Move over United States, there's a new number 1 on the leader board. The Chinese market had a record 43,441 new electric cars on the roads in November. That is another 36 percent increase over last October and 56 percent compared to last year. The new additions put China first in the plug-in market share at 1.4 percent, ahead of the United States at 1.1 percent and Europe at 1.2 percent. If China continues on this trend, the electric vehicle market will end the year with over 350,000 new units, more than doubling their entire fleet since the beginning of the year at a grand total at over 650,000 vehicles. United States will follow at roughly 560,000 units and Europe at 630,000.
The major boom in electric vehicles in China this year is a result of very generous subsidies provided by the central government and the local level of government in an effort to cut down on emissions which has been a blight on many cities causing serious air pollution. The maximum subsidy by the central government is roughly 45,000 yuan ($6740 USD). The subsidies on a local level will differ according to city but the maximum is roughly 50,000 yuan ($7500 USD), adding up to a total of 95,000 yuan ($14,240 USD) in subsidy. Sometimes, the subsidy could account for 60 percent of the sale price of vehicles. Aside from the monetary subsidies, many cities offer additional incentives such as free license plates, which may cost a petrol-powered car in Shanghai $12,000 USD and free parking places. In a country with so many vehicles on the road, having a parking space is a necessity. In some cities, potential motorists must obtain a parking space before they are allowed to purchase a vehicle. The lack of parking spaces is a result of poor urban planning; the incredible growth of the middle class which grew faster than urban planners could re-model cities to fit parking spaces.
However, the most recent boon is a result due to the upcoming incentive changes with people wanting to cash in on the current subsidies. Although the changes have not been announced, people fear the changes could be less beneficial than the ones currently available. The changes come amidst an eight-month nationwide investigation that found widespread cheating on the generous subsidy programs by electric-vehicle makers. The investigators found that some companies collected hundreds of millions of yuan by inflating the number of vehicles they made, some even collected the subsidy before even making any electric vehicles at all. The investigation also found some companies sold their electric cars to their own subsidiaries in order to collect more of the generous subsidy from the government. The incentive program which made China the world leader in electric vehicles will be seeing revision that will be implemented within the the next five years. The revision aims to prevent further abuse of the program and perhaps shift the amount of subsidy to help lower production cost.
Many of the largest producers of electric vehicles saw a major fine in the hundreds of millions of yuan and their subsidy revoked. Some of the companies became reliant on the subsidy as their main source of income and not the actual sale of vehicles. Some companies are feeling the pain of over reliance on the government aid even though they are not part of the scandal. Their capital drained as production is haulted and subsidy payments are delayed as they are under investigation. There are currently over 200 electric vehicle companies in China, producing over 4000 brands of cars and other vehicles.
Although the government is seeing limited success with their subsidy program, reducing greenhouse gasses will require a lot more effort. The 650,000 electric vehicles on the road this year is only a fraction compared to the 280 million vehicles in the country, with over 20 million cars added in 2015. Their current program has the aim to increasing the number of electric vehicles on the road to 5 million by 2020. However, that is not the only problem facing the electric vehicle market in China. The government has finally getting serious about adding public charging stations. People with their parking spot at home may charge their vehicle at home but what if people do not have one and rely on public street parking. The country now currently has 85,000 public charging stations, up 65 percent compared to the end of 2015. The private sector is also doing their part as more and more shopping malls install chargers in their underground parking lots.