[The story of how this leafy tech hub in southern China became the first city in the world to turn nearly all of its buses and taxis electric is laden with economic and political subplots. It’s a study of how the Chinese government deployed an array of policies to gain an advantage in a strategic technology while the United States fell behind.]
By
Gerry Shih
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Electric buses drive out
of a public transportation hub in Shenzhen. More than 16,000
buses — almost none
running on diesel or gas — circulate in the Chinese city.
(Qilai Shen/Bloomberg
News)
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SHENZHEN,
China — A year ago, when D.C. Metro officials
unveiled 14 electric buses — a purchase that made the capital one of the
largest electric-fleet operators in the United States — this southern Chinese
metropolis was already in the middle of a full-blown electric revolution.
Today, more than 16,000 buses and 12,000
taxis whir along Shenzhen’s palm-fringed boulevards. How many run on diesel or
gasoline? Practically none. How many are made in China? Almost all.
Going fully electric “cost a lot of money,”
said Zheng Jingyu, the Shenzhen transit official in charge of the overhaul.
“But it helps our citizens and helps our air.”
Turns out, it also helps China’s
competitiveness.
The story of how this leafy tech hub in
southern China became the first city in the world to turn nearly all of its
buses and taxis electric is laden with economic and political subplots. It’s a
study of how the Chinese government deployed an array of policies to gain an
advantage in a strategic technology while the United States fell behind.
In the past decade, China has spent huge sums
propping up electric-vehicle manufacturers, setting production quotas for
plug-ins and doling out incentives for electric-car buyers.
But it also has used the state’s clout to
generate demand for its domestic electric-vehicle manufacturers in less obvious
but important niches that the government could influence easily. Think buses
and taxis.
At a time when policymakers around the world
broadly see plug-ins as the future of transportation, China’s multipronged
strategy to promote the technology contrasts sharply with that of the Trump
administration, which is rolling back Obama-era tax credits and subsidies.
“The current U.S. administration is not a
leader promoting electrification or alternative energy sources, so the federal
government is sitting on its hands,” said Scott Kennedy of the Center for
Strategic and International Studies in Washington. “The difference between
China and the U.S. couldn’t be greater. It’s night and day.”
Shenzhen says its switch from diesel and
gasoline, completed in January, has resulted in a carbon-dioxide emissions cut
of more than 1.35 million tons a year. That’s the equivalent of taking 280,000
passenger cars off the road — an environmental boon in a country grappling with
notorious air pollution.
City officials say their electric overhaul
was spurred by a 2009 policy from Beijing’s top economic planning agency to
make China a leader in the then-nascent electric-vehicle industry — from
passenger sedans to commercial trucks to the battery technology that powers
them.
Flush with cash and encouragement from the
central government after several years of trials, Shenzhen in 2015 bet big on
electric when the technology was still somewhat clunky, city officials and
industry executives said.
The buses were hobbled by limited range, but
local officials pushed procurement deals between bus and taxi operators and
Shenzhen’s BYD, an electric-vehicle manufacturer.
In turn, BYD received more than half the
price of every bus — $150,000 out of $300,000 — directly in the form of
government handouts.
The government also appropriated land for
thousands of charging stations and signed up Potevio, a state-owned
telecommunications hardware maker, to build them — a process that might not go
as smoothly in the United States.
“The early technology wasn’t mature, and
there was no precedent for large-scale deployment,” said Zheng, the Shenzhen
transport official. He referenced a phrase coined by Deng Xiaoping, the Chinese
leader who turned Shenzhen into an economic powerhouse through risky reforms in
the 1980s: “We were crossing the river by feeling the stones.”
Those bets are paying off.
Several major Chinese cities, including
Taiyuan, Beijing, Shanghai and Hangzhou have significant electric fleets of
taxis and buses. A Bloomberg New Energy Finance report estimates that roughly
20 percent of municipal Chinese buses are already electrified.
