China is so big that it's the global heavyweight in numerous areas. It is already the world's largest car market. But it is also the largest buyer of electric vehicles. More than 300,000 buzzed off the lot last year.
That's 43% of the global total, but the Beijing government, faced with smoke-belching coal power stations across the country, still doesn't think that's enough. It is mulling a move to force carmakers to ensure that 8% of all the cars they make in China are electric.
The most-obvious companies that would gain from the new policy are the Chinese car companies that already make electric vehicles. Though little-known outside China, BYD (BYDDY) and BAIC Motor (BCCMY) are already churning out thousands of cars per year. The BYD Qin model is the top-selling e-car, with around 69,000 now on Chinese roads.
They've been benefitting from government subsidies of as much as $8,000 each, from both the national and local governments. But those benefits are being phased out starting this year.
The quota system would substitute the subsidy carrot with a stick. Car companies who miss that target would have to buy expensive credits from their competitors, who are already beating the set level.
A draft of the rules was reportedly doing the rounds of industry executives at the Shanghai Auto show, which ended on April 28. The rules would raise the threshold up and beyond 8% in subsequent years, according to the Financial Times.
A Ford Motor (F) executive told the FT that his company is meeting every week with Chinese officials to discuss the policy on e-cars. Expect other foreign brands to be doing the same.
The Shanghai Auto show was also a great opportunity for brands to showcase their future electric models, with several planning e-cars that you can only buy in China.
Hybrid Cars has an interesting article highlighting the seven "most compelling" electrified vehicles at the trade show. That includes a China-only model from NIO, which makes the world's fastest electric hypercar. The ES8 is due in China in 2018.
Volvo, which is owned by the Chinese company Geely Holding Group (GELYY) , says it expects to start rolling out its first all-electric car in the world in China in 2019. It actually plans to use that Compact Modular Architecture technology as a platform to spin off many e-vehicle models. So China is its global R&D petri dish for going electric.
Volkswagen (VLKAY) intends to start making electric vehicles in China in 2018, through its joint venture with Anhui Jianghuai Automobile Group SH:600418, one of its Chinese partners. Its I.D. Crozz model is at the vanguard in China, the third I.D. variant. The latest model can drive itself and has a steering wheel that retracts into the dashboard in that mode.
Jeep plans a seven-seater luxury SUV known as the Yuntu Concept for China that's an electric version of the Grand Wagoneer. Jeep parent Fiat Chrysler (FCAU) already makes gas-guzzling Cherokee and Renegade 4WDs in partnership with Guangzhou Automobile Group HK:2238.
In Beijing's scoring system, all-electric vehicles will get full credit, while hybrids would likely get a discounted reward.
General Motors (GM) apparently isn't coming up with much that's new in China, other than the way it words things. It is repurposing its Chevrolet Volt hybrid under the Buick brand in China, where Buick is a luxury marque. The car will be called the Buick Velite 5.
Honda Motor (HMC) will make a hybrid SUV in China, a version of its popular CR-V. It's due to come on the China market in mid-2017, made at the factory of Honda's joint venture partner, Dongfen Motor Group (DNFGY) .
While mainland China is intent on stimulating demand for electric vehicles, Hong Kong is moving in the opposite direction. The small area of the city and its high density mean it is perfect for electric cars.
The territory has waived the tax on the purchase of an electric vehicle ever since 1994. That didn't make much difference until 2014, when the Model S from Tesla (TSLA) was introduced to the city, dominated by luxury car brands. The Model S provides more than an adequate competitor for Mercedes, BMW or Audi sedans.
I see Tesla cars all over the place out in the suburban New Territories, where I live. There are close to 8,000 e-vehicles all told in this city of 7 million, and I must have spotted just about every one. The Model X arrived in March, and it's equally popular. Even rich Hong Kongers love a bargain, and saving on gasoline is a huge "freebie."
But Hong Kong's financial secretary, Paul Chan Mo-po, slashed the maximum cap on the tax waiver to HK$97,500 with his new budget in February, effective immediately. That dramatically increases the cost of a higher-end e-vehicle like a Tesla.
A Tesla Model S starts at around HK$600,000 (US$77,000) in Hong Kong, which results in a first-registration tax of HK$487,500 (US$62,700) or so, after the waiver, elevating the cost from HK$600,000 (US$77,000) to around HK$1.1 million (US$141,000).
District councilor Paul Zimmerman, an architect who now champions smart city design, calls the decision to "kill" electric cars "stupid." Since Tesla's arrival, electric vehicles make up around 10% of all new-car purchases, and a much higher share of the luxury market.
He's not alone in blaming lobbying by Mercedes-Benz parent Daimler (DDAIF) , BMW (BMWYY) and Audi parent Volkswagen for the change. The brands tried, and couldn't, compete with their own electric vehicles, the thinking goes, and instead have effectively got the luxury end of the market blocked.
"The German spin masters blamed congestion and increase of our vehicle fleet on EVs, ignoring the fact that just 1.2% of our car fleet is electric," Zimmerman says. "Instead of telling the three losers to speed up development of their own EVs, the Government gave in."