China to Overtake U.S. in Electric Vehicles Sales in 2020

Chinese consumers may purchase about 47 percent more electric vehicles than the U.S. in a decade, according to a consultant for the World Bank.

Plug-in electric vehicles that connect to a power grid to store energy in batteries will rise to 2.2 million, or 11 percent, of vehicles sold in China in 2020, said Oliver Hazimeh, a partner at PRTM, which did a report on China’s $15 billion New Energy Vehicles Program. By contrast the U.S. may have 1.5 million such new vehicles on the road that year, he said in a phone interview yesterday.

“China’s emerging as a leader in electric vehicles,” Hazimeh said. “There’s huge pent up demand for cars from the middle class.”

Plug-in vehicles may comprise 10 percent of new sales globally by 2020, creating a $250 billion market, according to the study released today. There may be as many as 8 million units sold that year, Hazimeh said by phone.

China has committed about $15 billion for vehicle electrification over the next five years where it will develop infrastructure to promote electric vehicles while the U.S. has agreed to provide $2 billion to $3 billion to promote battery-powered vehicles, Hazimeh said. President Barack Obama’s administration aims to have 1 million electric vehicles on the road by 2015.

Lottery System

“There’s political will at all levels of the government in China to support development of electric vehicles,” Shomik Raj Mendiratta, a transport specialist at the World Bank, said by telephone from Hong Kong yesterday.

China is using monetary and other incentives to boost electric car use, said Demi Zhu, a Beijing-based analyst with Bloomberg New Energy Finance. State electricity grids are developing the electric vehicle market by building battery-swap stations and renting the units to lower costs, Zhu said.

Battery costs, which increases the price of a plug-in vehicle to as much as twice as that of a gasoline vehicle, may halve to about $300 per kilowatt-hour by 2020, Hazimeh said.

“If you buy an electric vehicle you don’t need to go through a lottery system in Beijing to purchase cars,” Zhu said. “And you can drive your car every day.”

Beijing introduced measures such as draws and restricted driving to control car ownership and curb pollution. The government is also encouraging car makers and battery companies to team up and reduce costs, Zhu said.

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