Why this is important to Wisconsin businesses: The New Infrastructure Strategy calls for adding tens of millions of new charging stations by 2030.
China’s New Infrastructure Strategy, first announced in 2018, became a top topic in 2020 as support for new infrastructure became a topic of discussion in Chinese Politburo meetings.
The document defines “new infrastructure” as infrastructure development driven by science and technology, with seven main fields: 5G base station, ultra high voltage (UHV), intercity high-speed railways and rail transit, big data centers, artificial intelligence, industrial internet of things (IIoT) and electric vehicle charging infrastructure. Given the overall slowdown in China's economic growth and the devastating impact of the pandemic around the globe, the New Infrastructure Strategy is expected to become a new driving force in China's economy. Electric vehicle charging infrastructure, which is officially incorporated into the New Infrastructure Strategy in 2020, has become a new opportunity for companies.
Before 2014, this infrastructure was controlled by the Chinese State Grid, which is a state-owned enterprise. After that the market was liberalized, and a large amount of private capital began to pour in. In 2015, the number of electric charging stations in China was 66,000, the number of new energy vehicles was 420,000 and the corresponding vehicle-to-pile ratio was 6.4:1. In 2019, the number of charging stations was 1.219 million, the number of new energy vehicles was 3.81 million and the vehicle-to-pile ratio was 3.1:1.
Even though the electric vehicle charging infrastructure market has expanded significantly with private capital, there is still a huge gap compared to the target vehicle-to-pile ratio of 1:1, which is set by the State Council in the Development Guide for Electric Vehicle Charging Infrastructure (2015-2020). The Ministry of Industry and Information Technology suggests that by 2025, new energy vehicles should account for 25% of new car sales. The ministry also estimates that by 2030, the number of new energy vehicles in China will reach 64.2 million, assuming a vehicle-to-pile ratio of 1:1. Considering that the current number of charging stations is 1.2 million, current construction plans still leave a gap of 63 million based on projections for the next 10 years.
According to the New Era Securities Research Institute, demand for charging infrastructure will be huge in the next five years, and the market will reach the level of ¥100 billion ($15 billion USD). A market of that size will require ¥280 billion ($43 billion USD) in charging equipment, and the charging and service market will be about ¥40 billion ($6 billion USD). Accelerated investment in charging infrastructure will significantly increase the demand for charging equipment and drive the increase in revenue and profit of related industrial chain companies.
Under the New Infrastructure Strategy, local governments have introduced new measures to promote the development of new energy vehicle charging. In Shanghai, equipment for special and public charging and changing facilities will be subsidized by 30% (within certain limits) during the construction process. In Wuhan, if the investment exceeds ¥500,000 ($76,000 USD), a one-time financial subsidy of 20% of the investment will be granted. Similar measures and subsidies are given by various local governments.
Opportunities await foreign enterprises, and some of them have already entered the market. As the leader in electric vehicles, Tesla has already started its layout in the Chinese market with its V3 super charging pile. Meanwhile, Daimler, BMW and Volkswagen, along with four other German automobile giants, have jointly set up a charging infrastructure platform called Hubject that has partnered with Chinese key charging pile operators to explore new standards and new modes of fine urban charging network operation. Traditional electric companies including ABB and Schneider have also joined the field as equipment suppliers and whole solution providers. The presence of these global players shows that the promise of China’s electric vehicle charging market is widely recognized, and given its prioritization by the Chinese government and increasing market demand, the market holds participation and export opportunities for companies around the globe.