5 Jun 19

The New Detroit

Behind China’s push for electric is an entire ecosystem of municipalities wanting a piece of the lucrative cake. The Government has been investing massively in EV-towns to cater for the manufacturing industry – according to Bloomberg about USD 30 million.

Build it, and they will come

China counts 500 EV makers as a result of its “Made in China 2025” strategy; MiC25 is meant to turn the country into the world’s largest tech hub whilst becoming less dependent from other nations for its energy supply. This is where the focus on electric comes from – not so much because of eco motivations, although China is making great efforts to make cities more liveable for their increasing populations.

Now, entire cities are being built – about 20 of them – to host the EV industry. A successful EV manufacturer, including its supporting supply chain, can generate up to USD 15 billion of revenues for its home location. It goes without saying that incentives, such as cheap land, tax breaks and housing subsidies, are vastly available to attract the carmakers.

Shunde NEV Town

One such example is Shunde, a NEV town inside the city of Foshan, in the southern part of China. Shunde wants to attract EV manufacturers, adjacent suppliers, offices and provide for housing for its workers. To do so, Foshan city has reached out to China’s largest developer, Country Garden, who will not only build the town, but also try to convince the EV supply chain to choose Shunde, rather than any of the other 19 prospecting cities.

The challenge for Country Garden is to find enough companies to make Shunde work, but also to find exactly those suppliers that are sustainable and will survive the EV fever. The developer claims to have filled up over half of the available office space already. It has attracted Youxia Motors (EV startup) and autonomous carmaker Beijing Zoominbot Automotive Technology.

Challenges ahead

EVs only account for 5% of the total vehicle sales in China, and the Government has cut part of the subsidies destined to incentivise consumers to go for electric. In China’s fast moving economy, this means that the enthusiasm around the industry has weakened; some people are already talking about the EV Town bubble.

It is certain that not all of the 20 cities will survive, or even be built. The Bloomberg journalist visiting the Country Garden showroom in Shunde reported to find “…its voltage a bit low.” Most offices were empty, few people were around. Country Garden remains positive. There’s one thing the EV industry needs and that municipalities can offer: land. …we have been well aware of sector challenge since planning it two years ago, and we’re confident that we can adapt to the change.”

Authored by: Yves Helven