China’s new EV subsidies might not be enough to bolster slowing growth
China’s new EV subsidies might not be enough to bolster slowing growth

Cadillac advertises its electric vehicles in Shanghai, May 23, 2023. A female traffic policeman stood below.

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BEIJING — Subsidies for electric vehicles are not enough to fuel China’s slowing economic growth.

One of the few detailed stimulus packages announced by Beijing this year extended tax breaks for electric vehicle purchases, according to documents released on Wednesday.

The incentives, which were due to expire this year, will now run until the end of 2027.

Authorities expect consumers to save 520 billion yuan ($72.43 billion) as a result.

However, tax breaks won’t solve the root cause of why Chinese aren’t buying more EVs: the range issue.

charging challenge

Craig Zeng, chief financial officer of Autohome, an online car information and shopping site, said charging car batteries is still “relatively cumbersome.” That’s according to CNBC’s translation of his remarks in Mandarin.

He’s talking about the entire EV market.

He pointed out that the layout of China’s residential areas means that there are not many private parking spaces, and there are limits to the number of charging points that can be installed in a community.

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In Chinese cities, where most people live in apartment buildings, some parking lots are located underground or in open spaces around apartment buildings. In the capital, Beijing, owning an assigned parking space (without a battery charger) costs close to $100 a month, more than even apartment rent.

In such an environment, “after many people buy a car, the problem of charging will gradually become prominent.” Zeng said that this problem will affect people’s decision to buy electric vehicles in the future.

Read more about EVs from CNBC Pro

At a news conference on Wednesday, Chinese officials took note of the charging problem and called for faster installation of charging infrastructure in residential parking spaces, especially in new developments. That’s according to their official record of what they said.

Officials noted that China’s charging infrastructure has expanded rapidly over the past seven years, with charging stations comparable in coverage to gas stations in central urban areas.

However, China still has a long way to go.

In its report, the International Energy Agency said that more than 70 percent of public fast charging stations are located in 10 provinces. 2023 Electric Vehicle Outlook Report. That’s only about a third of the country.

Fast charging allows drivers to top up a car battery in less than an hour, but it still takes longer than filling up a gas tank.

China still leads the world in the installation of public fast charging stations – accounting for almost 90% of the global increase in such chargers last year, the IEA said.

“Growth in electric vehicle sales can only be sustained if charging needs are met through convenient and affordable infrastructure, whether through private charging at home or at work, or at public charging stations,” the IEA report said.

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