In the past five years, Chinese manufacturers
led by BYD produced more than 410,000 e-buses, the vast majority of those used
in the world, estimates Yale Zhang of Automotive Foresight, a Shanghai
consultancy. London’s famous double-decker fleet includes BYD electric
vehicles, and hundreds of BYD’s E6 hatchback taxis are starting to roam the
streets of Bangkok and Mexico City.
Umberto Guida, director of research and
innovation at the International Association of Public Transport, an industry group
in Brussels, said it is “inevitable” that public transportation will go
electric in major world cities.
But Beijing’s political will and financial
backing played a key role when there were still lingering questions over the
feasibility and profitability of plug-ins, he said.
“In the early days, China facilitated by
creating big demand,” Guida said. “It gave the possibility for this market to
grow.”
On the streets of Shenzhen today, ubiquitous
government vehicles bearing green-tinted license plates — denoting they are
hybrid or fully electric — show how the city’s electrification policies reach
far beyond public transportation.
Shenzhen police patrol neighborhoods in
electric sedans. The postal service delivers mail in green-plated minivans. The
transport commission says it is working this year to convert the fleet of
sedans used for official city business to electric in coming years.
All told, China’s government has spent $59
billion in research funding, subsidies and procurements to promote the
electric-vehicle industry — or 42 percent of the sector’s entire commercial
activity, according to a 2018 report by Kennedy at the Center for Strategic and
International Studies.
That dwarfs the expenditure by the United
States and even European countries, which have some of the most generous
plug-in incentives in the world. And that doesn’t count the powerful,
nonfinancial incentives China has introduced for electric-car buyers. For
instance, they can obtain license plates immediately, while consumers who buy
gas guzzlers must wait years in some cases.
Although policy experts say the Chinese government
has been instrumental in pushing forward the industry, many raise a familiar
question: Is Beijing going too far to tip the scales?
New-energy vehicles, and specifically
commercial vehicles such as buses, were one of 10 pillars of the “Made in China
2025” blueprint that has been criticized by the Trump administration as an
example of what the White House terms unfair Chinese practices.
As trade frictions with Washington have
worsened over the past year, China’s state media has shelved propaganda
boasting of how the “2025” plan would help China dominate high-tech
manufacturing. But China’s leaders have shown no signs of abandoning the underlying
tactic of propping up strategic industries, U.S. officials who study Chinese
industrial policy say.
Some U.S. and European executives worry
China’s state-driven industry will produce a glut of cheap vehicles that will
flood the world market and kill off international competitors. That’s what
China’s heavily subsidized solar-panel industry did a decade ago.
Chinese analysts, meanwhile, worry that the
top-down, subsidy-fueled approach produces substantial waste and not enough
world-class innovation.
“China has the largest volume of sales, but
we don’t have much confidence in our technology,” said Qiu Kaijun, editor of
the website Electric Vehicle Observer. “It’s far too early to say that China
has already won.”
On the streets of Shenzhen, there are other
signs that going electric by diktat can sometimes be bumpy. Taxi drivers say
they were forced to put down deposits of more than $4,500 for new vehicles when
the government mandated the electric conversion, a significant cost for many
struggling to make ends meet.
The new BYD electric taxis — at least early
models — also had unpredictable brakes, and charging is a major headache.
Although the government has built thousands of charging stations, there are not
nearly enough spaces in central areas to serve taxi drivers.
“Whenever I have to charge, I get angry,”
said taxi driver Song Guiqing, as he cruised along Shenzhen Bay. “If you want
to charge downtown during peak hours, forget about it.”
Within public transport circles, however,
Shenzhen is considered something of a pacesetter.
Joseph Ma, deputy general manager of the
semiprivate Shenzhen Bus Group, the city’s largest bus and taxi operator, said
he frequently hosts transportation officials from Japan, India, Spain, England,
California, New York — all over the world.
“They always ask: ‘How did you do it?’ ” Ma
said. “I say, ‘Coordination and subsidies.’ ”
Lyric Li in Beijing contributed to this
report.
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