Since 2016, China began to give out special “green-colored” license plates to new energy vehicle (NEV) car owners. This new plate distinguishes the NEVs from the regular “blue-colored” license plates which are commonly used on regular fuel passenger cars. Most importantly, NEV’s green plates are exempt from some cities’ license plate auction system, which was set to limit new car ownership in order to resolve congestion and pollution problems. For example, in 2020, the average sale price for a new license plate registration quota in Shanghai is about 90,000 Chinese yuan ($14,068). This means buying a NEV in Shanghai could cost about $15k less than buying a regular fuel car during the process of registration. Buying a NEV becomes a very good option for potential car buyers in Shanghai. The Chinese government is doing so to encourage people to buy more NEVs because it wants to achieve the goal that by 2035, 20% of the total vehicles on the road are NEVs. The policy aims to reduce carbon emissions by limiting the number of fuel-based passenger vehicles. In July 2020, Shanghai's government unveiled plans to add 100,000-200,000 public and private NEV charging points over the next three years. In May, It also offered a subsidy of 5,000 yuan/unit ($704/unit) to NEV buyers.
Tesla, which first entered China in 2019, has a large advantage in the NEV market. Since early 2020, Tesla's newly built super factory in Shanghai has been delivering vehicles to the Chinese market. The maximum capacity of the factory could reach 550,000 units per year. Shanghai’s Tesla sales made up 31% of the total amount of China-made cars Tesla sold in the country. In September 2021, Tesla sold 56,000 EVs in China. That is a record sale number per month, and it seems to be growing in the future.
Buyers at a Local Tesla Dealership in Shanghai, China
Source:
1.
China's Shanghai continues to offer free EV
licenses. Web. February 2021. https://www.argusmedia.com/en/news/2185607-chinas-shanghai-continues-to-offer-free-ev-licences
2.
Tesla sales in China expected to see Q4 surge
with Shanghai’s updated license plate rules. Web. December 2020. https://www.teslarati.com/tesla-model-3-boosts-q4-sales-china-shanghai-rules/
3.
New energy vehicles in China. Web. October 2021.
https://en.wikipedia.org/wiki/New_energy_vehicles_in_China
Hi Yingjia,
ReplyDeleteI think we discussed this a little bit on class this past Thursday. I was in Shanghai in 2020, and remember that one of my professors said that getting the license plate for your car might even be more expensive than the car itself. I think the policy in place pushes customers to buy EVs, as you stated the reasons in your blog.
Thanks.
Hi, Yingjia, thank you for your interesting blog post! I was very surprised to learn about the ~$15K registration fee for new license plates on non-NEV cars, along with the ~$704 per-unit subsidy for NEV buyers. I think these are extraordinary incentives for NEV ownership over non-NEVs. I was not surprised to learn that Tesla was quick to capitalize on this market. But, I was fascinated by other competitors, given that Tesla only produces BEVs. So, other competitors may have an edge in terms of producing PHEVs. I was also interested in the price parity between NEVs and non-NEVs, considering that non-NEVs, especially if they are used, have generally lower fixed costs than NEVs. Furthermore, PHEV NEVs have generally lower fixed costs than BEV NEVs. So, I wonder if it would still be more affordable to pay the fees and forgo the subsidies by purchasing an older, used non-NEV. Thanks again for the thoughtful post.
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