Caixin
May 22, 2019 07:28 PM
BUSINESS & TECH

China’s Electric Car Charging Network Still Lacks Spark

Electric-vehicle charging stations line the entrance to a Tesla dealership in Beijing on April 17. Photo: VCG
Electric-vehicle charging stations line the entrance to a Tesla dealership in Beijing on April 17. Photo: VCG

While China has charged ahead in developing the world’s biggest electric vehicle (EV) market, the country is struggling to build the supporting infrastructure to recharge its electric fleet, with high costs, low usage and a lack of national safety standards all causing roadblocks.

A raft of generous policy incentives from Beijing in the last decade helped to turbocharge the development of China’s EV market, as the country sought to take pole position in the new market while trying to reduce CO2 omissions from traditional vehicles. New-energy vehicle sales surged by more than 60% last year to 1.25 million, with 99% of the world’s 425,000 e-buses operating on Chinese city streets.

Despite the government’s success in promoting EVs, it is having a much tougher time encouraging the charging infrastructure to match. Policymakers largely hoped that EV charging points could piggy back on the country’s network of 100,000 or so gas stations. But so far only around 50 gas stations have EV charging facilities, Zheng Jiatu, the deputy secretary of the China Electric Vehicle Charging Technology and Industry Alliance (CCTIA), told Caixin.

Public charging points are seeing little usage so far. CCTIA statistics show that China had 808,000 charging points last year, with over half in the hands of car owners, rather than being public. The public points are only utilizing a tiny amount of the charge they are capable of delivering each month, and far below the 30% utilization rate that such charging points need to be profitable in a public environment, according to Liu Kai, director of the CCTIA’s technology and certification division.

So far, a reliable public network has struggled to take shape. This is not for a lack of forward thinking. State-owned China National Offshore Oil Group Co. Ltd. (CNOOC) announced its intention to explore developing a network of charging stations a decade ago, but there is no public information that suggests it has put any into operation at its gas stations so far. In 2010, 16 major state-owned enterprises including the other two major state-owned gas companies banded together to form the CCTIA, in a bid to coordinate developing a standardized national EV charging system. Yet development remains in the pilot stages.

Multinational oil giants Royal Dutch Shell PLC and BP PLC are also experimenting with developing charging points at their China gas stations. Yet up to now, Shell only has a charging business in a gas station in Tianjin. BP is still exploring what sort of business model, technology and equipment could work.

Costly upfront charges

Creating a new viable business model is proving a major challenge in the development of a grid so far, said Li Biao, chairman of BAIC BJEV Co. Ltd., the largest charging point operator. Upfront investment costs are high, and so far, utilization rates remain low, discouraging meaningful development.

Another major issue challenge is that gas stations are not usually located in areas where it is easy to connect them to the state grid, given the need for a substantial power supply. “Domestic gas stations were mostly built or leased by oil companies more than a decade ago, and the regional grid load was not taken into account in the construction,” said Li. “More than 90% of the existing gas stations need to negotiate with the state grid for grid expansion when installing charging stations,” he said, adding that the cost can run into the millions.

Another challenge is that existing charging points are not necessarily close to where there is highest demand, Li said. While charging points used by e-bus companies or at busy public locations such as airports are seeing relatively high usage rates, most EV users prefer to charge at home, rather than at gas stations.

Safety standards roadblock

Zhu Zhuomin, CEO of Powershare Co. Ltd., said that the country’s current lack of unified safety standards is also hampering development at gas stations. At present there are no clear standards for safety from the fire authorities, the national grid or other electricity-related groups.

This has caused some consternation from China’s regional governments. “Local governments are taking different attitudes toward charging stations at gas stations,” Zhu said. “For example, in various southern provinces, district governments welcomed gas stations’ charging station business, but others hesitated because there was no national security standard to refer to.”

Top economic planner the National Development and Reform Commission, the National Energy Administration and four other ministry-level bodies issued guidelines on developing charging infrastructure in 2015. Yet they only mention the vague aim of “encouraging the construction of public fast charging facilities at qualified gas stations” without specifying what constitutions a “qualified gas station.” In the absence of clearer policy support, the development of a national charging grid may struggle to get off the ground.

Contact reporter David Kirton (davidkirton@caixin.com)

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