2017 New Energy Vehicle Government Strategies

Transcription

1 2017 New Energy Vehicle Government Strategies BRUCE M. BELZOWSKI SERGIO TADEU GONÇALVES MUNIZ CAMILLE CU

2 THE AUTHORS: Bruce M. Belzowski Managing Director of University of Michigan Transportation Research Institute (UMTRI) Automotive Futures Group. Sergio Tadeu Gonçalves Muniz Associate Professor - Federal University of Technology - Paraná (UTFPR), Brazil and was visiting researcher at University of Michigan Transportation Research Institute (UMTRI), Automotive Futures Group. Camille Cu Undergraduate Student at University of Michigan. UMTRI Automotive Futures Assistant in Research.

3 Chinese market In the EV market, more than 95% of the market is dominated by domestic brands: the price and government subsidies are crucial. China electric vehicle industry: 200+ carmakers, with currently about 4,000 new energy vehicle (NEV) models in development. China became the world s leading automotive market in China surpassed the U.S. in 2015 to become the world s biggest market for New Energy Vehicles (NEVs): comprising PHEVs, BEVs, FCEVs Great Potential: in United States: 0.8 vehicles/resident; in China: 0.1 vehicles/resident.

4 Monthly NEV Sales Data from Jan Feb March April May June July August Sep Oct Nov Dec m/2017/07/china- Oct-2017.html

5 Sales of BEVs and PHEVs 600, , ,000 98, , , ,092 83, , , , ,159 12,791 17,642 74, ,482 2,580 1,416 3,038 45,048 5,579 11,375 14, ,715 BEVs PHEVs Source: EV Volumes

6 2017 NEV SALES IN CHINA: JANUARY TO SEPTEMBER Jan 2017 Feb 2017 March 2017 April 2017 May 2017 June 2017 July 2017 August 2017 Sep BEV PHEV

7 TOP 20 SELLING EV COMPANIES IN CHINA

8 2017 Half Year NEV sales ranking- (PC only) BYD BAIC Zhidou SAIC Zotye Jiangling JAC Geely Chery Chang'an om/ /art html

9 BEV PHEV vehicle model cumulative sales vehicle model cumulative sales 2017 TOP SELLING NEV MODELS IN CHINA THROUGH JUNE Zhidou D SAIC Roewe erx BAIC EC BYD tang 7502 BYD e BYD Song Dm 5838 JAC iev 9401 SAIC Roewe e Chery eq 9300 BYD Qin DM 1654 Geely EMGRAND 7982 Jiangling Motors E Changan Benben 6064 Zotye E BAIC EU 5961 Source: EV Volumes

10 GOVERNMENT GOALS AND INCENTIVES IN CHINA With massive pollution and scant domestic oil reserves, China has made going electric a top priority. The Federal Government wants 3 (was 5) million "new energy vehicles" (NEVs) on the roads by In order to have access to subsidies, foreign automakers should develop NEVs with their Chinese joint-venture partners. The NEV sales are spurred by government subsidies and permits: subsidies can reach up to 60% sticker price of a car/bus; exceptions from the lotteries for license plates in big cities. CCG plans to gradually reduce the amount of subsidies by 20% annually from 2016 to 2020, planning to stop providing subsides after Incentives/subsidies differ for companies and individuals (Individuals get more)

11 THE SUBSIDIES AND THE BUBBLE IN 2015 Startups and local authorities invested in making NEVs: unqualified companies + far below the minimum scale required (average NEV makers ± 3,000 cars) The generous subsidies => started a gold-rush => Bubble (200+ companies)! But high subsidies encouraged cheating Because of the cheating/fraud, China s central government (CCG) imposed stricter technology standards and limitied the number of EV makers.

12 FRAUD ISSUE Chinese authorities initiated an investigation early 2016: the number of EVs sold in 2015 was about 30,000 units higher than 2014; There was a wide-spread subsidy fraud in many small cities; Represents approximately 10 percent of total expenditures (CCG); In 2015, about 108,000 NEVs were registered for plates in the first 10 months of 2015 (which represented only 63% of the 171,145 units supposedly sold in that period) Common types of Frauds: Mostly about electric buses; Electric vehicle producers simply shipped cars to fictitious customers; Selling to their own car rental companies, which exist only for get subsidies; Doctored invoices to inflate EVs subsidies: Suzhou King Long case (claimed to have sold 12,003 electric buses in 2015). Sell or rent a provincial and/or a national license.

