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Title: A Study of China s Explosive Growth in the Plug-in Electric Vehicle Market

Abstract

The year 2015 marks a turning point in China s plug-in electric vehicle (PEV) or new energy vehicle (NEV) industry, with an explosive growth in both productions and sales, following the gloomy period of 2009-2012. The PEV production in 2015 reached a record level of nearly 380,000 units, a 352 % increase from 2014, making China the largest PEV market in the world. For the potential implications on energy and the environment, it is worth studying the driving forces of China s PEV market and understanding its future trajectory and dynamics. The key findings of this report are listed in the following. Though controversial, the government monetary incentives have played a significant role to impel China to be the largest light PEV (191,100 units) market in the world. Chinese vehicle buyers appear more price sensitive on PEVs. Inexpensive low-cost micro electric vehicles are the most popular vehicle model in China s PEV market (38.9 % of the PEV market in 2015). In contrast, the premium or luxury vehicles are more popular in the gasoline vehicle segment. In fact, China is expected to be the largest premium car market in 2016. The PEV sales growth is primarily possible because of themore » young domestic private-owned auto manufacturers, which are mostly located in south China. Top-tier conventional vehicle automakers in China appear to be less proactive in the PEV market, based on market shares. This is in clear contrast to the U.S. market, where major automakers are generally the primary players in the PEV market. The PEVs produced by the domestic automakers are concentrated in the low-end market segment, while the high-end vehicle segment is dominated by the foreign brands. At present, the substantial market growth and government subsidies afford the domestic entrants to quickly gain profits in the low-end segment. The PEV consumers in China are very sensitive to the vehicle price, thus prefer the PEVs with cheaper prices after government subsidies, and care less about the driving quality and comfort. In contrast, most PEV consumers in the United States (U.S.) have higher incomes, view the PEVs as a high-status symbol, and care less about the vehicle prices, and therefore welcome the premium PEVs more in the U.S. The PEV financial subsidies by the Chinese government are divided into three stages based on the strategic directions and policies. In 2009 2012, government incentives concentrated on the public fleet vehicles, while excluding the individual consumers from the subsidies in most cities. In 2013 2015, comprehensive central/local government incentives were extended to all vehicle purchasers including the individual buyers in most cities, which was conducive to the phenomenal growth of the PEV sales. For years 2016 to 2020, monetary incentives are being phased out and will be substituted by other non-monetary incentives (such as the standards for Chinese Cooperate Average Fuel Consumption and New Energy Vehicle Credits) for the sustainable development of the PEV market. The PEV subsidy fraud has drawn attention by the central government, which prompts the government to be more prudent about monetary incentives. With the advantage of high acceptance in the PEV market and integrated EV charging infrastructure, the region with better economic development brings a more aggressive PEV roll-out plan to the municipalities who are more willing to solve the local urban pollution while keeping the automotive market in sustainable growth. On the one hand, the local automakers are offered abundant subsidies from the Chinese government to those who intend to help the Chinese automotive industry seize the industrial upgrading opportunity to transform its manufacturing sector, and they have taken most shares of the PEV market. On the other hand, facing the trade barriers, the foreign automakers have dominated the premium PEV sales in China, although their total market shares in the PEV market are much less than the domestic automakers. In diverse selectable alternative fuel vehicle technologies, China has put its focus on the PEV technologies for the technological modernization in the automotive industry; the research and development in fuel cell vehicle technologies in China is less competitive compared with other countries such as Japan and the U.S. With the demand of batteries from the PEV automakers, the Chinese EV battery industry is aggressively expanding. It has risks in excessive production capacity, and faces the challenges from the competitors from Japan and South Korea.« less

Authors:
 [1];  [1];  [2];  [3];  [3];  [4];  [4]
  1. Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
  2. China Automotive Technology and Research Center, Tianjin China
  3. China Automotive Technology and Research Center, Tianjin (China)
  4. Aramco Services Company, Novi, MI (United States)
Publication Date:
Research Org.:
Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States). National Transportation Research Center (NTRC)
Sponsoring Org.:
USDOE
OSTI Identifier:
1341568
Report Number(s):
ORNL/TM-2016/750
453060031
DOE Contract Number:
AC05-00OR22725
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
33 ADVANCED PROPULSION SYSTEMS

