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Energy Prices Remain Level

Oil has remained at its 2013 price, at about USD 100 per barrel. Demand is high despite the slowdown because people have continued to buy cars, and China now imports 70 percent of its oil. Because oil is not extremely expensive, government has invested little in finding new domestic sources. The mild recession of the late 2010s has also affected demand in other developing countries (such as Brazil and India), which has kept oil prices stable.

Car Manufacturing and Ownership Grow but Not Rapidly

The car industry has been growing at a pace just below GDP growth. Total vehicle production reached 25 million in the early 2020s and has since grown to just over 35 million vehicles per year. Although vehicle ownership levels have been rising—in 2030, the total fleet size is roughly 260 million, or about 185 vehicles per 1,000 people—some observers had expected that the fleet would be even larger by now.

Domestic demand remains reasonably strong; once an urban resident reaches a certain income threshold, a car is generally the first major purchase. Also, there have been relatively few new ownership restrictions, such as auctions or lotteries for license plates. These remain in place in some first-tier cities, but the faltering economy in the late 2010s discouraged many second- and third-tier local governments from instituting additional constraints on driving and vehicle ownership. But the income gap means that car ownership is still financially out of reach for the majority of the Chinese population.

Vehicle exports (both cars and commercial vehicles) have continued to rise from about 1 million in 2012 to 3.5 million in 2030, accounting for about 10 percent of vehicle production in China. China's initial export markets were almost exclusively developing countries, especially in South America, the Middle East, and Africa. As these countries' economies grew, their demand for inexpensive Chinese vehicles did as well.

However, China has not quite unlocked the market in mature economies, in which more-advanced safety technologies and sophisticated emission controls are highly desirable and, in many cases, mandated. Chinese exports have been more successful in countries where lower prices remain the most important factor in vehicle purchase decisions. Given the difficulties of reform and the lack of more market-based incentives, Chinese manufacturers have been unable to shift to higher value-added technologies.

New-Energy Vehicles and Vehicle Technologies Still Hold Promise

Growth in EVs and hybrids has been robust, and NEVs now constitute about 20 percent of the passenger fleet. This represents an enormous increase over levels in the early 2010s, when high price tags and a lack of charging infrastructure stymied ambitious plans to increase numbers of NEVs produced. It was, of course, easier for NEVs to amass a larger share of the fleet in China than in developed countries because so many car purchases in China represented additions to the total fleet (as opposed to being replacement vehicles). Still, this share was not as high as hoped—there was an ambitious target of 30 percent of the fleet in 2030 (the well-publicized "30 in 30" campaign). However, like with past targets, the reality fell short.

Several factors contributed to the growth in NEV numbers. First, in keeping with the new climate regulations, those cities with ownership restrictions made exceptions for NEV owners to encourage people to purchase NEVs instead of conventional vehicles. Second, although the overall level of state investment in transportation infrastructure declined markedly, charging stations were a key exception to this pattern and received substantial outlays. The number of stations increased from a few tens of thousands 20 years ago to hundreds of thousands today. This public infrastructure was particularly important given that most Chinese vehicle owners cannot charge their NEVs overnight in a private space. So employer-based charging is very important, as are public stations for those who do not commute by car.

Finally, the central government pressured many cities to purchase more NEVs, such as transit buses and municipal fleet vehicles. This led to positive spillover effects as factories gained skill in producing NEVs and potential buyers became accustomed to seeing them on the roads.

The growth of in-vehicle telematics has been large, but, again, many expected it to be even larger. Constraints continue on access to online services, and vehicles are no exception. One growth area has been services that help drivers navigate congestion, which remains a serious problem in many cities. Real-time data help drivers identify less-congested routes, which is especially helpful for truck drivers and taxi services. However, as more and more drivers use them, the advantages have become smaller as more people can find those "hidden" routes.

Roadside assistance is another popular telematic service because the number of crashes remains high and people worry about being stranded on long-distance trips. The car can automatically signal its location and summon police or ambulance services. However, this capability is expensive, so it is used mostly by affluent drivers.

E-bikes—both the electric-assisted bicycles and the electric scooters, as well as everything in between—are an important mode for those urban dwellers who cannot yet afford cars. Growth has been steady, and they are seemingly everywhere. Their appeal is in making trips that are too far to walk and too inconvenient for transit. Although some cities had attempted to ban them previously, those days are over, and cities have instead tried to accommodate them with separate lanes and, in some cases, even off-street paths. Some models travel too fast to mix safely with pedestrian traffic, so a few places have three types of roadways—for cars, for e-bikes, and for totally nonmotorized traffic. But this is more of an experiment and does not seem likely to constitute a future model.

Smartphones have also enabled substantial growth in ride-sharing and car-sharing. Although owning a luxury foreign car continues to be a status symbol, for many households, the ability to access a car when needed fills an important void. Although people might still aspire to owning a car one day, these modes are quite popular for now. Some vehicle owners drive for ride-sharing services on the side to earn extra money, and, despite a few well-publicized fatal crashes and high-profile crimes, the public continues to use these services because they cannot purchase cars.

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