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February 16, 2015

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Promoting green cars via a rental share program

Convincing Shanghai residents to buy clean energy cars, even with generous public incentives, has been a hard slog for the municipal government.

Can an electric-car rental program help break down public resistance by giving consumers a taste of new energy driving?

Shanghai International Automobile City, a demonstration zone for electric cars, hopes that is the case. It recently celebrated the opening of the 50th outlet of its EVCARD program, China’s first electric-car sharing platform.

Registered users of EVCARD can check the availability of electric cars nearby, book one and pay for it via smart-phone. The rental period can be as short as half an hour, at a price of 15 yuan (US$2.4), with each minute increment costing 0.5 yuan until a daily maximum of 180 yuan is reached.

All the services are self-help. Cars are opened by the swipe of a smartcard, recharging services are available at every dedicated parking spot, and the car, with its location and condition under close monitoring, can be returned to any outlet.

The popularization of electric cars has been slow because of limited mileage per charge, scarcity of charging facilities and high sticker prices. Car-sharing, as a way to spread risk and share benefits, is a concept borrowed from a pioneering Paris program called Autolib.

In densely populated urban areas, each car in a sharing program actually replaces quite a few private car ownerships, thus easing traffic congestion and parking nightmares.

“I hope we can catch up with Paris in electric-car sharing services within two years,” said Rong Wenwei, general manager of Shanghai International Automobile City. “The network of EVCARD outlets will be extended beyond its current base in the Jiading District to more downtown areas.”

The current car-sharing fleet of 350 SAIC’s Roewe E50s is expected to grow to 1,500 by the end of the year, with the addition of Zinoro 1Es and Springos from BMW Brilliance and Shanghai General Motors.

Budget constraints

Budget constraints on electric car manufacturers mean they are constantly struggling to find the right balance between cost of batteries and the mileage they support. The solution often comes at the expense of features such as big legroom in the back seat, making electric cars less attractive to Chinese consumers.

“The Roewe E50 is small but big enough for me to run some local errands,” said an early EVCARD user surnamed Lin. “However, I prefer to drive my own combustion-engine car to haul my family around.”

Overall, using EVCARD is more cost-effective, Lin added. The money he has spent on electric-car sharing would pay fuel costs for his own car, but not insurance, parking, and maintenance costs.

The plunge in fuel prices hasn’t undermined Lin’s willingness to go green. Even with gasoline 25 percent cheaper than in the past, it’s still 10 times cheaper to recharge a car with electricity.

Liu Jianhua, head of the Shanghai New Energy Vehicle Promotion Office, said private buyers, not public fleets, are the key driver of clean energy cars, accounting for 70 percent of the 10,000 units sold last year,

The sales figure includes some BYD Qins, a hot-selling but also controversial plug-in hybrid.

The traditional combustion engine in its powertrain is a back-up power source to extend the range of the car beyond an electric charge lasting 70 kilometers. It also offers the option of running the car without recharging.

That feature has triggered speculation that the fuel mode is more widely used than the electric charging, prompting an outcry that the Qin shouldn’t be included in government incentive programs, which grant plug-in hybrid a 60,000 yuan subsidy and a local license plate worth at least 70,000 yuan in Shanghai.

Liu dismissed the criticism.

“Users like the electric mode because it is quiet and cheap,” he said of the Qin. “Most of BYD Qin owners are willing to drive the car more on electricity, though that still depends on the availability of charging.”

Public charging

Development of public charging facilities is still a work in progress. In some neighborhoods, private charging poles are making an appearance, though not without concerns about community safety issues and parking resources.

“It is a common problem, with social complications,” said Liu. “The city is working on a policy document governing these poles, taking the experiences of Shenzhen and Beijing as reference points.”

Given all the problems of making electric cars commercially viable, the idea of sharing clean energy vehicles seems to be an ideal promotion at present. But can such car-sharing be profitable?

Shanghai International Automobile City has already invested about 100 million in the EVCARD program and that figure is expected to rise by a similar amount this year.

“It is not that we are looking for huge profits in EVCARD,” said Cao Guangyu, deputy manager of Shanghai International Automobile City. “Our focus now is to fill some gaps in the city’s traffic system, to improve the commuting experience and to blaze a green trail. At the same time, we will try to bring down the costs to make it even more attractive to consumers.”


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