Electric mobility and the quest for automobile industry upgrading in China

Full text

GREEN INDUSTRIAL POLICY:
CONCEPT, POLICIES, COUNTRY EXPERIENCES

ii
COPYRIGHT © UN ENVIRONMENT, 2017
ISBN No: 978-92-807-3685-4
The report is published as part of the Partner-
ship for Action on Green Economy (PAGE)—an
initiative by the United Nations Environment
Programme (UN Environment), the Interna-
tional Labour Organization (ILO), the United
Nations Development Programme (UNDP), the
United Nations Industrial Development Organi-
zation (UNIDO) and the United Nations Institute
for Training and Research (UNITAR) in partner-
ship with the German Development Institute /
Deutsches Institut für Entwicklungspolitik (DIE).
This publication may be reproduced in whole or in
part and in any form for educational or non-prot
purposes without special permission from the
copyright holder, provided acknowledgement of
the source is made. PAGE would appreciate receiv-
ing a copy of any publication that uses this publi-
cation as asource.
No use of this publication may be made for resale
or for any other commercial purpose whatsoever
without prior permission in writing fromPAGE.
CITATION
Altenburg, T., & Assmann, C. (Eds.). (2017). Green
Industrial Policy. Concept, Policies, Country Expe-
riences. Geneva, Bonn: UN Environment; German
Development Institute / Deutsches Institut für
Entwicklungspolitk (DIE).
DISCLAIMER
This publication has been produced with the
support of PAGE funding partners. The contents of
this publication are the sole responsibility of PAGE
and can in no way be taken to reect the views of
any government. The designations employed and
the presentation of the material in this publica-
tion do not imply the expression of any opinion
whatsoever on the part of PAGE concerning the
legal status of any country, territory, city or area
or of its authorities, or concerning delimitation of
its frontiers or boundaries. Moreover, the views
expressed do not necessarily represent the deci-
sion or the stated policy of PAGE, nor does citing
of trade names or commercial processes consti-
tute endorsement.
UN Environment gratefully acknowledges the
nancial support of Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) GmbH for
the layout and printing of this book. The publi-
cation was supported by the project “Enhancing
low-carbon development by greening the econ-
omy in co-operation with the Partnership for
Action on Green Economy (PAGE)” funded by the
International Climate Initiative (IKI) of the Federal
Ministry for the Environment, Nature Conserva-
tion, Building and Nuclear Safety (BMUB).
Cover photo: Colourbox.com
PAGE also gratefully acknowledges the support of
all its funding partners:
◼European Union
◼Federal Ministry for the Environment, Nature
Conservation, Building and Nuclear Safety,
Germany
◼Ministry for Foreign Affairs of Finland
◼Norwegian Ministry of Climate and
Environment
◼Ministry of Environment, Republic of Korea
◼Government Ofces of Sweden
◼Swiss Confederation, State Secretariat for
Economic Affairs (SECO)
UN Environment
promotes environmentally
sound practices globally and in
its own activities. This publication
is printed on 100% recycled paper,
using vegetable-based inks and other
eco-friendly practices. Our distribution
policy aims to reduce UN Environment’s
carbon footprint.

vi
Green Industrial Policy - Concept, Policies, Country Experiences
TABLE OF CONTENTS
iv ACKNOWLEDGEMENTS
vFOREWORD
Erik Solheim
vii LIST OF BOXES
LIST OF TABLES
viii LIST OF FIGURES
ix ABBREVIATIONS
xi EXECUTIVE SUMMARY
Tilman Altenburg, Claudia Assmann
PART 1: CONCEPTUAL FOUNDATIONS
1Chapter 1 Green industrial policy: Accelerating structural change towards wealthy green
economies
Tilman Altenburg, Dani Rodrik
PART 2: THE ECONOMIC AND SOCIAL CO-BENEFITS OF GREEN TRANSFORMATION
22 Chapter 2 What can developing countries gain from a green transformation?
Emilio Padilla
38 Chapter 3 Gaining competitive advantage with green policy
Stefan Ambec
50 Chapter 4 Enhancing job creation through the green transformation
Michela Esposito, Alexander Haider, Willi Semmler, Daniel Samaan
PART 3: ACCELERATING CHANGE
69 Chapter 5 In with the good, out with the bad: Phasing out polluting sectors as green
industrial policy
Aaron Cosbey, Peter Wooders, Richard Bridle, Liesbeth Casier
87 Chapter 6 Developing green technologies and phasing them in
Babette Never, René Kemp
102 Chapter 7 Pricing environmental resources and pollutants and the competitiveness of
national industries
Kai Schlegelmilch, Hans Eichel, Anna Pegels
120 Chapter 8 Promoting circular economies
Verena Balke, Steve Evans, Liazzat Rabbiosi, Sandra Averous Monnery
134 Chapter 9 Trade and investment law and green industrial policy
Aaron Cosbey
PART 4: COUNTRY EXPERIENCES
153 Chapter 10 Renewable energy as a trigger for industrial development in Morocco
Georgeta Vidican Auktor
166 Chapter 11 Germany: The energy transition as a green industrial development agenda
Anna Pegels
185 Chapter 12 Electric mobility and the quest for automobile industry upgrading in China
Tilman Altenburg, Kaidong Feng, Qunhong Shen
199 Chapter 13 Ethanol policy in Brazil: A ‘green’ policy by accident?
Pedro da Motta Veiga, Sandra Polónia Rios

185
Electric Mobilityandthe Questfor Automobile Industry Upgradingin China
CHAPTER 12
CHAPTER 12
ELECTRIC MOBILITYANDTHE QUESTFOR
AUTOMOBILE INDUSTRY UPGRADINGIN CHINA
Tilman Altenburg, Kaidong FENG, Qunhong SHEN

