Caixin
Mar 03, 2021 07:45 PM
BUSINESS & TECH

Geely Urges Scrapping of Costly Ban on Rail Transport of Electric Vehicle Batteries

Li Shufu, chairman of Geely. Photo: VCG
Li Shufu, chairman of Geely. Photo: VCG

Geely Automobile Holdings Ltd., a leading carmaker in the world’s biggest market, is calling on the government to amend the country’s transport rules to allow batteries used in electric vehicles (EV) to be shipped by railway, as domestic manufacturers seek to cut logistics costs as they push into the booming European market.

Rules that ban lithium batteries from China’s railways — which were made decades ago due to safety concerns — lengthen shipment times and greatly increase transport costs, specifically since they mean carmakers can’t load their products onto the continent-spanning Sino-Euro Railway, said a proposal by Li Shufu, chairman of Geely, published Tuesday.

“This has impacted the export of new-energy vehicles — including components such as lithium batteries — of all major auto companies,” said the proposal. “Compared with sea and road transportation, shipment by rail has huge advantages, especially over long distances, in terms of economy, stability and carbon emissions.”

Geely’s plea comes after the European market for electric vehicles soared past China in 2020 to become the world’s largest, as generous incentives and new models fueled buying, according to a January report by S&P Global citing EV-volumes.com. China shipped a total of 222,900 EV units aboard last year, with over 30% exported to Europe, according to Cui Dongshu, secretary general of the China Passenger Car Association.

Li, who is also a delegate of the National People’s Congress, will submit the proposal to the legislature’s annual meeting that begins on Friday. A new five-year plan shaping national policy through 2025 will be approved during the meeting.

The problem facing carmakers is that lithium batteries used in EVs are classified as dangerous goods in China because of the combustible metals they contain, relegating them to shipment by sea or road for now, a battery industry insider told Caixin.

However, Li argues in the proposal that major carmakers have met all technology requirements and manufacturing standards to ensure safety when shipping electric vehicles, adding that European manufacturers have begun transporting products by rail thanks to the “friendly regulatory environment regarding transport of EVs” in the European Union.

Li recommended amending the existing rules to let lithium battery parts and EVs to be shipped by rail and the government could consider establishing dedicated lines for the transport of new electric vehicles to assist domestic manufacturers’ expansion into the global market.

Hong Kong-listed Geely launched a plan last year aiming to tap into the European market. In a monthly sales report for January, the company said its first batch of Lynk & Co 01 plug-in hybrid EVs is heading to Belgium by sea. Other startups including the high-profile Nio Inc. and Xpeng Inc. have also announced plans to enter the European market.

“With the increase in sales of new-energy vehicles in overseas markets such as Europe, China’s new-energy vehicles are expected to gain more growth opportunities overseas,” said Li’s proposal.

Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

Follow the Chinese markets in real time with Caixin Global’s new stock database.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code