Electric vehicles in China: A review of current policies

Abstract

Prompted by the urgency of reducing greenhouse gas emissions in the transport sector, the Chinese government has set ambitious targets for the uptake of electric vehicles. To achieve these targets is however a challenging task, due to various barriers in the uptake of electric vehicles, at both micro- and macro-levels. A range of monetary and non-monetary incentives has been implemented, or being considered for implementation, to overcome these barriers. This paper reviews these incentives with a view to assess the extent to which they are likely to remove the barriers in the uptake of electric vehicles. The review suggests that the primary focus of these incentives is to remove the micro-level barriers, such as high upfront costs, poor technical performance, and insufficient charging infrastructure. Limited attention has been paid to the macro-level barriers (for example, fragmented authority and local protectionism), despite ample evidence suggesting that these barriers could significantly impede the uptake of electric vehicles. Further, these incentives have tended to rely on regulation-based measures to remove the barriers. Only in the recent years, there appears to be a gradual shift towards market-based measures. This shift could improve the effectiveness of electric vehicle policies. The effectiveness of these policies could be enhanced if one recognizes the underlying macro-level barriers that are likely to protract or distort the implementation of market-based measures. This paper also provides some recommendations to remove these macro-level barriers.