4 Sep 18

Cities' Policies Push Electric Vehicles

Driven by air pollution and traffic congestion, cities’ policies all over the world are pushing the electric vehicle market to deploy even faster.  

Various cities are taking measures to improve air quality and reduce traffic. The kind of policies on city level varies from traffic restrictions for polluting cars to incentives for less polluting ones, such as free parking for electric vehicles. An overview of the low emission zones and traffic restrictions can be found here.

Most of these traffic restrictions will get more stringent over time, eventually leading to ‘no go zones’ for the internal combustion engine driven car (ICE). In some cases various traffic restrictions are implemented in the same zone, and as a result confuse drivers, as seems to be the case in London.

Discouraged by access restrictions for certain types of ICEs, and eventually ICEs altogether, they have to start looking for alternatives. Besides alternative mobility, various technologies can replace ICEs, such as biofuel, LPG, CNG and hydrogen. Nevertheless, many OEMs have opted to accelerate their EV programs. Bloomberg New Energy Finance estimates that 300 different EV models will be on the market by 2021, an overview of which can be found here.

Local actions, global results

In this light, China’s pioneering role is at least remarkable. In its war on pollution, various big Chinese cities, such as Beijing, Shenzhen, Guangzhou, Tianjin and Shanghai discourage ICEs by making the registration process very time and money consuming. In Shanghai, for example, new permits can be obtained for about $14,000 and in Beijing it takes several years to obtain one; whereas New Energy Vehicles are exempt from these restrictions. 

These local restrictions affect the global EV market, since 21 percent of the global EV sales goes to six Chinese cities; moreover, the Bloomberg New Energy Finance reports that EV sales in these cities have increased two to four times faster than the national average growth rate in China (up to eight times in Beijing, six times in Shanghai and five times in Tianjin – last year alone).

Even though the part of EVs is still marginal on the overall Chinese vehicle market, it is the national target to make 20 percent of the national vehicle sales electric by 2025. Moreover, the sales are supposed to be higher in the biggest, wealthiest cities, where most cars are sold. As a consequence the EV market in these Chinese cities is crucial for OEMs globally, since China is the largest car market in the world; and electrifying their fleet might be necessary to keep their sales steady. 

As a result, the various policies of cities worldwide to address air pollution, traffic congestion and climate change, are an important and increasing pushing factor for the EV market, stimulating OEMs and drivers to go electric.   

Authored by: Fien Van den steen