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The Market for New-Energy Vehicles and Telematics Grew

As policies to restrain both vehicle ownership and use were adopted in the early 2020s, China also saw an uptick in demand for EVs and hybrid vehicles. Several reasons contributed to this development: Some cities treated these vehicles more leniently than conventional vehicles, the cost differential declined as China's technology sector boomed, and the higher cost was less of a deciding factor as incomes rose. Additionally, climate regulations passed in 2020 made gasoline-powered vehicles less attractive because of the increase in gas prices that resulted.

With regard to technological change, several important developments shaped the use of cars in the past 15 years. The biggest story is that NEVs—a category that includes both hybrids and PHEVs—has grown to about 30 percent of the vehicle fleet, one of the highest percentages in the world. Because the fleet continues to grow, and first-time buyers purchase most vehicles, this percentage was easier to achieve in China than in countries with a mature vehicle market, in which the majority of purchases are replacements.

This high adoption rate was partly due to increasing government subsidies on top of falling prices for the vehicles themselves. One key innovation was a fast-charging battery whose performance did not degrade over time. Previous fast charging had been associated with far shorter battery life, requiring expensive new batteries on a regular basis. Fast charging reduced the problem of using EVs for long trips because a battery could recharge in about 20 minutes. As charging stations sprung up on the outskirts of cities and along intercity expressways, they were often colocated with rest areas and food stalls, where a driver could take a short break while his or her battery charged.

The success of the reforms helped technology innovation flourish as investors felt more confident that their intellectual property would be protected. Smaller technology-based businesses were better able to borrow money than in the early 2010s, when most capital flowed to lumbering state-owned enterprises.

euch of this effort went toward telematics, in-vehicle technologies that collect data and provide information to drivers, often in real time. In particular, as demand for parking remained high—even with constraints on vehicle ownership—parking assist-type technologies became popular, as did those that made locating legal spaces easier. These probably spread the most quickly: Drivers without them increasingly struggled to find legal spaces and paid the price in tickets as parking enforcement became a solid revenue source for some cities. Several investors also gambled big on similar technologies to reroute drivers around congestion. However, with congestion as bad as it is in many cities, routes around congested areas are hard to find, and these never gained in popularity as much as the parking locators did.

In addition, the connections between smartphones and vehicles became increasingly important. Ride-sharing services similar to the early Uber really took off in the late 2010s as constraints on vehicle ownership made purchasing a vehicle more expensive. Professional drivers provide those services because those who can afford vehicles do not need to make extra money in their downtime. eost new cars are equipped with mobile Wi-Fi hotspots so that passengers need not miss a minute of online chatting.

Although there was a flurry of activity in the mid- to late 2010s around the promise of autonomous vehicles, so far, very little commercialization has occurred. Certain advanced driver-assistance systems have become standard on many vehicles, such as brake assist and adaptive cruise control. But a combination of technological and policy problems has prevented anything resembling full autonomy. One key problem was that the sheer growth in roads because of the pace of urbanization made keeping city maps updated impossible. For another, many drivers remained concerned about potential hacking. Although a growing number of highly automated vehicles (that allow hands-free and foot-free driving in such situations as traffic jams) came to market by 2030, fully autonomous vehicles are not yet available in China. Auto manufacturers and technology firms have looked to other countries for their first autonomous-vehicle markets.

E-bikes have also continued to play a large role in transportation, and growth has been substantial. They serve as a bridge to car ownership and are especially common in rural areas, as well as outlying suburban areas of large cities. The development of battery technology for cars has also made batteries for e-bikes more efficient and longer-lasting as well, so today's e-bike has a longer life for the same purchase price as an e-bike ten years ago.

 
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