186
Green Industrial Policy - Concept, Policies, Country Experiences
1. INTRODUCTION
China promotes an ambitious electric mobility
programme, with two main objectives: to reduce
urban air pollution and to enhance the compet-
itiveness of its national automotive industry. A
range of industrial policies is being applied, and
several pathways to electric mobility are being
explored in parallel. On the one hand, China’s
industrial policy promotes the development of
battery-electric and plug-in hybrid passenger cars,
buses and trucks using a wide range of subsidies
and regulations. In addition to encouragement of
public and private Chinese carmakers, the govern-
ment puts pressure on international investors to
co-develop modern electric cars in joint ventures
with their Chinese partners. On the other hand, in
the shadow of national industrial policy and with
very little government support, low-cost electric
vehicles experience an unprecedented boom.
These include the 200 to 230 million electric
two-wheelers now circulating on China’s roads
and the recent addition of simple low-speed elec-
tric cars. Although the latter are not permitted on
highways, their popularity in rural areas is enor-
mous, with 600,000 produced in 2015 in Shandong
Province alone.
This paper explores the direction of the elec-
tric vehicle industry’s evolution and the extent
of China’s ability to achieve its environmental
objectives, while at the same time reaping early
mover advantages in an emerging global indus-
try. Section 2 informs the reader about the current
technological shift from internal combustion
engines to electric automobile technology and
how this may affect the competitive positioning
of countries and companies globally. Section 3
discusses China’s objectives, highlighting two:
enhancing national competitiveness in the auto-
mobile industry and reducing urban air pollution.
Section 4 provides an overview of China’s most
important electric vehicle policies, revealing an
enormous political commitment for this transi-
tion. Section 5 takes stock of where China stands
in terms of technological achievements and
emerging competitive advantages, differentiating
the four main technological areas of high-speed
cars and buses, low-speed cars, two-wheelers and
battery manufacturing. Section 6 then discusses
to what extent these developments actually
address the environmental problems related to
the automobile industry. Section 7 summarizes
the technological and environmental achieve-
ments of China’s move towards electric mobility.
2. FROM INTERNAL COMBUSTION ENGINES TO ELECTRIC
DRIVING: A TECHNOLOGICAL PARADIGM SHIFT
Globally, road transport is at the beginning of a
technological paradigm shift. According to inter-
national scenarios, transport in urban areas has
to be largely decarbonised by 2050 to keep global
warming within manageable limits (Teng et al.
2015). The old technology of internal combus-
tion engine automobiles is incompatible with the
imperative of decarbonising the world economy.
New carbon-efcient transport technologies are
required and electrication is the most prominent
alternative option, provided that the electric-
ity used by cars comes from low-carbon energy
sources. Furthermore, in contrast to conventional
trafc, electric vehicles produce almost no local
emissions and therefore reduce air pollution in
the cities.
Electric vehicles include a range of different trans
-
port technologies, including electric ships, trains,
buses, cars, and two-wheelers. The focus here is
on cars and two-wheelers, given the enormous
economic importance of the respective industries,
as well as their huge environmental impact.
Cars and two-wheelers can be fully or partly elec-
tried. In a fully electried battery-electric vehicle,
the internal combustion engine is replaced with
an electric engine powered by a huge, in most
cases lithium-ion, battery. There are, however,
different intermediate stages of hybrid vehicles
that combine electric and fuel-engine driving.
Mild hybrids are propelled mainly by internal
combustion engines–they use batteries as a
complementary temporary power source. Batter-
ies recharge with the electricity generated by the
combustion engine and the energy recuperated
from braking. Such vehicles can drive on elec-
tric only in the short term and their range is very
limited. Plug-in hybrids are designed for elec-
tric propulsion and have only a small auxiliary
combustion engine. They use larger batteries that
can be plugged into the electricity grid.

187
Electric Mobilityandthe Questfor Automobile Industry Upgradingin China
CHAPTER 12
Electric passenger cars, dened as fully
battery-electric vehicles and plug-in hybrids,
still account for only a small share of the global
car market: in 2016, 0.2 per cent of all passenger
cars (OECD and IEA 2017). In the market segment
of two-wheelers, the world market share of elec-
tric motors is much higher, about 25 per cent, a
proportion almost exclusively due to the popular-
ity of electric bikes and scooters in China (OECD
and IEA 2016). Overall, electric vehicle deployment
has been held back by technological problems,
mainly the disappointing performance and high
price of batteries: Most electric vehicles can travel
only 100–200 miles without recharging and fully
recharging a battery takes 4–8 hours. Progress
on these fronts however is quickening. Battery
performance is improving, particularly in terms
of the possible driving range, and their cost has
decreased rapidly in recent years, from US$1,000
per kWh in 2010 to US$300–400 per kWh in 2014
(Nykvist and Nilsson 2015). These authors forecast
that the price will go down to US$ 200 per kWh
by 2020 and calculate that electric vehicles will
become cost competitive with conventional cars
at a price of US$150 per kWh. In the same vein, a
recent study by Bloomberg New Energy Finance
(2016) states that battery price reductions “will
bring the total cost of ownership of electric vehi-
cles below that for conventional-fuel vehicles
by 2025, even with low oil prices.” At that stage,
uptake is likely to accelerate very fast. The same
source predicts that sales of electric vehicles will
reach 41 million by 2040 and include 35 per cent
of light duty vehicle sales. This is nearly 90 times
the equivalent 2015 gure, when electric vehicle
sales may have reached 462,000, about 60 per cent
more than 2014 (Bloomberg 2016). In fact, global
car manufacturers have already begun a race for
new and higher-performance battery-electric and
plug-in hybrid models.
At the same time, political pressure to elec-
trify road transport is increasing, as countries
committed to ambitious decarbonisation agen-
das in the 2015 Paris Agreement. Even before that,
many OECD countries had dened roadmaps
for the gradual reduction of GHG emissions that
force carmakers to successively reduce their
average eet emissions. The European Commis-
sion requires carmakers to ensure average emis-
sions of their eets do not exceed a maximum
of 130 g CO
2
/km for newly registered cars in 2015,
and this threshold will be lowered to 95 g CO
2
/km
by 2021. Although further reductions have not yet
been specied, the regulations ask “the Commis-
sion to maintain a clear emissions-reduction
trajectory comparable to that achieved up to 2020”
(EC 2017). United States and Japanese authorities
have set similar targets. Physical limits to fuel
efciencies in combustion engines mean they
cannot be fully decarbonised (Ferguson and
Kirkpatrick 2015). Since the required reductions
cannot be achieved by improving combustion
engines, carmakers must substantially increase
the share of hybrid and electric vehicles in their
eets. In China, political pressure for electri-
cation is similarly high, although for a different
reason. Chinese cities suffer unbearable air pollu-
tion and, given the combination of strong public
discontent with air pollution and a massive
increase of car ownership, reducing car-based
pollution is a political top priority.
The automotive industry is one of the most
important manufacturing industries globally. In
2015 it produced 68.5 million passenger cars and
90.7 million buses and trucks, with the corre-
sponding employment benets (OICA 2016). In
the EU, for example, 2.3 million people were
directly employed in car manufacturing in 2014,
increasing to 12 million if related services are
included (ACEA 2016). A similar order of magni-
tude applies for the United States and China.
The car industry creates important secondary
effects in industries such as steel, machine tools,
electronics and chemicals, explaining why all
major developing countries try to create domes-
tic automotive industries as a backbone of their
national industrial development strategies. At
the same time, the minimum scale requirements
and technological sophistication of the automo-
tive industry have continuously increased over
the past decades. Since South Korea joined the
exclusive club of car-producing nations in the
1970s, not a single newcomer has been able to
catch up with the technological frontier. China,
India and other emerging economies are quite
successful in producing cars and two-wheelers
for their domestic markets, but none of them has
been able to seriously challenge the technological
leaders, so far.
The paradigm shift to electric driving will likely
cause a major industry shake-up. When a new
set of technologies and the necessary supporting
institutions emerge, much of the accumulated
knowledge and physical assets accumulated
by incumbents loses its value, making it much
easier for newcomers to compete (Perez 1988).
Battery-electric vehicles require different kinds
of auto parts: electric engines with integrated
powertrains, magnets, powerful traction batteries,
different power electronics, new software, invert-
ers, charging devices, new lightweight materials
such as carbon bre-reinforced polymers–and
totally different thermo management systems