13 AFTER FRAUD On December 30,2016, four ministries published Notice on Adjusting the Financial Subsidy Policy on NEVs, which took effect on January 1st, Government made four main changes: Modified the subsidy policy, creating a new directory of vehicles that qualify for subsidies Raised the standards for NEVs Changed the way of giving money Built better regulatory system.

14 SUBSIDY POLICY MODIFIED 1. Increased the vehicle energy consumption requirements. 2. Gradually improved the vehicle driving range requirements. 3. Introduced a new national battery standard. 4. Raised safety requirements 5. Established a market sampling inspection mechanism 6. Established dynamic management system of "directory of vehicles eligible for subsidies

15 NEW POLICY Inspired in California law on EVs; It s a credit-based system: For carmakers: they are required to sell a percentage of NEVs; progressive credits for making EVs and BEVs. ICEVs that do not meet the new fuel economy requirements would get negative credits => possibility for buy credits. For 2019 to 2020, the proportion requirements of new energy vehicles are 10% and 12%, respectively. The requirement after 2020 will be decided. Recent negotiations with Germany and others delayed production requirements by two years

16 NEW POLICY Ways to offset negative fuel consumption credit: Use positive carry forward credit from fuel consumption of the company Use positive credit from new energy vehicles within the company Use positive credit of fuel consumption obtained by transfer from another company Buy positive new energy vehicle credits from other companies

17 POLICY PROBLEMS: INCENTIVES AND TIMING CCG has already backed off its previous requirement for 8 percent of company sales to be NEVs for 2017 CCG doesn t seem to understand the time needed to adjust auto technology and plants Incentives decrease over time instead of increasing CCG is providing more incentives to buyers of NEVs that are not as capable as foreign NEV brands

18 POLICY PROBLEMS: INCENTIVES AND TIMING 2020 Volume Requirements 2019 Incentives

19 NEW GOVERNMENT RELATIONSHIP WITH MANUFACTURERS Created a new directory of vehicles that qualify for subsidies that is updated monthly Created a strict permit system that requires companies to meet stringent standards in order to qualify for subsidies Subsidies are given to manufacturers after the sale of a vehicle. Manufacturers are supposed to discount NEVs with the subsidy. Some manufacturers are discounting NEVs more than the subsidy in order to be seen as leaders in NEVs. The government plans to change over all buses to BEVs

20 Percent of vehicle models in the directory for the first five months of 2017 % IN DIRECTORY NEV passenger car NEV vocational vehicle NEV bus 11% Vocational vehicles include vehicles with special equipment such as Sanitation, Logistics, Police 26% 63% /ART html

21 Number of types of NEVs in the directory for the first five months of 2017 # of types of vehicles FCV, 7 PHEV, 318 BEV PHEV FCV BEV, html

22 Number of different types of NEVs by technology in the directory for the first five months of passenger car Vocational Vehicle Bus BEV PHEV FCV /ART html

23 THE PERMITS The permits focus on startups rather than established carmakers The Ministry of Industry and Information Technology (MIIT) have approved 15 permits with only 4 companies passing the examination, so far. Permits allow companies to build NEVs, but the vehicle must still be qualified to receive subsidies Permits allow the company to build plants, but they still must go through an examination before they can build NEVs The MIIT listed 17 technologies that companies intending to sell electric cars must possess. (e.g. vehicle control system, information system that tracks sources of key parts, and a battery recycling process) It is estimated that 90% of the companies currently developing EV platforms won t meet the standards in two years.

24 COMPANIES THAT HAVE PERMITS SO FAR Wanxiang Group (6) Qiantu Motor (3) Part Suppliers: Traditional carmakers with NEV Independent Operation: Beijing New Energy Vehicle Co., Ltd (BAIC)(1) Yangtze River EV (2) Zhidou (Geely) (11) Chery New Energy Automotive Technology Co (4) Henan Suda (12) Yundu new energy vehicle Ltd (10) Zhejiang Hezhong (13) Min An Auto (5) Joint-Ventures: Jiangxi Jiangling Group New Energy Vehicle Co (JMEV) (7) Chongqing Jinkang Xiaokang New Energy Vehicle Co (8) Others: NEVS (9) Shenzhen Ludi Fangzhou Electrocar Limited Company (14) JAC-Volkswagon (15)

