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Evaluation of the Tipping Point to Widespread Uptake of Battery Electric Vehicles in China

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Document pages: 71 pages

Abstract: This paper aims to investigate different driving forces that underlie the big trend of growing battery electric vehicles (BEVs) penetration in China. Factors like Pollution level, high foreign oil dependency, and high CO2 emissions all drive China to steadfastly push its BEVs promotion in the transportation sector.China’s BEV industry has grown tremendously in the past 10 years and recently, China has been leading in both BEV sales and manufacturing in the world. The market itself is also undergoing a fundamental transition. From 2013 to 2018, China’s BEV market was mostly driven by policies. After 2018, China’s BEV market has gradually transformed into a market-driven one and most likely after 2022, China would have a consumer-driven BEV market.This thesis has three research objectives:Research objective 1 investigates when the tipping point for China’s BEV industry would occur. As we all know, the pinpointing of a tipping point for an industry or a product is essential for industry players to make strategic planning for their companies in terms of technology development, production prediction, and marketing strategies. It is also a great indicator of reference for investors to secure the next “Apple” in the future. Last but not least, the tipping point offered a great timeframe for policymakers to settle down their length of policy effectiveness to maximize its potential impact on the market.Research objective 2 focuses on how fundamental external factors like BEV batteries, charging infrastructures, driving range, and policies translate into the tipping point we estimated above. It is inevitable to discuss the foundational factors that make BEV penetration possible. Also, by evaluating these fundamental factors, we can compare and testify the result of the tipping point from research objective 1 and draw qualitative conclusions.Research objective 3 examines how the internal driving factors like BEV purchasing parity and BEV total cost of ownership explain the potential consumer demand that reflects on the tipping point. There would be no market penetration rate if there is no consumer demand for BEV that translates into their final purchases. Thus, research objective 3 sufficiently uncovers China’s BEV impact on individual consumers in terms of a direct BEV’s pure-monetary price and life-time cost.The critical insights from the research:1. China’s BEV tipping point using a 16 market penetration rate standard would most likely occur by the end of 2024.2. By 2023, or 2024, the battery cost would most likely reduce to $100 kwh.3. By the end of 2021, a lack of charging infrastructure would most likely no longer be a major concern for BEV consumers. By the end of 2023, a lack of public charging infrastructure may no longer be a concern for level one and two cities’ BEVs consumers in China.4. By the end of 2023, the average BEV driving range in China would most likely reach above 600 km, which would possibly satisfy over 90 of consumers’ psychological demand.5. Based on the China Internal Combustion Engine Vehicle (ICEV) Phase-out time table, China would likely ban the selling of ICEVs in level one and two cities. This would make ICEVs harder to sell in the foreseeable future since the auxiliary ICEV infrastructure would most likely decrease after 2030.6. Most traditional ICEV manufacturers have set out plans to launch more NEVs to embrace this trend.7. By the end of 2022, there would be most likely over 50 BEVs that consumers bought that would reach price parity with comparative ICEVs. The number increase to 73 parity percentage by 2025 and over 92 parity percentage by 2030.8. The TCO analysis concluded that even by the time 2019, the average BEVs in China under typical Chinese average driving profile, already have a TCO advantage over ICEVs. This trend would most likely continue in the future.This paper finishes with the conclusion that it is highly likely that the 16 market penetration rate tipping point would occur by the end of 2024 judging from BEV driving range prediction, charging piles growth, policy support, relatively cheaper price, and lower life-time cost.

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