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Didi BP Charging station
Quartz
The BP fast charging station in Guangzhou, China.
TAKING THE FAST LANE

China is leaning on ride-hailing to boost sales of electric vehicles

By Echo Huang in Guangzhou, China

Hua would prefer not to drive a battery-electric car.

But after the Chinese city of Guangzhou began implementing rules that made it all but impossible to use his gasoline car for ride-hailing, he rented an electric model from BYD in April. Now he worries constantly about the car running out of range, especially on hot days that can drain the battery faster. One time he paid an expensive parking lot fee downtown to use its charging facility, only to find the charging station he’d pulled into was broken. It was a lot easier when he could use his regular car for ride-sharing, but restrictions on when gas cars could be on the streets forced him to make the change.

“Charging is too much hassle,” said the 28-year-old, who asked Quartz use only his surname, as he charged his car at a station that UK oil giant BP recently set up in partnership with Didi Chuxing, the Chinese ride-sharing giant Hua drives with. “I don’t even dare go on a long-distance drive. I have to charge wherever I go.”

Hua was reclining in the driver’s seat of his e5, an EV with a 300-kilometer (186 miles) range, and playing with his phone to pass the time when a Quartz reporter encountered him—it takes about an hour to fully charge from 30%, even at a fast-charging station like this BP one.

Hua’s among the more than 600,000 drivers on Didi’s platform who use new energy vehicles (NEVs), a category that includes pure electric and plug-in hybrids—more than double the number this time last year. Didi didn’t provide a breakdown of how many of those are owned by drivers themselves, and by rental companies. The company’s platform includes more than 30 million drivers, including taxis and ride-sharing providers.

The rise of EVs in ride-sharing comes as the government seeks to promote sales and adoption, especially as it unwinds its generous subsidies to electric-vehicle makers. The sales of electric vehicles (EVs) fell in July—the first drop since 2017—after subsidies for manufacturers went down by roughly half in late June.

 

In the last year, a number of Chinese cities have rolled out rules that ban new registrations for ride-sharing with gasoline cars. Shenzhen, the headquarters of China’s largest EV maker BYD (Quartz member exclusive), for instance, said it would no longer give new ride-hailing licenses to vehicles that aren’t pure electric starting last August. Since then, a slew of mid-sized cities (links in Chinese), have all rolled out similar rules. Southern Guangzhou, one of China’s largest cities, is finalizing a similar policy.

The ride-hailing policy strengthens one of China’s most effective ways of controlling the numbers and types of cars on the road—the quota system adopted by the country’s most congested cities. Getting a license plate for fossil-fuel cars in big cities like Beijing and Shanghai can cost as much as buying a new car, while there are also restrictions on when they can be driven. EVs, with their visibly green license plates, aren’t limited to the same extent.

Businesses, reading the tea leaves, have been quick to adapt. Multiple carmakers have established EV ride-sharing subsidiaries, including large carmakers like Zhejiang-based carmaker Geely, FAW and WM Motor, and smaller ones like EV startup Xiaopeng Motor. In a departure from typical ride-hailing, Xiaopeng employs the drivers directly as a sort of mobile showroom for its flagship electric SUV, and told Quartz it presently has about 1,000 drivers in pilot city Guangzhou.

Didi, meanwhile, has also been establishing partnerships to operate EVs and charging networks. Dorcen, a carmaker in central Jiangxi province says it has designed an NEV sports utility vehicle specifically for ride-sharing, according to a salesperson at the Shanghai auto show, but couldn’t say what features make it especially suitable for ride-hailing. It has also set up its own ride-sharing company.

“EV demand from [the] associated ride-sharing business is relatively steady and controllable compared to the retail market,” Yang Jing, a Shanghai-based auto analyst for Fitch Ratings, said via email. In addition, “EV market regulation has shifted focus from subsidizing EV purchase to EV usage, encouraging local governments to subsidize charging facilities after canceling local EV subsidies” in late June, Yang wrote.

Right now, there’s one charging station for about every four NEVs.

Businesses are thinking about how to solve range anxiety—some have opted for battery swapping (Quartz membership). State-owned BJEV, for instance, is betting on the idea, which just takes a few minutes to change to a new fully-charged battery. The upfront cost can be high because of construction costs for a storage network, and it works better for customers with large fleets using a few models, versus catering to a bunch of different EV models. But right now, with electric ride-sharing dominated by BYD, BJEV, and Geely, it could work.

Another hurdle to expanding ride-hailing is that the costs of making the switch mostly fall on drivers, who might earlier have been using their own cars, but now are faced with rental fees.

A Didi driver surnamed Zhong who has been driving BYD’s e5, a pure battery model of a 400-kilometer-range (248 miles), for two months in Guangzhou said there were a lot of attractive features with electric. It costs a third per kilometer compared to driving a gasoline car, and he has more flexibility about when to “refuel”—at night or during a lunch break. Because he also enjoys a relatively long range, he would be able to accept a better-paid order for the 1.5-hour drive from Guangzhou to Shenzhen, while Hua said he’d mostly drive in the district he lives in.

But Zhong probably wouldn’t drive an EV either if not forced to, as his own gas car is already registered for ride-sharing. That car doesn’t have a local license plate, however, which would have allowed him to continue to use it for ride-sharing after the new rules came into effect—so Zhong decided to go ahead and rent the e5 for 4,800 yuan ($680) a month.

“I don’t have a local car plate so I can’t really do [gasoline] ride-sharing here. The fine would be so high,” said Zhong, who also said that he wouldn’t consider buying an EV. Instead, Zhong said he’s considering quitting ride-sharing once his rental contract ends, since he now works more than 13 hours a day to cover his car payments: “I am barely making any money.”