The Chart That Shows Why China Is Desperate to Switch to Electric Cars

The government considers new incentives to slow skyrocketing gasoline consumption.


Over the past decade, the number of cars sold in China has jumped from 2 million a year to nearly 20 million. No surprise, then, that oil consumption soared from 250,000 barrels a day to 2.25 million barrels a day between 2003 and 2013, according to a new report from United States Energy Information Agency. As a result, since 2009, China has been forced to import half of its oil.

That hockey stick-like growth has, of course, exponentially worsened China’s catastrophic pollution and so the government’s latest 5-year plan calls for 500,000 electric and hybrid cars to be on the road by 2015, with 5 million by 2020. To hit those targets, China has invested billions of dollars to jump-start the country’s electric car industry. It's also providing subsidies to get the motoring masses to go fossil-fuel free.

So far, that hasn’t really worked.

Just 14,604 electric cars and 3,038 plug-in electric hybrids were sold in 2013, according to the China Association of Automobile Manufacturers.

Now the government is revving up a new round of incentives, such as waiving a 10 percent tax on the purchase of new cars if buyers go electric. It has also delayed a phase-out of other subsides.  (In years past, some Chinese cities have handed out free license plates to electric car buyers—a considerable perk given that the price of a license plate alone can cost as much as a conventional car.)

In fact, China’s cities—rather than Beijing bureaucrats—may be more successful in promoting electric cars and cleaning up the air. The city of Hangzhou this month placed an order for 2,000 battery-powered buses and 1,000 electric taxis made by BYD, the Chinese automaker that counts Warren Buffett as one of its biggest shareholders. (BYD has also started making electric buses in California.)

Car makers clearly see a future for electric cars in China, the world’s biggest auto market.

Tesla Motors has garnered the most headlines for plans to sell its luxury electric sports sedan to the country’s 1 percent. But a joint venture between Nissan and China’s Dongfeng Motor Company will introduce an electric car this year, aiming to capture 20 percent of the market. And Daimler and BYD announced last month it will in September begin selling an electric car in China that has a range of 190 miles.

License plate not included.