188
Green Industrial Policy - Concept, Policies, Country Experiences
because there is no combustion engine that can
be used for heating and cooling. Conversely,
combustion engines and their parts, such as
pistons, crankshafts and alternators as well as
exhaust systems and fuel tanks, will no longer be
required. As a result, supplier industries are likely
to go through a major restructuring and see the
emergence of newcomers to the auto industry
(McKinsey & Company 2011). Similarly, the archi-
tecture of electric cars can be radically different:
The combustion engines are no longer needed,
but heavy batteries need to be placed in the
auto bodies in ways that allow for good driving
performance. Electric vehicles can have centrally
placed electric engines, but there may also be
two motors attached to the front and rear axles
respectively, or four small motors placed in the
wheels (e-mobil BW 2010). Chassis can be made of
carbon bre rather than steel. All these changes
challenge the existing carmaker’s competitive
advantages, which are currently rooted in their
capabilities to master internal combustion engine
and transmission technology, to design cars and
to manage multi-tiered production networks.
In fact, worldwide, many rms from non-au-
tomotive backgrounds are now venturing into
electric vehicle manufacturing, trying to take
advantage of the techno-organizational change
to leapfrog into the car industry. The concept of
leapfrogging refers to newcomers adopting a new
technology more quickly and thereby overtaking
the formerly leading rms (Fudenberg et al. 1983).
Tesla, a complete newcomer to the automotive
industry based in California, started production
of an all-electric sports car in 2005 and within a
few years leapfrogged into the segment of lead-
ing luxury carmakers. Between June 2012 and
September 2017, it sold almost 200,000 Model S
luxury vehicles and the company aims to deploy
at least 1 million electric cars by 2020 (OECD and
IEA 2017).
Other, albeit not yet equally successful, newcom-
ers have sprung up in other countries. In China,
BYD and Zotye were the rst movers in produc-
ing electric cars in China–each arriving from a
different industry background. BYD was a battery
manufacturer that ventured into car manufactur-
ing by 2003 and Zotye was an auto-parts dealer
that began producing cars in 2005. Both started
with traditional internal combustion engines but
took up electric vehicle production earlier than the
established carmakers. At a national scale, China’s
aim is to take advantage in a similar way. With a
strong effort to become a leading manufacturer of
electric vehicles, as well as a leading market for
them, the Chinese government hopes to become
more successful in the global car industry than it
was in the era of combustion engines.
3. CHINA’S OBJECTIVES: ENHANCED
COMPETITIVENESS AND CLEANER URBAN AIR
China is one of the most ambitious promoters of
electric mobility and, clearly, the most important
one outside the OECD. China promotes electric
vehicles for various reasons, but two stand out.
The rst reason is that the country regards the
technological shift from internal combustion
engines to electric propulsion as an opportu-
nity to catch up with the global leaders in auto-
motive technology and production. Although
China’s automobile production goes back to the
early years of the People’s Republic of China, the
industry took off only in the 1990s after being
declared ofcially strategic for China’s economic
development. Car production was seen as a
cornerstone of technological development and
national policies aimed at indigenous innovation
(Chu 2011). China’s provinces tried to create state-
owned automobile companies with local supplier
networks (Thun 2006).
Since private car ownership was allowed, sales
and production soared. China has by far the larg-
est market in terms of passenger car sales world-
wide (Euler Hermes 2014). In 2015, China produced
21 million passenger vehicles (OICA 2016).
However, technological progress has been slow
and foreign brands still capture almost 60 per
cent of the Chinese market (EU SME Centre 2015).
Fuel engines and transmissions are among the
technological elds where China clearly is behind
international competitors; but these technologies
are not needed in battery-electric vehicles. At the
same time, electric engines are less complex and
less expensive. Finally, China has the second larg-
est reserves of lithium in the world and is a lead-
ing global manufacturer of lithium-ion batteries,
so there seems to be a solid basis for seizing this
opportunity. For these reasons, policymakers are
optimistic that China’s industry can take advan-
tage of the technological change and, leapfrogging

189
Electric Mobilityandthe Questfor Automobile Industry Upgradingin China
CHAPTER 12
into the era of electric mobility, become a leading
player in the global automotive industry (Wang
and Kimble 2011).
The second reason for shifting to electric vehi-
cles is that they are emission-free locally and
therefore promise a solution for urban air pollu-
tion–one of China’s most pressing problems.
Concentrations of particulate matter in big
Chinese cities are far beyond what the World
Health Organization considers safe, and respira-
tory health problems are among the main causes
of death. Zheng et al. (2015) estimate that every
year between 2001 and 2012 in Beijing’s central
area, over 5000 people died prematurely due to
increased PM2.5 concentrations.
27
Estimates
on the costs of health attribute US$ 1.4 trillion
losses to outdoor air pollution in China in 2010
(OECD 2014). It is difcult to isolate how much of
this cost is due to road trafc, but for Beijing it is
estimated that in 2013 motor vehicles accounted
for 21 per cent of PM2.5 and estimates for Shang-
hai 2014 attribute 22 per cent to motor vehicles,
ships and airplanes (Beijing Municipal Environ-
mental Protection Bureau 2014; Shanghai Munic-
ipal Environmental Protection Bureau 2015).
This share is likely to increase with the globally
unprecedented boom in combustion engine car
sales in China. By 2015, the registered passenger
cars in civil use surpassed 95 million, making
China by far the world’s biggest automobile
market (National Bureau of Statistics of China
2016). Moreover, between 2004 and 2014, car sales
increased by 11.4 per cent annually in China
27 Particulate matter consists of microscopic parts suspended in the atmosphere. PM2.5 refers to particulate matter with
a mean aerodynamic diameter of 2.5μm. These are highly carcinogenic as they penetrate deep into lungs and blood
streams.
compared to 0.9 per cent in the US, 1.4 per cent
in the EU and -0.5 in Japan (Gao et al. 2014). At
such growth rates, urban air pollution clearly will
become unmanageable without a radical change
in vehicle technologies.
Therefore, notably, climate change mitigation is
not the main rationale behind China’s electric
mobility programmes. In fact, China’s grid-pow-
ered electric cars emit even more CO
2
than aver-
age petrol cars when life cycle emissions are
calculated. This is because electric vehicle emis-
sion totals include those from the fossil fuels
burned to produce that electricity. Also, emissions
from the manufacture of electric cars are higher
than those of conventional petrol cars. Taking
these factors into account, electric cars would
have a better performance in terms of CO
2
emis-
sions, except in heavily coal-based economies
such as China. In 2016, coal-red power plants still
accounted for more than 65 per cent of China’s
electricity demand (China Energy Portal 2017). As
a result, based on 2009 data, grid-powered electric
cars in China emitted 258 g CO
2
e/km, equivalent
to a fairly inefcient petrol car with a 9 l/100 km
fuel consumption (Wilson 2013).
However, a new study suggests that China’s coal
consumption peaked in 2014, much sooner than
scenarios had predicted. Intervening years are
verifying the trend and while coal will remain the
primary source of energy in China for the next
decades, the declining trend may accelerate (Qi et
al. 2016).
4. CHINA’S ELECTRIC VEHICLE POLICIES
China’s electric vehicle policies are driven mainly
by the desire to leapfrog into a new promising
eld of technological specialisation and the need
to reduce urban air pollution. To achieve these
goals, China’s central government set ambitious
targets for electric vehicle deployment: 500,000
cars to be sold by 2015 and 5 million by 2020
(State Council 2012). To encourage electric vehicle
development and deployment, a wide spectrum of
policies were enacted by the central government
(Table 12.1). In addition, provinces offered their
own policy packages, which in part added to the
central government’s incentives, but also pushed
in different directions.

