COMMENT
Electric car rental business is poised to grow in China
Yang Jian | 2015/2/13
SHANGHAI -- Last weekend I met a friend in a newly developed industrial zone in suburban Shanghai. While we were sitting in a roadside teahouse, I saw a small electric car pass by.
The car was built by Kangdi Electric Vehicle Group Co., a subsidiary of Zhejiang Geely Holding Group Co. It is only for rent, not for sale, my friend said.
This could be the next big thing for China's embattled electric vehicle producers. Automakers have come to view green vehicles as products more suitable for rent than sale. Three state-owned automakers have established partnerships this year to rent EVs.
On Sunday, Beijing Automotive Industry Group Corp. opened a joint venture in Beijing with Taiwanese electronic component supplier Foxconn Technology Group Co. This month, the 100 million yuan ($16 million) partnership plans to rent 500 compact electric sedans to motorists in Beijing.
Last week, Chery Automobile Co. signed an agreement with Chinese car rental company Yongche and telematics supplier Pateo Co. of Shanghai to develop "smart" EVs for car-sharing and rentals.
And in January, SAIC Motor Corp. partnered with STGCON New Energy Technology Co. -- a Shanghai-based supplier of battery charging equipment -- to launch a car rental business in several major cities.
SAIC will supply its Roewe E50 small electric cars and Roewe 550 compact plug-in hybrids.
The pioneer in this niche is Kangdi, a privately owned company that started renting EVs in 2013. Now, a slew of state-owned automakers are emulating Kangdi. This is a healthy sign for the EV industry in China.
To date, EVs still are too expensive for the average consumer. For example, the two-seat Kangdi microcar costs 133,000 yuan ($21,300). Even after government subsidies, it still costs twice as much as a gasoline-powered subcompact produced by Chinese carmakers.
Rentals are a smart way to solve the pricing problem, since motorists can rent an electric car for a few hundred yuan per month. But what about an EV's limited range?
Motorists who rent electric cars mainly drive in downtown areas or suburbs of big cities, so they don't need to drive long distances. However, there is still one problem for the rent-an-EV industry: a shortage of charging stations.
In China's big cities, most people live in high-rise apartment buildings, and public
charging stations are still scarce. So it will be difficult for EV rentals to blossom into a multibillion yuan business any time soon.
But Beijing is trying to fix that problem. This year, the central government will start subsidizing municipalities to build more charging stations. The subsidies will be based on the number of EVs and plug-in hybrids sold by each city.
Over the next few years, the cities will construct a large number of public battery-charging facilities. And when that happens, China's EV rental business will find itself on the fast track.
Pictured: Yang Jian is managing editor of Automotive News China.
