Despite the pandemic, global sales of electric vehicles (EVs) grew 43% in 2020. Total sales of electric vehicles in China were 1.3 million, an increase of 8% from 2019 and 41% of all electric vehicles sold worldwide. Although Europe sold more than China for the first time since 2015, China remains the largest domestic market for electric vehicles in the world.
The best-selling electric vehicle in China is not Tesla’s Model 3, but the tiny Hongguang Mini EV, produced by SAIC-GM-Wuling Automobile, a joint venture between Chinese state-owned SAIC Motor, the American automaker. General Motors and another Chinese company, Wuling. Engines.
The conglomerate positions the car as “the people’s transport tool” in its advertising, with a starting price of 28,800 yuan (about US $ 4,485, or £ 3,200) and a fully charged range of 120 km. Since its debut in July 2020, the Hongguang Mini EV has sold over 270,000 units and was the world’s best-selling EV as of January 2021.
This was a surprise, as Chinese consumers have traditionally preferred larger models with internal combustion engines. But our recent research on consumer preferences in China reveals significant market opportunities for electric vehicles in small towns and how innovative business models could encourage even more people to abandon their fossil-fueled cars.
Electric vehicles in large and small towns
China aims to peak its carbon emissions by 2030 and achieve carbon neutrality by 2060. Since 2009, the Chinese government has offered subsidies and tax exemptions and built charging points to encourage buyers and consumers. electric vehicle manufacturers.
But these subsidies are drying up now. Finding out what Chinese motorists like about electric vehicles could tell us what is behind the growth in the world’s largest domestic market, and whether it is likely to continue or stagnate. This matters not only to China, but to the rest of the world. China has been the world’s largest emitter since 2006, and cars with internal combustion engines are among the biggest sources of carbon emissions in the world.
In a recent study, we found that most EV sales are made in major Chinese cities – those with more than five million people, such as Shanghai and Beijing – largely due to stronger political incentives. the low. But consumers in small towns – each with less than one million people – were the most likely to drive electric vehicles.
In these small towns, drivers tend to enjoy shorter trips and therefore have less pressure on their time and cost of living. People there tend to care more about the proper functioning of the vehicle and the environmental benefits of electric vehicles. Previous research has found that these consumers are less likely to purchase an EV if it is the more expensive option. This could explain why Hongguang’s Mini EV – with its limited range and relatively cheap price – originates from Liuzhou in Guangxi Province, a small town in southwest China.
Major Chinese cities generally operate license plate lotteries that limit the number of gasoline cars registered each year. The lottery winning rate is less than 1%, around 0.0039% in Beijing, so motorists have no choice but to switch to electric vehicles. Our results suggest that the Chinese government’s focus on getting people to drive electric vehicles in major cities may be shifted.
Small Chinese cities are demonstrating a desire for cheap, electrified mobility that could be satisfied there and across the world, especially the booming cities of the developing world. In short, the future of electric vehicles could be very different from the Tesla luxury cars that are currently gaining the most attention.
Buy, rent or share EVs?
To get more people to drive electric vehicles, manufacturers have tried new business models in the Chinese market, such as battery rental plans. The battery is one of the most expensive components in an electric vehicle and this system allows consumers to purchase the body of the vehicle and then lease the battery on a monthly basis.
Our second study showed that the battery rental model is likely to broaden the appeal of electric vehicles by attracting those currently turned off by the price.
Some EV companies that have introduced battery rental models have also offered a service whereby drivers can replace their empty batteries with a fully charged battery at a gas station – a much faster transaction than recharging.
Read more: Explanation: For the future of electric vehicles, one size doesn’t fit all
We have found that it doesn’t matter to drivers whether they lease their battery or whether they own the car entirely. Consumers were ready to accept the battery rental model, as this and battery swap services help remove two barriers to purchasing electric vehicles simultaneously: high price and long charge wait times.
Separating the bodies and batteries of electric vehicles can even make their driving more sustainable. When batteries can no longer handle long distance journeys, they can be reconfigured for a second life in grid-connected storage and power tools. At the same time, owners can continue to use electric vehicle bodies without needing to renew batteries or scrapping their vehicles.
Our research also looked at electric vehicle sharing programs, such as the EV card, where people can simply hop into a vacant EV and drive it if they join a membership program. They are billed for EV use by the minute. Low-income households were the most likely to use this service, potentially making it an effective way to broaden their appeal.
Collectively, a picture emerges of the promising ways to achieve decarbonization of urban mobility – in China and around the world. Rather than subsidizing richer consumers in mega-cities to switch to an EV, a more promising strategy might be to focus on new forms of access to EVs in smaller, less affluent cities in China and the rest of the world. world.