190
Green Industrial Policy - Concept, Policies, Country Experiences
Table 12.1: Main polices for the promotion of electric vehicles in China
Phase 1 (1990–98):
Research and development
and small-scale
demonstration projects
◼First research and development projects for electric vehicles in the 8th and
9th National Key Technology Research and Development Programmes
Phase 2 (1999–2008):
Scale up systemic research
and development projects
with small-scale local
demonstration projects
◼Deployment of Cleaner Vehicles programme: city trials in 12 major cities
◼10th National Key Technology Programme for electric vehicles: scale up
research and development for electric vehicles by about factor ten
Phase 3 (2009–2012):
Large-scale demonstration
projects and rst major
incentive programmes
◼New Energy Vehicles declared strategic emerging industry
◼Ten Cities, Thousand Vehicles Demonstration and Deployment Programme:
testing and subsidies for public eets in 25 cities
◼Use of conventional motorcycles banned in major cities: totally in 13 and
partially in 16 cities
◼Energy saving and New Energy Vehicles industry development plan 2012–
2020: preferential treatment of electric vehicles
◼Subsidy policy for purchasing private electric vehicles in 6 pilot cities
◼Public procurement regulations and subsidies
◼400,00 charging stations and 2000 batteries swapping station target
Phase 4 (2013–2015):
New round of incentives,
systematic policy for
charging
◼Guidelines for New Energy Vehicles Deployment with rened incentives:
purchase tax waiver, trade barrier removal, price regulation of electricity
charging, infrastructure subsidy etc.
◼Pilot region expanded to 88 cities
◼National Plan for Charging Infrastructure
Phase 5 (2016–ongoing):
Reduced subsidies, stricter
performance standards
◼Phase out of subsidies by 2020 announced
◼Electric vehicle quota for carmakers announced
◼Stricter fuel economy requirements
◼A general ban on the production and sale of fossil fuel cars under study for
the near future
◼Use of stricter technology standards and licensing policies to overcome
industry fragmentation
◼Enforcement of technological and environmental regulations for low speed
electric four-wheelers
Sources: Adapted from Xu and Su (2016), Zhang et al. (2014).
As a key element of electric mobility support,
the ‘Ten Cities, Thousand Vehicles’ programme
launched demonstration projects in 13 pilot cities
in 2009 and added 12 more later. Public electric
grid companies were told to build an infrastruc-
ture of charging stations for electric vehicles. In
parallel, 29 major cities fully or partially banned
the use of petrol motorcycles, thereby boosting
demand for electric two-wheelers (ADB 2009).
Later on, especially with the launch of the ‘Energy
saving and New Energy Vehicles industry devel-
opment plan 2012–2020’ generous incentives were
offered for the whole country, including purchase
subsidies and tax exemptions for electric vehicles
as well as large dedicated research programmes
with emphasis on lithium-ion battery research.
Purchase subsidies are probably the most gener-
ous ones worldwide (Mock and Yang 2014; Alten-
burg et al. 2016). In addition to US$9,200 per car
from the central government, regional govern-
ments offered additional cash subsidies and
free vehicle registration. For the city of Shang-
hai, effective subsidies reached US$ 27,600 per
vehicle (Wan et al. 2015). Public procurement was
another key policy. The central and local govern-
ments purchased electric vehicles for government
eets and made their procurement manda-
tory for bus and taxi companies. However, local
procurement policies come at a price. In many
cases, local governments focused subsidies onto
locally manufactured car brands, thereby blocking
competition and creating a geographically frag-
mented industry (Zhang et al. 2014).
More recently, the government announced plans
to phase out purchase subsidies by 2020 that
motivated local governments and investors to
adopt many electric vehicle projects but at the
same time reduced automakers and battery
suppliers motivation to develop higher-quality
products (Bloomberg News 2016). Instead, the
government is now augmenting pressure on

191
Electric Mobilityandthe Questfor Automobile Industry Upgradingin China
CHAPTER 12
carmakers to accelerate electrication. Since
June 2017, new draft legislation imposes an elec-
tric vehicle quota on carmakers. By 2018, 8 per
cent of all newly built cars should have an electric
engine, going up to 12 per cent in 2020. Companies
that fail to meet their quota would have to reduce
their sales of conventional cars or purchase credit
points from other carmakers. Whether the quota
can actually be reached, however, also depends
on supply-side constraints, such as technological
progress and availability of charging infrastruc-
ture. Yet, such pressure clearly has a strong effect
on company strategies, and various carmakers
already announced new investments in electric
vehicle manufacturing for the Chinese market,
including Volvo and Ford (The Guardian 2017).
Furthermore, the government dened a roadmap
with gradually increasing fuel economy require-
ments for conventional cars which by 2020 will be
among the most ambitious worldwide. The Minis-
try of Industry and Information Technology even
announced their work on a timetable to totally
ban the production and sale of fossil fuel cars
28 Information on specic car models and their technological innovations in this section has been collected from special-
ised press reports and company websites.
from a certain date (The Guardian 2017). Moreo-
ver, stricter technology standards and licensing
requirements are imposed to consolidate the
currently fragmented auto industry (Bloomberg
New Energy Finance 2016).
In parallel, pressure is increased on foreign
carmakers to share technologies. As China is by
far the world’s largest and most dynamic market
for automobiles, all major global carmakers are
keen to increase their market presence in China.
China pursues a barter-type policy allowing inter-
national carmakers to build new or expand exist-
ing production facilities, but only if they bring in
their latest technology and co-develop cars with
local partners (Holmes et al. 2015). A development
plan issued in 2010 clearly states that for any
joint venture manufacturing key components
of electric vehicles–such as batteries, motors
and controllers–the Chinese partner must hold
at least 51 per cent of the capital. Again, such
requirements can only yield the expected results
if local partners manage to enhance their absorp-
tive capacity for the new technologies.
5. TECHNOLOGICAL ACHIEVEMENTS AND
EMERGING COMPETITIVE ADVANTAGES
Within a few years, China has become a leading
global market for electric vehicles. This section
provides an overview of achievements in four
different segments of the electric vehicle indus-
try in terms of market development, technological
upgrading and competitiveness.28
5.1. HIGHWAY-CAPABLE PASSENGER CARS
AND BUSES
Sales of highway-capable battery-electric and
plug-in cars and buses remained marginal until
2013, with less than 18,000 in total, leading some
analysts to pessimistic forecasts and critical
assessments of China’s electric vehicle policy
package (Wan et al. 2015). Since then, however,
deployment powerfully took off, surpassing
330,000 vehicles in 2015 (Xu and Su 2016). At about
1.4 per cent, this is still a minor fraction of all car
and bus sales, but the increase is impressive and
indicates a real breakthrough for electric driving
in China.
Purchases by bus and taxi companies are a
major force for electric vehicle deployment,
while individual consumers are still hesitant
to buy highway-capable personal vehicles
despite the enormous subsidies offered. So far,
Chinese products range at the low end of tech-
nological complexity and do not meet the quality
demanded on international markets (Bloomberg
News 2016). To assess the potential for techno-
logical upgrading, a differentiated view of China’s
automotive companies is needed.
State-owned enterprises, especially those
engaged in joint ventures with international
carmakers, have beneted from booming markets
for traditional vehicles with internal combustion
engines. Therefore, they have had little incentive
to enter the risky eld of electric vehicles. When
the large state-owned car companies nally
entered electric vehicle production, not least to
benet from the generous government subsidies,
they relied on retrotting the internal combus-
tion car models rather than developing models
optimised for electric vehicle technology. Gener-
ally, their strength is in producing technologically
unsophisticated, affordable cars. For example,
one of China’s best-selling electric vehicles, the

