What Can Electric Car Makers Learn From An Extensive Market Like China?

China is the world's largest manufacturer and purchaser of electric vehicles, accounting for more than half of all-electric automobiles produced and sold in 2018. China manufactures 99 per cent of all-electric buses in the globe.

China’s EV Sales during Pandemic

Despite the epidemic, worldwide electric vehicle (EV) sales grew by 43% in 2020. China sold 1.3 million electric automobiles in 2019, up 8% from the previous year and accounting for 41% of all-electric vehicles sold worldwide. For the first time since 2015, EV sales in Europe topped those in China, yet China remains the world's largest national market for electric vehicles.

The smallest Hongguang Mini EV is the best-selling EV in China according to SAIC-GM-Wuling Automobile, a joint venture between China's state-owned SAIC Motor, US manufacturer General Motors, and another Chinese business, Wuling Motors.

The car is marketed as "the People's Commuting Tool" with a starting price of 28,800 yuan (about US$4,485, or £3,200) with a fully charged driving range of 120 kilometres. The Hongguang Mini EV has sold over 270,000 units from its very launch in July 2020, making it China's most popular electric vehicle.

It came as a surprise that Chinese buyers have a preference for big vehicles with internal combustion engines. However, our latest study of Chinese consumer preferences indicates enormous market potential for electric automobiles in small cities, as well as how creative business models might persuade even more people to abandon their fossil-fuelled vehicles.

Electric Vehicles In Large And Small Towns

China wants carbon neutrality by 2060 and reaches a peak in carbon emissions by 2030. The Chinese government has given subsidies and tax exemptions and created charging stations from 2009.

However, those subsidies are running out. Finding out what Chinese drivers want in an electric vehicle might reveal what's driving the world's huge national market's growth and if it'll continue or halt. It is significant all over the globe. Since 2006, China has become the world's top emitter, and internal combustion engine automobiles are one of the world's greatest producers of carbon emissions.

According to recent research, the vast number of electric vehicle purchases are in China's large cities - those with populations over five million people, such as Shanghai and Beijing – owing to higher governmental incentives. Consumers in a small city, with populations of less than a million people, on the other hand, are a different storey.

The journeys for drivers in such small towns are shorter, which means they have less time and money to spend. The performance of the car and the environmental benefits of electric vehicles are more important to the people there. According to prior studies, if an EV is the more expensive option, these buyers are less likely to buy it. It might explain why Hongguang's Mini EV, with its limited range and low price, comes from Liuzhou, a small city in Guangxi province in southwest China.

In China's larger cities, vehicle plate lotteries are routinely using to limit the number of gasoline automobiles registered each year. As the lottery winning percentage in Beijing is less than 1% or 0.0039 per cent, motorists have little choice except to switch to EVs. Our findings show that the Chinese government's emphasis on encouraging people to use electric vehicles in major cities is misguided.

Smaller Chinese cities indicate a need for inexpensive, electric transportation that might be met both in China and all around the world, particularly in the developing world's expanding towns and cities. In summary, the future of electric vehicles may not resemble the high-end Teslas that are presently garnering the most attention.

Evs: Buy, Lease, Or Share?

To encourage more people to drive electric vehicles, manufacturers have experimented with various business models in China, such as battery leasing schemes. The battery is one of the most costly parts of an electric car, and this arrangement allows customers to purchase the vehicle's body and then lease the battery every month.

Our second analysis found that the battery leasing model would likely extend the popularity of electric vehicles by attracting consumers who are now turning off by their cost. Some EV businesses that have developed battery-leasing models have also offered a service that allows drivers to swap out their depleted batteries for fully charged ones at a service station.

Consumers were willing to embrace the battery-leasing model since it, together with battery swapping services, removes two obstacles to purchasing electric vehicles at the same time: the high price and long charging periods.

Separating the bodywork and batteries of electric vehicles may potentially make driving them more environmentally friendly. When the batteries are no longer capable of long-distance travel, they may modify for use in grid-connected storage and electrical equipment for a second life. At the same time, owners may keep using their electric vehicles without replacing their batteries or junk them.

The research also looked at EV sharing programmes like EV-Card, which allow users to get in an empty EV and drive it provided they sign up for a subscription. They charged per minute for using the EV. This service was most commonly used by low-income households, suggesting that it may be an effective method to extend their appeal.

Conclusion

Overall, a picture of promising techniques for de-burning urban transportation in China and throughout the world emerges. A more realistic strategy in China would be to focus on new types of EV access rather than subsidise wealthy consumers in megacities to migrate to electric vehicles.

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