Citation Formats

Ou, Shawn, Lin, Zhenhong, Wu, Zhixin, Zheng, Jihu, Lyu, Renzhi, Przesmitzki, Steven V., and He, Xin. A Study of China s Explosive Growth in the Plug-in Electric Vehicle Market. United States: N. p., 2017. Web. doi:10.2172/1341568.
Ou, Shawn, Lin, Zhenhong, Wu, Zhixin, Zheng, Jihu, Lyu, Renzhi, Przesmitzki, Steven V., & He, Xin. A Study of China s Explosive Growth in the Plug-in Electric Vehicle Market. United States. doi:10.2172/1341568.
Ou, Shawn, Lin, Zhenhong, Wu, Zhixin, Zheng, Jihu, Lyu, Renzhi, Przesmitzki, Steven V., and He, Xin. Sun . "A Study of China s Explosive Growth in the Plug-in Electric Vehicle Market". United States. doi:10.2172/1341568. https://www.osti.gov/servlets/purl/1341568.
@article{osti_1341568,
title = {A Study of China s Explosive Growth in the Plug-in Electric Vehicle Market},
author = {Ou, Shawn and Lin, Zhenhong and Wu, Zhixin and Zheng, Jihu and Lyu, Renzhi and Przesmitzki, Steven V. and He, Xin},
abstractNote = {The year 2015 marks a turning point in China s plug-in electric vehicle (PEV) or new energy vehicle (NEV) industry, with an explosive growth in both productions and sales, following the gloomy period of 2009-2012. The PEV production in 2015 reached a record level of nearly 380,000 units, a 352 % increase from 2014, making China the largest PEV market in the world. For the potential implications on energy and the environment, it is worth studying the driving forces of China s PEV market and understanding its future trajectory and dynamics. The key findings of this report are listed in the following. Though controversial, the government monetary incentives have played a significant role to impel China to be the largest light PEV (191,100 units) market in the world. Chinese vehicle buyers appear more price sensitive on PEVs. Inexpensive low-cost micro electric vehicles are the most popular vehicle model in China s PEV market (38.9 % of the PEV market in 2015). In contrast, the premium or luxury vehicles are more popular in the gasoline vehicle segment. In fact, China is expected to be the largest premium car market in 2016. The PEV sales growth is primarily possible because of the young domestic private-owned auto manufacturers, which are mostly located in south China. Top-tier conventional vehicle automakers in China appear to be less proactive in the PEV market, based on market shares. This is in clear contrast to the U.S. market, where major automakers are generally the primary players in the PEV market. The PEVs produced by the domestic automakers are concentrated in the low-end market segment, while the high-end vehicle segment is dominated by the foreign brands. At present, the substantial market growth and government subsidies afford the domestic entrants to quickly gain profits in the low-end segment. The PEV consumers in China are very sensitive to the vehicle price, thus prefer the PEVs with cheaper prices after government subsidies, and care less about the driving quality and comfort. In contrast, most PEV consumers in the United States (U.S.) have higher incomes, view the PEVs as a high-status symbol, and care less about the vehicle prices, and therefore welcome the premium PEVs more in the U.S. The PEV financial subsidies by the Chinese government are divided into three stages based on the strategic directions and policies. In 2009 2012, government incentives concentrated on the public fleet vehicles, while excluding the individual consumers from the subsidies in most cities. In 2013 2015, comprehensive central/local government incentives were extended to all vehicle purchasers including the individual buyers in most cities, which was conducive to the phenomenal growth of the PEV sales. For years 2016 to 2020, monetary incentives are being phased out and will be substituted by other non-monetary incentives (such as the standards for Chinese Cooperate Average Fuel Consumption and New Energy Vehicle Credits) for the sustainable development of the PEV market. The PEV subsidy fraud has drawn attention by the central government, which prompts the government to be more prudent about monetary incentives. With the advantage of high acceptance in the PEV market and integrated EV charging infrastructure, the region with better economic development brings a more aggressive PEV roll-out plan to the municipalities who are more willing to solve the local urban pollution while keeping the automotive market in sustainable growth. On the one hand, the local automakers are offered abundant subsidies from the Chinese government to those who intend to help the Chinese automotive industry seize the industrial upgrading opportunity to transform its manufacturing sector, and they have taken most shares of the PEV market. On the other hand, facing the trade barriers, the foreign automakers have dominated the premium PEV sales in China, although their total market shares in the PEV market are much less than the domestic automakers. In diverse selectable alternative fuel vehicle technologies, China has put its focus on the PEV technologies for the technological modernization in the automotive industry; the research and development in fuel cell vehicle technologies in China is less competitive compared with other countries such as Japan and the U.S. With the demand of batteries from the PEV automakers, the Chinese EV battery industry is aggressively expanding. It has risks in excessive production capacity, and faces the challenges from the competitors from Japan and South Korea.},
doi = {10.2172/1341568},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Sun Jan 01 00:00:00 EST 2017},
month = {Sun Jan 01 00:00:00 EST 2017}
}