192
Green Industrial Policy - Concept, Policies, Country Experiences
Chery QQ3EV, used cheap but environmentally
harmful lead-acid batteries until production
stopped in 2016. But Chinese producers can adapt:
lithium cells power Chery’s follow-up model, the
EQ-S15EV.
Recently the government increased its pressure
on international joint venture partners to launch
electric vehicles in the country and share the rele-
vant knowledge with Chinese rms. In response
to this, several international carmakers, includ-
ing Toyota and BMW, have recently developed
battery-electric vehicles that t Chinese market
conditions and are in some cases exclusively
produced for this market. How this will affect
technological learning and competitiveness of
Chinese rms is not yet clear.
While state-owned enterprises long remained
hesitant to venture into electrication, some
technologically ambitious newcomer rms in
car production became electric vehicle pioneers.
These include Zotye Auto, the auto-part producer
that started to produce battery-electric vehicles
in 2010 and initiated an interesting battery-swap-
ping project with the State Grid Company in
Hangzhou; and BYD, the battery producer for the
electronics industry. BYD rst moved into car
battery production and then produced the rst
plug-in hybrids in 2008 followed by a battery-elec-
tric vehicle in 2010. In 2014, BYD launched the
battery-electric model Denza, a car developed
with Daimler in China and the rst car Daimler
ever developed outside Germany.
It is not yet clear which electric vehicle devel-
opments in China are most promising in terms
of technological leapfrogging and interna-
tional competitiveness. Chinese carmakers
may successfully specialise in simple, no-frills
low-cost electric vehicles that meet the needs of
emerging global middle classes. However, based
on a rapidly expanding internal market for elec-
tric vehicles, China could become the global plat-
form where automotive multinationals develop
and produce large portions of their electric port-
folios, with minor or major contributions from
their Chinese joint venture partners. Also, electric
bus manufacturing could become China’s eld of
competitive specialisation. The rollout of elec-
tric buses has been impressive, with more than
300,000 buses circulating in China in 2015 (OECD
and IEA 2017). This provides economies of scale
and potential early mover advantages. Chongqing
Hengtong Bus Power System Co. Ltd., for example,
has developed the world’s rst rapidly recharging
battery-electric public bus.
5.2. AFFORDABLE LOW-SPEED
ELECTRIC CARS
Hundreds of Chinese companies have started to
develop technologically simple small low-speed,
low-voltage, low-range electric cars. These cars
are built for a top speed between 40 and 70 km/h,
sufcient to drive in cities or rural roads, but these
low-speed electric vehicles are not allowed on
highways. Their driving range without relling
the battery is up to 70 kms, which is sufcient for
most Chinese customers.
Low-speed electric vehicles are very cheap.
Depending on their sophistication, they are sold at
a price of US$2,000 to US$8,000. Hence the lowest
cost low-speed electric vehicles are affordable
for many households unable to purchase a new
gasoline car, which start at around US$5,000 in
China. The fact that low-speed models are exempt
from registration adds to their attraction; some
big cities impose quotas on the registration of
automobiles to limit the number of cars circu-
lating in their jurisdictions. Prices are so low for
two reasons. First, designs are very basic. These
vehicles run on simple 1.5 to 4 kW direct current
motors, they use low-cost components, such as
lead-acid batteries, and all non-essential features
have been removed. Low-speed electric vehicles
lack sophisticated battery management or motor
control systems and in most cases do not meet
basic safety standards. Second, manufacturers
combine very simple low cost techniques, such as
traditional stamping dies, with hi-tech elements,
including three-dimensional laser cutting robots
(Autoblog 2014).
The future of China‘s low-speed electric vehicle
industry is unclear. Unlike highway-capable elec-
tric vehicles, the low-speed models do not receive
any government support. In particular, customers
are not entitled to receive any of the generous
purchase subsidies offered for highway-capable
cars. Quite the opposite: national trafc regula-
tions discourage the emergence of this industry.
Only some provincial governments, especially the
one in Shandong, encouraged low-speed electric
vehicle production.
Still, demand is high for simple and affordable
cars for families in smaller cities and rural areas.
Tapping into this demand, dozens of relatively
small carmakers emerged particularly in Shan-
dong province where 600,000 low-speed electric
vehicles were sold in 2015. According to OECD/IEA
(2017) estimates, three to four million low-speed
electric vehicles were circulating in China in 2016.
Policymakers had not expected this popularity.
In fact, Shandong’s industry had emerged in the

