China's Electric Vehicle Graveyards

China's Electric Vehicle Graveyards

China has the world's largest stock of plug-in electric vehicles, and its dominance in the sector is a powerful symbol of the country's economic rise.china electric vehicle But it's also a reminder that there's no such thing as a free lunch, and the massive subsidies that undergird China's EV industry have come at a price: a growing number of cars sitting idle in what Bloomberg News describes as "EV graveyards."

The phenomenon has been driven in large part by Beijing's efforts to promote electric vehicle use, including imposing bans on gasoline-powered car sales in several cities.china electric vehicle The move was meant to help ease the transition to electric vehicles, which are expected to account for 40 percent of all cars sold in 2030. In addition, the government has boosted the market by offering rebates for EV purchases and penalizing manufacturers who make high-fuel-consumption models.

Taking advantage of the incentives, many Chinese automakers backed or founded ride-hailing companies that filled their fleets with electric vehicles.china electric vehicle Some, like Geely's Caocao Chuxing and Changan's Maple brand, are still operating, but others have closed or been acquired by bigger competitors. The EVs themselves have become a burden to owners and their makers, which have had to invest in expensive battery-making plants, while consumers are paying a premium for the cars' superior environmental performance but don't always get the same mileage out of them.

As the EV market has consolidated, the cars have begun to pile up, and some local governments have even started to charge drivers for parking them in city centers.china electric vehicle This has led some consumers to abandon EVs, and the companies have had to write off their unsold inventory as losses.

That has left behind a growing number of sites where vehicles are parked haphazardly, often covered in dust.china electric vehicle The cars, which appear to be either new or nearly new, have been discarded by companies that shut down or were taken over by rivals. At one site in Hangzhou, the vehicles are stacked on top of each other and surrounded by plastic sheets. The body paint on the vehicles shows that they were once operated by Didi, Changan and Faststep Automobile Management.

The EV graveyards aren't just an eyesore. The waste of the cars reduces their climate benefit because it takes more energy to build an EV than a conventional model. And the spent batteries contain valuable materials like nickel and lithium that could be reused.

China's government agencies are trying to mitigate the problem by pledging to help the country's EV companies cope with foreign trade restrictions and to expand their overseas supply chains. But such efforts may not be enough to counter protectionist pushback in the United States and elsewhere. And as the EV market grows globally, it's creating a broader set of tensions between China and the rest of the world. That is raising the stakes for a race that has barely begun. The EV graveyards will likely become more common.