Technical Report:

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  • Oak Ridge National Laboratory (ORNL), Sentech, Inc., Pacific Northwest National Laboratory (PNNL)/University of Michigan Transportation Research Institute (UMTRI), and the U.S. Department of Energy (DOE) have conducted a Plug-in Hybrid Electric Vehicle (PHEV) Market Introduction Study to identify and assess the effect of potential policies, regulations, and temporary incentives as key enablers for a successful market debut. The timeframe over which market-stimulating incentives would be implemented - and the timeframe over which they would be phased out - are suggested. Possible sources of revenue to help fund these mechanisms are also presented. In addition, pinch points likely to emerge duringmore » market growth are identified and proposed solutions presented. Finally, modeling results from ORNL's Market Acceptance of Advanced Automotive Technologies (MA3T) Model and UMTRI's Virtual AutoMotive MarketPlace (VAMMP) Model were used to quantify the expected effectiveness of the proposed policies and to recommend a consensus strategy aimed at transitioning what begins as a niche industry into a thriving and sustainable market by 2030. The primary objective of the PHEV Market Introduction Study is to identify the most effective means for accelerating the commercialization of PHEVs in order to support national energy and economic goals. Ideally, these mechanisms would maximize PHEV sales while minimizing federal expenditures. To develop a robust market acceleration program, incentives and policies must be examined in light of: (1) clarity and transparency of the market signals they send to the consumer; (2) expenditures and resources needed to support them; (3) expected impacts on the market for PHEVs; (4) incentives that are compatible and/or supportive of each other; (5) complexity of institutional and regulatory coordination needed; and (6) sources of funding.« less
  • The Plug-In Hybrid Electric Vehicle (PHEV) Value Propositions Workshop held in Washington, D.C. in December 2007 served as the Task 1 Milestone for this study. Feedback from all five Workshop breakout sessions has been documented in a Workshop Summary Report, which can be found at www.sentech.org/phev. In this report, the project team compiled and presented a comprehensive list of potential value propositions that would later serve as a 'grab bag' of business model components in Task 2. After convening with the Guidance and Evaluation Committee and other PHEV stakeholders during the Workshop, several improvements to the technical approach were identifiedmore » and incorporated into the project plan to present a more realistic and accurate case study and evaluation. The assumptions and modifications that will have the greatest impact on the case study selection process in Task 2 are described in more detail in this deliverable. The objective of Task 2 is to identify the combination of value propositions that is believed to be achievable by 2030 and collectively hold promise for a sustainable PHEV market by 2030. This deliverable outlines what the project team (with input from the Committee) has defined as its primary scenario to be tested in depth for the remainder of Phase 1. Plans for the second and third highest priority/probability business scenarios are also described in this deliverable as proposed follow up case studies in Phase 2. As part of each case study description, the proposed utility system (or subsystem), PHEV market segment, and facilities/buildings are defined.« less
  • First of all, overall economic growth objectives in China are concisely and succinctly specified in this report. Secondly, this report presents a forecast of energy supply and demand for China`s economic growth for 2000--2050. In comparison with the capability of energy construction in China in the future, a gap between supply and demand is one of the important factors hindering the sustainable development of Chain`s economy. The electric power industry is one of China`s most important industries. To adopt energy efficiency through high technology and utilizing energy adequately is an important technological policy for the development of China`s electric powermore » industry in the future. After briefly describing the achievements of China`s electric power industry, this report defines the target areas and policies for the development of hydroelectricity and nuclear electricity in the 2000s in China, presents the strategic position of China`s electric power industry as well as objectives and relevant plans of development for 2000--2050. This report finds that with the discovery of superconducting electricity, the discovery of new high-temperature superconducting (HTS) materials, and progress in materials techniques, the 21st century will be an era of superconductivity. Applications of superconductivity in the energy field, such as superconducting storage, superconducting transmission, superconducting transformers, superconducting motors, its application in Magneto-Hydro-Dynamics (MHD), as well as in nuclear fusion, has unique advantages. Its market prospects are quite promising. 12 figs.« less
