Sales of electric cars totaled 287,000 in July, August, and September with China responsible for half of them. Sales in other markets are trending up gradually, but nothing like what is happening in China. The increase in EV sales in China can be traced directly to a number of government policies that strongly encourage people to purchase an electric car instead of a conventional car. Many policy makers are worried their own incentive programs are too generous but the Chinese experience makes it clear if you want people to buy electric, you have to make it worth their while.
“The Chinese government is very focused on pushing up EV sales,” says Aleksandra O’Donovan, advanced transport analyst at BNEF and one of the authors of the report. “One reason for that is the local pollution levels in the cities, and a second is for China to build domestic heroes to compete internationally in this market.”
Many countries are sending mixed messages about their electric car policies. On one hand, they are talking about banning conventional cars. On the other, they are complaining incentives are budget busters that disproportionally benefit the wealthy. The main issue is that EVs still cost quite a bit more than the least expensive conventional cars, the ones that many people rely on for daily transportation. Incentives may not make a big difference to wealthy buyers but they can make all the difference for low income drivers who need basic transportation to get back and forth to work.
China proves electric car incentives work. The only question is, can governments afford them? The factor that could make incentives unnecessary is battery prices. Batteries make up a large part of the price of electric cars. The less they cost, the more affordable those cars will be and the less the need will be for incentives.
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