China car dilemma: Beijing wants electric, buyers want SUVs

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China’s BYD F3DM plug-in hybrid [image credit: Mariordo]

Scare stories about man-made global warming or even city pollution cut little ice with Chinese car buyers. The high cost of battery power and/or fear of running out of it on their journeys – range anxiety – seem more of a concern.

Automakers face a dilemma in China’s huge but crowded market: Regulators are pushing them to sell electric cars, but buyers want gas-guzzling SUVs, says Phys.org.

The industry is rattled by Beijing’s proposal to require that electric cars make up 8 percent of every brand’s production as soon as next year. Consumers are steering the other way: First-quarter SUV sales soared 21 percent from a year earlier to 2.4 million, while electric vehicle purchases sank 4.4 percent to just 55,929.

“It’s tough for someone with an EV to come and take away market share from SUVs,” said Ben Cavender of China Market Research Group.

The Shanghai auto show, which opens to the public on Friday, will showcase work on electric models meant to appeal to Chinese drivers who are wary of the unfamiliar technology’s reliability and cost.

The pressure for electrification in China is an added headache for automakers at a time when sales growth is slowing and competition heating up in a market they are counting on to drive global revenue.

Sales growth fell to 1.7 percent in March from last year’s 15 percent. SUVs made up 40 percent of sales, while sedan purchases fell 4.9 percent.

At the Shanghai show, the industry’s biggest marketing event this year, almost every global and Chinese brand plans to display at least an electric concept car, if not a model ready for sale, alongside its latest SUVs and sedans.
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Government planners see electric vehicles as a sector where China can lead, and a Cabinet technology development plan issued in 2013 calls for two of the top global brands in 2025 to be Chinese.

Hence the proposal, released in September, calling for electric or gasoline-electric hybrids to make up 8 percent of every automaker’s output next year. That would rise to 10 percent in 2019 and 12 percent in 2020.

Manufacturers failing to meet those targets could buy credits from companies that produce more electrics, helping to subsidize development.

People in the industry say manufacturers have warned Beijing those targets are too ambitious. News reports say regulators might have agreed to lower or delay them in an updated plan due out this year, but there has been no official confirmation.

Full report: China car dilemma: Beijing wants electric, buyers want SUVs | Phys.org