25 NEW GOVERNMENT RELATIONSHIP WITH LOCAL GOVERNMENTS For Provinces ( district, city)with a more complete charging infrastructure construction and a large scale of new energy vehicle application receive financial incentives In heavy pollution regions, financial incentives are provided when the region reaches production of NEVs equal to 2%, 3%, 4%, 5%, 6% of total vehicle production from 2016 to For mild pollution regions, the goal is 1.5%, 2%, 3%, 4% and 5%. For all other regions, the goal is 1%, 1.5%, 2%, 2.5% and 3%

26 NEW GOVERNMENT RELATIONSHIP WITH CONSUMERS: CONSUMER TAX EXEMPTION FOR NEW ENERGY VEHICLE PURCHASE Typical Tax: (vehicle price/1.17)*10% The purchase of new energy vehicles are exempt from the vehicle purchase tax from September , to December 31, requirements to be in the tax exemption directory BEV, PHEV, fuel cell vehicles with permit and sold in China. Lead-acid batteries will not be accepted. Driving range requirements The combined fuel consumption of the plug-in hybrid passenger car (fuel consumption excluding electric energy conversion) should be less than 60 percent of the corresponding fuel consumption of traditional vehicle in national standard. Pass the new energy vehicle special inspection and meet the new energy vehicle standards requirements.

27 Consumer Preferences in China: Electric Vehicles

28 National charging station plan for bus taxi sanitation/logistics city public city express charging station

29 public charging station construction goal by cities in Guangdong Province (#1 in GDP in 2016) total year-total

30 public chargers construction goal by city in Guangdong Province total year-total

31 Some Early Results Province BEV Marché total Part de marché (BEV) Part dans le total BEV Xizang ,0% 0,0% Neimenggu ,0% 0,0% Heilongjiang ,0% 0,0% Guangxi ,0% 0,0% Xinjiang ,0% 0,0% Jilin ,0% 0,1% Qinghai ,0% 0,0% Hebei ,1% 0,4% Guizhou ,1% 0,2% Yunnan ,1% 0,4% Liaoning ,2% 0,5% Jiangsu ,2% 1,7% Sichuan ,2% 1,3% Henan ,3% 2,0% Shan xi ,4% 1,0% Gansu ,5% 0,7% Hainan ,5% 0,3% Fujian ,7% 1,8% Chongqing ,7% 1,6% Hubei ,7% 2,9% Guangdong ,8% 7,6% Hunan ,9% 3,6% Zhejiang ,2% 7,7% Anhui ,3% 4,9% Jiangxi ,3% 3,3% Shanghai ,5% 4,2% Shandong ,7% 13,5% Shanxi ,3% 8,3% Tianjin ,5% 7,0% Beijing ,9% 25,1% TOTAL ,0% 100% BEV 13 Provinces 36,4% of total car market Market share BEV 0,1% 9 Provinces 33,5% of total car market Market share BEV 0,6% 8 Provinces 30,1% of total car market Market share BEV 2,4% 74% of total BEV sold Tommaso Pardi in cooperation with Deng Xiaoxiang (IDHES GERPISA)

32 Some Early Results Province PHEV Total Part de marché Part dans le total Ningxia ,0% 0,0% Qinghai ,0% 0,0% Hainan ,0% 0,0% Heilongjiang ,0% 0,0% Shanxi ,0% 0,0% Jiangxi ,0% 0,0% Gansu ,0% 0,0% Jilin ,0% 0,0% Guangxi ,0% 0,1% Xinjiang ,1% 0,1% Hebei ,0% 0,1% Neimenggu ,0% 0,1% Anhui ,0% 0,1% Henan ,0% 0,1% Chongqing ,0% 0,2% Beijing ,0% 0,2% Yunnan ,0% 0,2% Liaoning ,0% 0,2% Guizhou ,0% 0,3% Fujian ,0% 0,4% Hubei ,0% 0,4% Shandong ,0% 0,5% Sichuan ,1% 0,5% Hunan ,0% 0,6% Jiangsu ,0% 0,8% Zhejiang ,0% 1,6% Shan xi ,1% 3,2% Tianjin ,6% 4,7% Guangdong ,6% 35,7% Shanghai ,3% 49,9% TOTAL ,2% 100% PHEV Shanghai (NEV) - SAIC 40,4% PHEV - BYD 30,2% - Chery 8,7% BEV - BAIC 7% 86,5% of total NEV market 2 Provinces 12% of total car market 85,5% of total PHEV sold Tommaso Pardi in cooperation with Deng Xiaoxiang (IDHES GERPISA)