193
Electric Mobilityandthe Questfor Automobile Industry Upgradingin China
CHAPTER 12
shadow of national law. According to national
law, low-speed electric vehicles were illegal until
very recently, yet some provincial and municipal
regulations provided for exceptions on certain
roads. Only in 2016, the central government
started to develop legislation to legalise and regu-
late low-speed electric vehicles (Paglee 2017). So
far, many central and local government policies
remain contradictory with regard to minimum
speed requirements and phasing out lead-acid
batteries, among other issues. Once this legal
uncertainty is overcome the market is likely to
receive an additional boost; by 2020, low-speed
electric vehicles’ annual sales are projected to
reach about 2 million (OECD and IEA 2016).
5.3. ELECTRIC TWO-WHEELERS
China’s market for electric two-wheelers is boom-
ing. Two-wheelers include electric bicycles–bikes
with a small electric motor that still retain the
ability to be pedalled by the rider–as well as more
powerful scooters and motorcycles. Sales started
gradually during the 1990s and by 2004 40,000
were sold (Cherry 2010). At around US$ 230 to
US$290 for simple versions and US$650 for high-
end versions, electric two-wheelers are affordable
for many Chinese families (Fu 2013). To keep their
cost low, Chinese e-bikes are generally low-tech
and powered by lead-acid batteries. Only a small
fraction of two-wheelers are equipped with lith-
ium-ion batteries, which increase the cost by
US$160 (Fu 2013). Also, electricity costs are low:
The cost of powering a two-wheeler is about 0.2¢
per kilometer. Battery replacement amounts to
about 1¢ per km, depending on the size of the
battery and uctuating prices. These estimates
compare to an average of 8¢ per kilometer for
cars and 3¢ per kilometer for motorcycles. An
average bus trip costs 3¢ per kilometer as well
(Cherry 2010).
Two policy decisions make electric bikes so popu-
lar: The government classies electric two-wheel-
ers–with pedals, a maximum speed of 20km/h
and maximum weight of 40 kg–as bicycles, so
riders do not need a driver’s license or registra-
tion. As well, many city governments restrict
conventional motorcycle use in their inner cities
(Cherry 2010).
About 200 to 230 million electric bicycles were
circulating in China in 2015, according to various
sources, with 37 million produced annually (OECD
and IEA 2016). This makes China by far the most
important global market with a share of about
85 per cent (INSG 2014). About 2,600 licensed
whole-vehicle manufacturers and assemblers
existed in 2011, of which the 50 largest account
for half of the production (Fu 2013). The bulk of
production is sold in China, but an estimated 5
million electric bikes are exported, mainly to other
Asian countries (INSG 2014). Electric two-wheeler
production and maintenance thus became a
major and unique industry in China, even though
they are technologically quite unsophisticated.
With this scale of market success, electric bikes
are the rst mass-produced and massively popu-
lar alternative-fuel vehicles in the history of
motorised vehicles (Cherry 2010).
5.4. BATTERY TECHNOLOGY DEVELOPMENT
China-specic technological solutions are also
being developed in the eld of lithium-ion battery
technology. Chinese module production is close
to the international technological frontier, but
the country lags far behind in the elds of battery
chemistry, membranes and battery management
systems. About 200 battery manufacturers are
operating in China, but most cannot compete with
global brands (Bloomberg News 2016). Technolog-
ical mastery of battery management systems in
particular is important to produce premium cars
and to differentiate brands: each system needs to
be specically tailored to the energy requirements
of each car; moreover, they are necessary to opti-
mise battery performance and prevent failures.
Specic research and development programmes
have been established to build capacity, but reach-
ing the level of global leaders will take time.
The lack of technological capabilities in battery
technology has led to two China-specic develop-
ments: First, some Chinese companies, including
the Chinese state-owned automotive manufac-
turer BAIC and Zotye, have built remote battery
monitoring systems that allow them to monitor
the status of entire car eets in real time through
wireless networks. Monitoring centres can then
send messages to drivers assisting them to
improve battery performance and avoid emer-
gency situations. Compared to mature onboard
systems, remote monitoring is clearly a second-
best option, but it can substitute some of the func-
tions of advanced battery management systems.
Second, Chinese rms are investing in battery
swapping operations so cars can exchange their
discharged battery with a charged one, rather
than recharging their own battery. This, in prin-
ciple, saves time and provides exibility to the
user. The practical problem is that only identi-
cal batteries can be swapped. However, carmak-
ers design battery management systems to
meet the specic requirements of each model,

194
Green Industrial Policy - Concept, Policies, Country Experiences
and swapping stations cannot hold stocks of all
battery models. In Hangzhou, electric vehicle
manufacturers, battery manufacturers and the
State Grid Corporation of China set up a citywide
battery swapping experiment with the State Grid
Corporation owning the batteries. The experiment
targets mainly taxis of the Zotye brand and bus
eets, which keeps the number of battery types
manageable. Extending the experiment to other
car brands will be quite difcult, however.
6. TO WHAT EXTENT DOES THE SHIFT TO ELECTRIC
VEHICLES SOLVE ENVIRONMENTAL PROBLEMS?
The shift to electric vehicles has one big posi-
tive effect on the environment: Electric vehicles
themselves produce almost no local pollutants, so
they help to reduce the enormously harmful smog
levels in Chinese cities.
In terms of greenhouse gas emissions, in contrast,
China’s efforts to promote electric mobility do not
make any positive contribution, yet. As discussed,
with China’s current energy mix, use of an aver-
age electric car emits as much CO
2
as a fairly
inefcient petrol car. This, however, will change
over time. On one hand, petrol cars are becom-
ing more fuel-efcient. On the other hand, China
is undertaking considerable efforts to decar-
bonise its power sector: The government set the
target for peak CO
2
emissions around 2030 and
is committed to steadily reduce them afterwards
and carbon intensity will decrease by 60 to 65 per
cent below 2005 levels by 2030 (He 2014). China’s
coal consumption peaked in 2014, much sooner
than scenarios had predicted, and will decline by
degrees, even as coal remains the primary source
of energy for the next decades (Qi et al. 2016).
Thanks to the energy-saving targets established
in the 2005–2010 11
th
Five-Year Plan, CO
2
emis-
sions declined by 1.46 billion tons during that
period (Teng et al. 2015). Between 2011 and 2015,
the share of low-carbon sources grew from 19 to
28 per cent of the national energy mix (OECD and
IEA 2016). Whether electrication of China’s trans-
port is good for the global climate will depend on
the relationship between fuel efciency improve-
ments and the rate of electricity mix decarbon-
isation. Physical limits to fuel efciencies in
combustion engines mean they cannot be fully
decarbonised (Ferguson and Kirkpatrick 2015).
Therefore, over the long run, transport electrica-
tion is the only alternative for China.
The manufacture, use and disposal of batteries
produce another major environmental problem.
China has made electric driving affordable. But
this has been achieved by using the lead-acid
batteries that are very harmful for the environ-
ment, especially when they are not properly
recycled. Nearly all two-wheelers and low-speed
vehicles use lead-acid batteries, and even in
the segment of highway-capable cars, Chinese
rms offer cheap lead-acid versions. Electric
two-wheelers contribute greatly to releasing lead
into the environment, given that they require a
new battery containing 10–20 kg of lead every
12–18 months (Cherry 2010). In Beijing alone,
30,000 to 50,000 tons of lead-acid batteries need
to be recycled every year (Fu 2013). However,
Chinese battery recycling is not well regulated
and as much as a quarter or more of the used
lead is not captured in the process (Cherry 2010).
After frequent cases of lead poisoning in China, in
2011 the government decided to close 80 per cent
of all the registered lead-acid battery production,
assembly and recycling companies (Fu 2013).
Lithium-ion batteries are less harmful, but at
this stage in the industry’s growth they are too
expensive for general use. As the technology
matures, however, costs are decreasing quickly
(Nykvist and Nilsson 2015). Government regula-
tions will then have an important role in ensuring
that manufacturers adopt lithium-technology as
soon as possible and that lead-acid batteries are
phased out. While lithium-ion batteries also pres-
ent a number of environmental challenges, there
is hardly any alternative to using this technology
at a much larger scale (USEPA 2013). Progress on
lithium-ion batteries is critical to increase the
driving range of electric vehicles and decrease
their cost, which in turn makes electric vehicles
attractive to more customers.
Last but not least, rebound effects matter: As elec-
tric vehicles become cheaper and better, and the
population grows and becomes wealthier, more
consumers can afford more advanced technol-
ogies. People who used to pedal their traditional
bicycles are shifting to electric bikes and scoot-
ers. People who used to drive electric two-wheel-
ers start buying low-speed electric cars, and those
who drove such cars in the past may now be able
to purchase a comfortable highway-capable car.
Cherry (2010) cites studies conducted in Shang-
hai, Kunming and Shijiazhuang cities showing
that most electric bike users used to travel by bus

