China Tells Automakers To Build Electric Cars – Or Else!

China is the world’s largest and fastest growing car market. Every car maker in the world wants a piece of the action but first they have to please the Chinese government. According to Bloomberg, when it comes to letting foreign manufactures build factories in the country, China says build electric cars – or else! China wants a 28% improvement in average fuel economy by 2020. The only way manufacturers can meet that target is with plug in hybrid or electric cars. It also wants 5,000,000 “new energy” vehicles on Chinese roads by then. That’s about 4.5 million more than there are today.

Toyota in particular has had harsh words for electric cars recently. Yoshikazu Tanaka, chief engineer of the Toyota Mirai hydrogen fuel-cell car, told reporters at a test drive event recently that electric cars will damage the electrical grid. “If you were to charge a car in 12 minutes for a range of 500 km (310 miles), for example, you’re probably using up electricity required to power 1,000 houses. That totally goes against the need to stabilise electricity use on the grid. He went on to say, “I don’t think such cars will become popular.”

That is not the message the Chinese government wants to hear but it may be the truth. Sales of electric cars in China have been well below expectations, despite substantial government incentives. For instance, in many Chinese cities, a person cannot obtain a license plate for a new car automatically. New registrations are limited and decided by lotteries. But anyone who buys an EV gets to register and drive it immediately. That’s a huge advantage if you want a car now, but Chinese buyers are still buying EVs in modest numbers.

Much of that has to do with a limited infrastructure for charging electric and plug in cars. Not having enough SuperCharger locations has put a big dent in the sales of the Tesla Model S in China. Even though Tesla thinks it has done a good job building chargers in China, buyers disagree, forcing Tesla to devote a lot of time and money to fix the problem. Hiroji Onishi, Toyota’s chief executive officer for the China region, said on April 21 that because President Xi Jinping is accelerating the EV push, “we believe infrastructure including charging stations will be developed quite rapidly.”

Somewhat reluctantly, Toyota will roll out the Leahead and Ranz all-electric brands with its China partners Guangzhou Automobile Group and FAW Group starting this year. The models will make China the only market where Toyota sells EVs. At the recent Shanghai Auto Show, the Toyota stand featured a Prius hybrid in the center. The two joint venture all electric cars were relegated to a spot in the background.

“It is the cost of entry of being here,” says James Chao, managing director of IHS Automotive in Shanghai, says of the joint-venture electric vehicles. “A lot of it is kind of for show, and they just want to please the government.” Adds Ashvin Chotai, managing director of researcher Intelligence Automotive Asia, “They’ll do some token launches and token sales, but I’m not expecting any waves. This is just a distraction, an unwanted headache.”