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FORTUNE.COM // APR.1.19
its total-vehicle sales—or buy so-called new-
energy-vehicle credits from other automakers.
It’s an environmental mandate China modeled
on one in California.
VW, which sold only about 8,000 electric
and plug-in hybrids in China in 2018, ac-
cording to Bloomberg, says it plans to sell an
eye-popping 400,000 annually by next year
and 1.5 million annually by 2025. Tesla, which
resisted manufacturing in China when the
country still required joint ventures, shifted
strategy after the policy changes and broke
ground in January on a factory in Shanghai,
its first factory outside the U.S. Tesla says the
plant will ultimately produce 500,000 electric
cars annually.
Amid that onslaught, BJEV is scrambling. It
has targeted selling 500,000 electric vehicles
annually starting next year, and it is pursu-
ing foreign markets. In a meeting room at the
company’s headquarters that, like others, is
named for a major global city—in this case,
Berlin—Wang, the BJEV engineer, explains
that Chinese automakers have focused mostly
on ancillary car features, like Wi-Fi, but still lag
established auto giants on the basics, such as
safety and high-speed handling.
On “the fundamental things, they have the
experience,” Wang says of Western rivals. “In
the future, we need to care about the quality of
the car—not only to say we are the cheapest.”
He adds, “We need to catch up.”
year. BJEV doesn’t produce hybrids.
The Chinese government is mulling long-term targets for
electric-car sales. China’s Society of Automotive Engineers has
said 40% of passenger-vehicle sales should be electrics or plug-in
hybrids by 2030. Behind China’s ambition are three strategic
goals: combating pollution, curbing oil imports, and building
competitive electric-car firms. Governments at every level have
been pursuing the goals through carrots and sticks.
The carrot consists of big subsidies, which, in the case of some
models, make buying an electric car half as expensive as it would
otherwise be. By far the bestselling electric car in China in 2018,
an econobox from BJEV called the EC, sold for about $8,000
after subsidies.
For many drivers, the stick has been at least as important.
Traffic-clogged megalopolises such as Beijing have greatly reduced
the number of new license plates they issue for conventional
vehicles and have limited when such cars may drive in certain
areas. But cities are issuing more electric-car license plates, which
are green, while not restricting when electric cars can be used.
The wake-up call for BJEV was China’s shifting electric-car
subsidies to car models that are more efficient and go far-
ther on every charge. The company is also grappling with the
government’s eliminating protectionist policies that coddled
domestic firms.
China still requires that foreign automakers pay import duties
if they manufacture the cars outside the country. But as of 2018,
foreign companies no longer need joint ventures with Chinese
firms to undertake local manufacturing and thus avoid tariffs.
Further unleashing the foreign competition is a Chinese
requirement taking effect this year that any automaker selling
petroleum-powered vehicles in the country must either sell a
minimum number of its own electric cars—a number pegged to
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