Leapfrogging or Stalling Out? Electric Vehicles in China

Sabrina Howell, Henry Lee and Adam Heal
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Sabrina Howell: Harvard University
Henry Lee: Harvard University

Working Paper Series from Harvard University, John F. Kennedy School of Government

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.

Date: 2014-07
New Economics Papers: this item is included in nep-ene, nep-reg and nep-tre
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