  • In Task 2, the project team designed the Phase 1 case study to represent the 'baseline' plug-in hybrid electric vehicle (PHEV) fleet of 2030 that investigates the effects of seventeen (17) value propositions (see Table 1 for complete list). By creating a 'baseline' scenario, a consistent set of assumptions and model parameters can be established for use in more elaborate Phase 2 case studies. The project team chose southern California as the Phase 1 case study location because the economic, environmental, social, and regulatory conditions are conducive to the advantages of PHEVs. Assuming steady growth of PHEV sales over themore » next two decades, PHEVs are postulated to comprise approximately 10% of the area's private vehicles (about 1,000,000 vehicles) in 2030. New PHEV models introduced in 2030 are anticipated to contain lithium-ion batteries and be classified by a blended mileage description (e.g., 100 mpg, 150 mpg) that demonstrates a battery size equivalence of a PHEV-30. Task 3 includes the determination of data, models, and analysis procedures required to evaluate the Phase 1 case study scenario. Some existing models have been adapted to accommodate the analysis of the business model and establish relationships between costs and value to the respective consumers. Other data, such as the anticipated California generation mix and southern California drive cycles, have also been gathered for use as inputs. The collection of models that encompasses the technical, economic, and financial aspects of Phase 1 analysis has been chosen and is described in this deliverable. The role of PHEV owners, utilities (distribution systems, generators, independent system operators (ISO), aggregators, or regional transmission operators (RTO)), facility owners, financing institutions, and other third parties are also defined.« less
  • Plug-in hybrid electric vehicles (PHEVs) offer significant improvements in fuel economy, convenient low-cost recharging capabilities, potential environmental benefits, and decreased reliance on imported petroleum. However, the cost associated with new components (e.g., advanced batteries) to be introduced in these vehicles will likely result in a price premium to the consumer. This study aims to overcome this market barrier by identifying and evaluating value propositions that will increase the qualitative value and/or decrease the overall cost of ownership relative to the competing conventional vehicles and hybrid electric vehicles (HEVs) of 2030 During this initial phase of this study, business scenarios weremore » developed based on economic advantages that either increase the consumer value or reduce the consumer cost of PHEVs to assure a sustainable market that can thrive without the aid of state and Federal incentives or subsidies. Once the characteristics of a thriving PHEV market have been defined for this timeframe, market introduction steps, such as supportive policies, regulations and temporary incentives, needed to reach this level of sustainability will be determined. PHEVs have gained interest over the past decade for several reasons, including their high fuel economy, convenient low-cost recharging capabilities, potential environmental benefits and reduced use of imported petroleum, potentially contributing to President Bush's goal of a 20% reduction in gasoline use in ten years, or 'Twenty in Ten'. PHEVs and energy storage from advanced batteries have also been suggested as enabling technologies to improve the reliability and efficiency of the electric power grid. However, PHEVs will likely cost significantly more to purchase than conventional or other hybrid electric vehicles (HEVs), in large part because of the cost of batteries. Despite the potential long-term savings to consumers and value to stakeholders, the initial cost of PHEVs presents a major market barrier to their widespread commercialization. The purpose of this project is to identify and evaluate value-added propositions for PHEVs that will help overcome this market barrier. Candidate value propositions for the initial case study were chosen to enhance consumer acceptance of PHEVs and/or compatibility with the grid. Potential benefits of such grid-connected vehicles include the ability to supply peak load or emergency power requirements of the grid, enabling utilities to size their generation capacity and contingency resources at levels below peak. Different models for vehicle/battery ownership, leasing, financing and operation, as well as the grid, communications, and vehicle infrastructure needed to support the proposed value-added functions were explored during Phase 1. Rigorous power system, vehicle, financial and emissions modeling were utilized to help identify the most promising value propositions and market niches to focus PHEV deployment initiatives.« less