that he had falsified e-bus sales documents (which helped him to obtain 2,5 million euro in subsidies).

Depending on which city or province, these subsidies could go up to the equivalent to 15 000 euro per sold EV and half of that amount to plug-in hybrid vehicles and this explains both the real market interest and the fake market interest: looking at figures alone, regardless of their legitimacy, in 2015 no less than 331 000 EV+PHV were registered in China, meaning a 340% increase over the previous year. But as the scandal was unveiled the sales figures are rapidly going back to more reasonable levels: 46% increase in March (some 18 000 EVs and some 5300 PHVs), which is far less than the 170% in Jan-Feb and the already mentioned triple growth in 2015.

Naturally Beijing was not expecting such strong reaction to its EV push and budgets got out of control. Over (the equivalent of) 3 billion euro were ripped off the country´s savings and the Finance Minister was called for an urgent meeting to stop the bleeding...Considered to be a modern, pro-active and daring soul, the Finance Minister opened an investigation which led to the casualties even before ir came to an end but also to the announcement of a gradual reduction of these incentives by 40% by 2020. Most likely the previously announced goal to reach 5 million EVs and PHVs on the roads in the 27 provinces and 4 municipalities of China by 2020 will be put away (the number of EV/PHV circulating in China last year wasn´t higher than 500,000) but, of course, the electric propulsion vehicles premiered at this year´s Beijing motor show were projected before the new game changing measures were presented.

But, moral integrity issues aside, what is ridiculous is Beijing´s aspiration to lecture Europe on the need to incentivize electric mobility, regardless of whether or not. In a meeting in mid-April, Wan Gang (Chinese science and technology minister) explained to the German government it would be absolutely vital to provide incentives to encourage consumers to go electric in order to meet Germany´s ambitious targets of having 1 million EV/PHV vehicles on the road by 2020 (a goal announced in 2011): "Incentives are very important for research and development and that creates market maturity very quickly", he solely stated. But, of course...

The background persisting problem is the famous Chinese skills to skip the "by-the-book" policies, cut corners and always try finding a shortcut to get where they want to. As it is often the case, the less than compliant methods are leading to disastrous results in several ways. A decade ago Chinese car manufacturers were crushed and crashed by "western" authorities and public opinion as their cars attempted to hit the market and were mocked by its kindergarten design attributes and deplorable overall quality and safety as several vehicles were reduced to dust after trialed under EU collision test standards. And now, once again a shortcut has led to a short-circuit.

Joaquim Oliveira

Joaquim Oliveira

European Car of the Year Jury Member

May 31, 2016 Columns › Joaquim Oliveira

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