Feng Wei (et al.) from the Shandong University has taken a snapshot, 2018, of the largest EV-adopting city in China, Shanghai, to try and calculate the benefits of EV introduction.
The paper is filled with fascinating observation of which one is an aside noting not all EVs are equal in terms of their environmental benefit.
The more expensive models score badly as do Plug In Hybrid Electric Vehicles (PHEV) despite the fact that consumers like them (less range-anxiety, as opposed to full-electric or BEV) and they account for the lion’s share of New Energy Vehicles (NEV) sold in the survey period.
[When studies put NEVs and Internal Combustion Engine Vehicles (ICEV) side by side, as this one does, there’s often a lack of clarity as to which comes out on top. The assumed cost of input dis-benefits and the value of output benefits are the problem and greatest source of variance. However, in this case…]
The work here is complex but fair in my estimation and the researchers conclude the total societal benefit of NEVs in Shanghai in the study period was U$1,230 per vehicle. Huzzah? Not so fast. Vehicles were sold with an average subsidy of U$5,076. So there seems to be a net dis-benefit associated with EV introduction of c. U$3,800 per vehicle. Hmm.
The authors make three recommendations that would help strengthen the case for NEVs:
- Stop subsidizing PHEVs as if they were BEVs. A look at the table above reveals the good sense of this and some local authorities have already got the message and started to do this.
- Raise the efficiency standards of NEVs. They don’t say as much but a rating system ought to be possible to effect this letting consumers make like-for-like comparison with other NEVs and ICEVs at point of sale.
- Reduce the sulfur output of the coal fired generation capacity that’s used to produce the majority of China’s electricity currently. Higher quality coal (it’s dearer but available) is a viable fix.
If NEVs are, in fact, over-subsidized the government should reconsider the policy, right? Indeed they are, but subsidies due to be withdrawn in December this year were extended last week for another year to the end of December 2023.
The paper notes that what started as an environmental program is looking now more like an industrial policy and last week’s subsidy extension news suggests there’s substance to the notion.
It’ll be interesting to see how this high-growth segment fares, as and when the visible-hand is finally removed. Boosters and fans are reminded, past performance is no guide to future prospects and that’s likely to be especially pertinent advice in this case.
You can access the work in full via the following link The Benefit of Electric Vehicles.
Happy Sunday.