195
Electric Mobilityandthe Questfor Automobile Industry Upgradingin China
CHAPTER 12
or bicycle, and only a few substituted them for
cars. Furthermore, as people become wealthier,
they tend to travel longer distances. Even if the
technologies in use become more resource-ef-
cient and the share of renewables in the energy
mix increases, the sheer expansion of modern
vehicle ownership and mileage is likely to result
in higher total emissions. Low-carbon strategies
need to account for these potential repercussions.
Still, complementary reforms are necessary, such
as the promotion of public transport systems, as
well as urban designs that minimise the need
to commute between housing areas, business
districts and shopping centres.
7. CONCLUSIONS
China’s ambitious programme to electrify road
transport is an exemplary case of green indus-
trial policy pursuing technological upgrading
and greater competitiveness in parallel with
environmental improvements. China’s compre-
hensive policy package includes huge research
and development efforts, technology-sharing
agreements with global investors, strategic public
procurement, purchase subsidies and city trials.
The result is that electric-powered two-wheelers,
passenger cars, trucks and buses are becoming a
major alternative to fuels-based driving.
The Chinese government set hopes on electric
vehicles as a technology that would allow the
country to catch up with the global leaders in
the automobile industry–something it had not
achieved under the old paradigm of traditional
combustion engine cars. Multinational carmak-
ers maintained their signicant advantage in
combustion engine vehicle production through
accumulated specialist knowledge in all the
domains needed to build good engines and trans-
missions and to integrate them in the car design.
However, manufacturing electric vehicles requires
a different range of skills and, in principle, this
will allow advantages for China.
China’s leapfrogging aspirations are high, but the
country has made signicant progress in various
domains:
◼
In the mainstream market of highway-capa-
ble electric vehicles many Chinese companies
are now offering battery-electric and plug-in
hybrid models. By international comparison,
these are all still low-end, but they are also
low-cost and suitable for the rapidly expand-
ing domestic market.
◼
Some automobile multinationals are now
producing new battery-electric models exclu-
sively for the Chinese market. Given the size of
the Chinese markets and government pressure
to locate research and development operations
in China, this may promote enhanced techno-
logical capabilities.
◼
In electric bus production, China has become
one of the rst volume manufacturers globally
and should pursue this opportunity, especially
to meet the demand from other countries for
reducing urban air pollution.
◼
China produces 85 per cent of electric
two-wheelers globally and exports about 5
million units annually to other Asian markets,
although it only covers the low-end of markets,
so far.
◼
Low-speed electric vehicles have emerged as
an interesting niche market in which there is
hardly any international competition because
Chinese demand conditions are different from
those in high-income countries. Offering such
simple affordable products may be a viable
business model for exports to other developing
countries, especially as their decarbonisation
efforts progress.
◼
China’s industry has a long tradition at the
level of lithium battery cell manufacturing and
a strategic position due to its enormous lith-
ium reserves.
So there are various promising opportunities for
industrial development related to electric mobil-
ity. In all the technological elds mentioned above
China has become a major player. The challenge
lies in technological upgrading.
Across the board, Chinese producers cover the
low-end product range, so far; whereas Japanese,
Korean, European and American competitors
cater to the more complex high-value vehicle
market. But there is cause for optimism about
the prospects for upgrading due to at least three
reasons: First, the Chinese government has
recognised the challenge and redesigned its poli-
cies with a stronger emphasis on research and
development, stricter technology standards and
consolidation of the fragmented auto and battery
industries. Second, China is the largest market
for most of the related supply chain products,
giving the country an advantage in terms of scale
of production as well as potential foreign direct
investment. Third, exploiting the export potential

196
Green Industrial Policy - Concept, Policies, Country Experiences
of simple but reliable low-priced goods to coun-
tries with similar demand conditions is a prom-
ising option.
What about the hoped-for environmental
improvements? After a few years of disappoint-
ingly slow uptake, a tipping point has now been
reached where the share of electric vehicles in
the Chinese eet of two-wheelers, cars, buses
and trucks is gaining traction. With each tradi-
tional fuel vehicle being replaced by an electric
one, local emissions go down and, with enor-
mous ramications for public health, China’s
most pressing environmental problem, urban
air pollution, is reduced. In terms of greenhouse
gas emissions, the shift to electric vehicles will
not improve the state of affairs in the short term.
Instead, emissions will increase as electric vehi-
cles run on power generated by coal-red plants.
But China’s power sector is slowly shifting away
from coal. As this trend continues and accel-
erates, the carbon footprint of China’s electric
vehicles is bound to improve. With a substantial
share of renewables in the power mix, electric
cars are clearly preferable to conventional cars.
An integrated programme for greening the auto-
motive industry must go beyond changes in the
automotive sector and simultaneously pursue the
decarbonisation of the electricity supply. Another
problem lies in the increased demand for envi-
ronmentally harmful but inexpensive batteries.
Due to the preference for low-cost electric vehi-
cles, the particularly harmful lead-acid batteries
dominate the market. Gradual transitions to lith-
ium-ion battery installation, as well as appropri-
ate recycling policies, are needed to minimisrbe
environmental harm.
Transition to sustainability requires complex
systemic shifts rather than just technologi-
cal substitutes. Policymakers need to ensure
that the electricity mix gets decarbonised; that
low-carbon public transport systems become
more attractive; that cities are designed so
people do not have long commutes between the
places where they live, work and shop; and that
materials are reused or recycled to the greatest
extent possible. What inspires hope is the speed
at which some countries, including China, are
greening their economies and the realisation
that emerging economies can reap the double
dividend of environmental improvement and
enhanced competitiveness.

