“Crossing the river by feeling the stones”

Famous words by former Chinese leader Deng Xiaoping, describing the 1980 economic reforms that turned China into a socialist market economy. Better known in the West as the “Opening of China”, these initial reforms and their continuation under President Xi Jinping brought China prosperity and growth through massive change. The entire journey has not been easy nor without failures, but no one will deny that the Chinese have had the courage to try.

Shenzhen

The Guangdong Province largest city was the first Special Economic Zone (SEZ) in the roll out of the economic reform. SEZs apply trade models that are free-market oriented and have more autonomy than other, planned-economy cities or provinces. Shenzhen’s population is difficult to measure, due to its high number of temporary residents, people in transit and commuters, but it’s reasonable to say that its permanent population is somewhere around 13 million people.

Shenzhen is China’s third economic powerhouse, after Beijing and Shanghai. It’s location is ideal, bordering Hong Kong, with easy access to the South China Sea. In the (near) future, a wider development of the Greater Bay Area (GBA), which includes the entire province of Guangdong, Hong Kong and Macau is to be expected, with a prominent role for Shenzhen. The tech industry is dominant in the city, that hosts companies such as the Ping An Group (banking, insurance, leasing), ZTE, Huawei, Tencent and electric vehicle manufacturer BYD.

Go electric!

Shenzhen was the first city in the world to electrify its entire public transit system, back in 2014. Currently, a fleet of over 16,000 buses and 12,000 taxis whir through its busy streets, cutting CO2 emissions with the equivalent of taking 280,000 petrol or diesel cars off the road. This was a direct result of the “Made in China 2025” strategy, aiming to make China less dependent on the import of fossil fuels.

In addition to public transit, over a third of the delivery vehicles are electric and so are police and city vehicles; the total number of EVs in Shenzhen is now estimated to exceed 150,000 units.

Strategy

The city’s strategy to implement electric comes down to one statement: EVs need to be economically viable to their fossil fuel alternatives. This was achieved by a variety of (coordinated) initiatives: subsidies (for the vehicles and the charging infrastructure), road restrictions for ICEs and preferential electricity rates.

Many obstacles and mistakes

Shenzhen decided to convert early; in 2014, most of the EVs were clunky, unreliable and had an insufficient range. On top of that, charging times were high. Needless to say that the Chinese EV manufacturers at the time had acquired knowledge nor expertise to produce efficient vehicles. Nevertheless, and this is exactly where the Chinese excel, the execution of a vision didn’t need to be perfect from day one, but executing nonetheless had to happen.

Monitoring growth

Shenzhen’s population continues to grow, and so does the size of its middle class. As a result, the need for mobility is increasing every day. This means that the city needs to tackle a set of new challenges, as the queues at charging stations are becoming uncomfortably long. These challenges are:

• The pressure on the electricity grid, especially as fast charging stations create unpredictable spikes in energy demand
• Distribution of charging points
• Unsustainable level of subventions for vehicles, infrastructure and electricity

A first conclusion, based on data analysis, is that EV users don’t charge their vehicles where they use their vehicles: a good example are the delivery vehicles, that spend most of the day in the city, but charge in the suburbs.

The second conclusion is that people prefer shorter charging times on fast chargers. Obvious, for sure, but it means that a part of the charging network, the slower chargers, are not being used at all.

A third conclusion is the need of better integration of EV data into city planning. Charging infrastructure is more than an accessory to city planning; if well integrated, traffic streams and pressure on the power grid can be optimised.

Finally, using strategic electricity pricing can help distribute and balance out peaks of electricity consumption.

Shenzhen is relentlessly analysing data and improving the coordination between data sources (connected vehicles, charging station, operator data). EV proliferation cannot slow down the city’s growth.

Take-aways

Electrification starts with vision and courage. Most of the corporate fleets apply an EV strategy that is, at best, anecdotal and single digit. There are many valid reasons for this: hesitations from the employees, insufficient charging infrastructure, unavailability of affordable (lease or other) EV solutions. However, much of the real resistance comes from decision makers who don’t feel comfortable with a more complex procurement process (vehicle plus charging) and service offering.

Furthermore, a transition to electric will rarely generate sourcing savings on a “old-versus-new” basis. Consequently, procurement people need to be otherwise incentivised. Zheng Jingyu, who was in charge of the electric overhaul in Shenzhen, puts it like this: “[Going fully electric] costs a lot of money, but it helps our citizens and helps our air.”

Finally, electrification requires a different way of fleet management. Data based analytics are essential: knowing where the cars will be used and parked, understanding charging behaviour of the employees in order to source for the most adequate solution are just two examples.

But most importantly, give it a try.