Gearing up for an EV world

It’s welcome news for the environment when China sets out to ban the production and sale of gasoline and diesel vehicles. Even though there’s no definite timetable yet, the announcement by the world’s largest automobile market is already diving up the shares of automakers and battery makers in Asia, including the Chinese electric vehicle (EV) leader BYD. The intended ban on combustion-engine automobiles is part of Beijing’s moves to address serious air pollution problems. It follows decisions by England and France to outlaw the sale of such cars and vans from 2040 to clamp down on harmful emissions. Norway and the Netherlands are considering much more aggressive timetables to phase out fossil-fuel cars.

“Enterprises should strive to improve the level of energy-saving for traditional cars, and vigorously develop new-energy vehicles,” said Xin Guobin, vice-minister of industry and information technology. “These measures will promote profound changes in the environment and give momentum to China’s auto industry development.”

China produced and sold 28 million vehicles in 2016, according to the International Organization of Motor Vehicle Manufacturers. The sale of new-energy vehicles topped 500,000, over 50% more than in the previous year, and the majority were made by Chinese firms.

However, new-energy vehicles accounted for less than 2% of Chinese auto sales, despite generous subsidies offered by the government, as offerings from local names such as BYD failed to impress consumers.

Cui Dongshu, secretary-general of the National Passenger Car Association, said that phasing out conventional vehicles would be “a long process” and even more difficult for heavy-duty trucks as automakers “have not really tried hard in this sector” and consumers are still not very familiar with new-energy vehicles.

I agree that limiting emissions from fossil-fuel cars is a must given my experience of suffering from pollution in traffic-choked Bangkok, where the number of new cars keeps rising regardless of economic conditions.

But such an important idea needs to be backed by clear supporting policies and targets so that industries and consumers can adapt. Apart from automakers, those in the battery and lithium industries need to be able to plan for adequate supplies and prevent a spike in prices.

At the same time, infrastructure including charging stations must be well planned in order to ease one of the chief concerns about EV ownership. On the consumer side, while the technology of new-energy cars must be reliable, price is more important. Most EVs currently are about twice the price of petrol and diesel vehicles. Will technology advances in the next two decades and/or more subsidies be enough to bring the price of EV down sharply so that they appeal to lower-income consumers?

In my view, at least some cheap conventional-fuel models should still be available for consumers who cannot afford EVs. Meanwhile, more should be done to raise public awareness about the exact benefits of EVs in fighting the growing threat of climate change.

Simply announcing radical changes in transport policy doesn’t mean they will happen. Vietnam said recently that it was considering banning motorcycles from the leafy streets of Hanoi. The capital is forecast to have 7 million bikes, equal to its population, within two years, but the local Communist Party chapter aims to make motorbikes extinct by 2025.

But motorcyclists and street vendors in Hanoi do not agree, saying the economy would take a serious hit if local people were denied a mode of transport they’ve grown up with and use to ferry around anything from beer crates and cooking gas tanks to rice sacks and small families. Authorities in this case do not appear to have come up with an alternative to offer citizens.

In China, experts say there are more issues to consider. First, simply forcing consumers to buy electric vehicles won’t necessarily eliminate the smog that chokes cities such as Beijing, where auto emissions are responsible for nearly a third of air pollution.

Of course, more EVs will mean more demand for electricity, which in China is produced mainly by burning coal. While EVs produce fewer carbon dioxide emissions even when that is taken into account, according to Bloomberg New Energy Finance, it is important that the government expand its ambitious plan to clean up the power grid too.

Beijing deserves a thumbs-up for its forward-looking policy, but it needs to implement its plans carefully to avoid backlash and convince the public that the move is for the good of the planet and not just to protect the auto industry.