197
Electric Mobilityandthe Questfor Automobile Industry Upgradingin China
CHAPTER 12
REFERENCES
ACEA (2016):
Facts about the Automobile
Industry
. Retrieved from www.acea.be/
automobile-industry/facts-about-the-industry
Altenburg, T., Schamp, E. W., & Chaudhary, A. (2016).
The emergence of electromobility: Comparing
technological pathways in France, Germany,
China and India.
Science and Public Policy
,
43
(4),
464–475.
Asian Development Bank (ADB). (2009).
Electric
Bikes in the People’s Republic of China: Impact
on the Environment and Prospects for Growth
(ADB economics working paper series). Manila,
Philippines.
Autoblog. (2014).
A window into China’s low-speed
electric vehicle revolution
. Retrieved from www.
autoblog.com/2014/07/25/a-window-into-chinas-
low-speed-electric-vehicle-revolution/
Beijing Municipal Environmental Protection Bureau.
(2014).
The analysis of sources of PM2.5 in Beijing
.
Retrieved from http://search.bjepb.gov.cn/bjepb/
413526/331443/331937/333896/396191/index.html
Bloomberg New Energy Finance. (2016).
Electric
vehicles to be 35% of global new car sales by 2040
.
Retrieved from http://about.bnef.com/press-re-
leases/electric-vehicles-to-be-35-of-global-new-
car-sales-by-2040/
Bloomberg News (2016, July 11).
China Has Too Many
Mediocre Electric Carmakers, Researcher Says
.
Retrieved from www.bloomberg.com/news/
articles/2016-07-11/china-has-too-many-medio-
cre-electric-carmakers-researcher-says
Cherry, C. (2010).
Electric Two-Wheelers in China:
Promise, Progress and Potential.
Retrieved from
www.accessmagazine.org/articles/fall-2010/elec-
tric-two-wheelers-china-promise-progress-po-
tential/
China Energy Portal. (2017).
2016 Detailed Electricity
Statistics.
Retrieved from https://chinaenergypor-
tal.org/en/2016-detailed-electricity-statistics/
Chu, W.-W. (2011). How the Chinese government
promoted a global automobile industry: VW and
Toyota vying for pole position.
Industrial and
Corporate Change
,
20
(5), 1235–1276.
e-mobilBW. (2010).
Strukturstudie BWe mobil −
Baden-Württemberg auf dem Weg in die Elektro-
mobilität
. Stuttgart.
EU SME Centre. (2015).
The Automotive Market in
China
. Brussels. Retrieved from www.cham-
berelancs.co.uk/wp-content/uploads/2015/10/
EU-SME-Centre-Sector-Report-The-Automotive-
Market-in-China.pdf
Euler Hermes. (2014).
Economic Outlook No.1210:
Special Report August-September 2014.
European Commission (EC). (2017).
Reducing CO
2
emissions from passenger cars.
Retrieved from
https://ec.europa.eu/clima/policies/transport/
vehicles/cars_en
Ferguson, C. R., & Kirkpatrick, A. T. (2015).
Internal
combustion engines: applied thermosciences
.
John Wiley & Sons.
Fu, A. (2013).
The Role of Electric Two-Wheelers in
Sustainable Urban Transport in China: Market
analysis, trends, issues, policy options
. Retrieved
from https://sustainabledevelopment.un.org/
content/documents/3792fu2.pdf
Fudenberg, D., Gilbert, R., Stiglitz, J., & Tirole, J. (1983).
Preemption, leapfrogging and competition in
patent races.
European Economic Review
,
22
(1),
3–31.
Gao, P., Hensley, R., & Zielke, A. (2014).
A road map to
the future for the auto industry
(McKinsey Quar-
terly No. October 2014).
He, J.-K. (2014). An analysis of China’s
CO
2
emis-
sion peaking target and pathways.
Advances in
Climate Change Research
,
5
(4), 155–161.
Holmes, T. J., McGrattan, E. R., & Prescott, E. C. (2015).
Quid Pro Quo: Technology Capital Transfers for
Market Access in China.
The Review of Economic
Studies
,
82
(3), 1154–1193.
International Nickel Study Group (INSG). (2014).
The
Global E-bike Market
(Brieng Paper No. 23).
Lisbon.
McKinsey & Company. (2011).
Boost! Transforming
the powertrain value chain: a portfolio challenge.
Retrieved from: http://actions-incitatives.ifsttar.
fr/leadmin/uploads/recherches/geri/PFI_VE/
pdf/McKinsey_boost.pdf
Mock, P., & Yang, Z. (2014).
Driving electrication. A
global comparison of scal incentive policy for
electric vehicles.
(White Paper). Washington, D.C.
National Bureau of Statistics of China. (2016).
Statis-
tical Communique of the People’s Republic of
China on the 2015 National Economic and Social
Development.
Retrieved from www.stats.gov.cn/
english/PressRelease/201602/t20160229_1324019.
html
Nykvist, B., & Nilsson, M. (2015). Rapidly falling costs
of battery packs for electric vehicles.
Nature
Climate Change
,
5
(4), 329–332.
OECD. (2014).
The cost of air pollution: Health
impacts of road transport
. Paris: OECD.
OECD & International Energy Agency (IEA). (2016).
Global EV Outlook 2016: Beyond one million elec-
tric cars
. Paris, Paris: OECD Publishing; IEA.
OECD & International Energy Agency (IEA). (2017).
Global EV Outlook 2017: Two million and counting
.
Paris: OECD/IEA.
Organisation Internationale des Constructeurs d’Au-
tomobiles (OICA). (2016).
Production and Sales
Statistics.
Retrieved from www.oica.net/category/
production-statistics
Paglee, C. (2017): China’s huge hidden electric vehicle
market.
China Automotive Review,
(12)4, 22–23.

198
Green Industrial Policy - Concept, Policies, Country Experiences
Perez, C. (1988). New technologies and develop-
ment. In C. Freeman & B.-ê. Lundvall (Eds.),
Small
countries facing the technological revolution
(pp.85–97). London, New York: Pinter Publishers.
Qi, Y., Stern, N., Wu, T., Lu, J., & Green, F. (2016). China’s
post-coal growth.
Nature Geoscience
,
9
(8),
564–566.
Shanghai Municipal Environmental Protection
Bureau. (2015).
70% of PM2.5 pollutants come from
a local source.
Retrieved from www.shanghai.
gov.cn/nw2/nw2314/nw2315/nw17239/nw17252/
u21aw968232.html
State Council. (2012).
Energy Saving and New Energy
Auto Industry Development Plan (2012–2020).
Retrieved from www.gov.cn/zwgk/2012-07/09/
content_2179032.htm
Teng, F., Gu, A., Yang, X., & Wang, X. (2015).
Pathways
to deep decarbonization in China
. Sustainable
Development Solutions Network (SDSN) and
Institute for Sustainable Development and Inter-
national Relations (IDDRI): Paris, France.
The Guardian (2017, September 11). China to ban
production of petrol and diesel cars ‘in the near
future’.
The Guardian
. Retrieved from www.
theguardian.com/world/2017/sep/11/china-to-
ban-production-of-petrol-and-diesel-cars-in-the-
near-future
Thun, E. (2006).
Changing lanes in China foreign
direct investment, local government, and auto
sector development
. Cambridge University Press.
United States Environmental Protection Agency
(USEPA). (2013).
Application of Life-Cycle Assess-
ment to Nanoscale Technology: Lithium-ion
Batteries for Electric Vehicles
. Washington, D.C.
Wan, Z., Sperling, D., & Wang, Y. (2015). China’s electric
car frustrations.
Transportation Research Part D:
Transport and Environment
,
34
, 116–121.
Wang, H., & Kimble, C. (2011). Leapfrogging to elec-
tric vehicles: Patterns and scenarios for China’s
automobile industry.
International Journal of
Automotive Technology and Management
,
11
(4),
312–325.
Wilson, L. (2013).
Shades of Green: Electric Cars’
Carbon Emissions Around the Globe.
Xu, L., & Su, J. (2016). From government to market and
from producer to consumer: Transition of policy
mix towards clean mobility in China.
Energy
Policy
,
96
, 328–340.
Zhang, X., Rao, R., Xie, J., & Liang, Y. (2014). The
Current Dilemma and Future Path of China’s Elec-
tric Vehicles: The current dilemma and future
path of China’s electric vehicles. Sustainability,
6(3), 1567–1593.
Sustainability
,
6
(3), 1567–1593.
Zheng, S., Pozzer, A., Cao, C. X., & Lelieveld, J. (2015).
Long-term (2001–2012) concentrations of ne
particulate matter (PM2.5) and the impact on
human health in Beijing, China.
Atmospheric
Chemistry and Physics
,
15
(10), 5715–5725.