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Sorry Tesla, but China wants golf carts

by

Bloomberg

When Elon Musk imagines the future of electric cars, he probably doesn’t see city streets jammed with golf carts. The Chinese government does.

It’s drawing up plans to regulate plug-in vehicles with maximum speeds of 70 kph. Included in that category are a vast range of vehicles that ply China’s countryside and smaller cities, including single-seat delivery trucks and pod-like three-seaters that are as little as 1.3 meters across. Though not nearly as stylish as a Tesla (or even a BYD Qin), these motley vehicles are far more likely to propel China — and maybe the world — toward an electric future.

The boom in low-speed electric vehicles (or LEVs) is an unplanned disruption in a Chinese auto market accustomed to central planning. LEV makers are out-innovating and out-selling their upscale electrified counterparts. Production of LEVs is growing quickly, and sales exceeded 300,000 in 2014, according to state media.

One reason is economic. In the 1990s, electric bicycles began appearing on Chinese streets, catering to an upwardly mobile demographic that wanted more speed and range than a normal bike but couldn’t afford a car. Today, there are more than 150 million e-bikes on China’s roads, leading one expert to call it “the single largest adoption of alternative fuel vehicles in history.” E-bikes aren’t an endpoint but rather an interruption in “the transition from bicycle to bus and from bus to car,” as one study put it.

That’s where LEVs come in. In general, they’re cheaper — often much cheaper — than traditional cars. For consumers weaned on e-bikes, and accustomed to a limited driving range and frequent charging sessions, LEVs seem like a natural stepping stone into car ownership.

Yet much as rural Chinese adopted cheap mobile phones rather than wait for landline access, many drivers are finding that LEVs are actually all they need. For residents of smaller cities, a glorified golf cart that can take them to the market, a relative’s home or the workplace makes a lot of sense. LEVs are easier to maneuver through traffic and into tight parking spots. Retailers are finding they work well as delivery vehicles, especially to meet the booming demands of e-commerce. And China’s growing population of seniors are realizing that a souped-up golf cart can meet most of their travel needs.

Already, those golf carts meet China’s long-term climate pledges. As battery technology and green-power generation improve, so will their carbon footprints.

All of which suggests that, with more than 600 million people living outside of China’s biggest cities, and car ownership rates still low, the opportunity for growth in LEVs is huge. And an explosion of manufacturers and hobbyists suggests many more innovations are on the way.

Even so, the industry has some problems to solve. Technically, LEVs don’t require a license and can’t even be registered, because the law doesn’t recognize them. That helps explain why they typically lack basic safety features, such as seatbelts. Regulations that set minimum safety standards, including where LEVs are allowed to drive, would not only legitimize them, but even help them thrive. For now, Elon Musk need not fear the competition. But he might very well learn from it.

Adam Minter writes on business in Asia.