Leapfrogging or Stalling Out? Electric Vehicles in China

67 Pages Posted: 9 Sep 2014

See all articles by Sabrina T Howell

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

Henry Lee

Harvard University - Harvard Kennedy School (HKS)

Adam Heal

Harvard University - Harvard Kennedy School (HKS)

Date Written: May 1, 2014

Abstract

China has ambitious goals for developing and deploying electric vehicles (EV). The stated intention is to “leapfrog” the auto industries of other countries and seize the emerging EV market. Since 2009, policies have included generous subsidies for consumers in certain locations, as well as strong pressure on local governments to purchase EVs. Yet four years into the program, progress has fallen far short of the intended targets. China’s EV industry faces the same challenges as companies in the West: a) high battery costs; b) inadequate range between charges; and c) no obvious infrastructure model for vehicle charging. In addition, China’s industry is constrained by four domestic barriers. Mass EV deployment in China likely requires substantial policy adjustment. In particular, it will be necessary to permit foreign EV technologies relatively free market entry. In turn, this requires greater foreign IP protection. China must also consolidate its domestic industry and place greater emphasis on smaller, cheaper vehicles aimed at domestic, lower-end markets. If EVs are to contribute to air quality improvement, the government must ensure that the electricity powering EVs is cleaner than the current mix, particularly in Northeast regions of China.

Suggested Citation

Howell, Sabrina T and Lee, Henry and Heal, Adam, Leapfrogging or Stalling Out? Electric Vehicles in China (May 1, 2014). HKS Working Paper No. RWP14-035, Available at SSRN: https://ssrn.com/abstract=2493131 or http://dx.doi.org/10.2139/ssrn.2493131

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Henry Lee (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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Adam Heal

Harvard University - Harvard Kennedy School (HKS)

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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