# **1 Introduction**

The study presents a comprehensive empirical analysis on various driving forces with a focus on the role of government behind the rapid growth of the electric vehicle (EV) market in China based on the most detailed data ever complied on this important market. An electrified transportation system together with a clean electricity grid holds the promise to reduce fossil fuel usage, local pollution, and greenhouse gas emissions (GHGs). In contrast to internal combustion engine vehicles (ICEVs), plug-in electric vehicles (EVs) power the motor using electricity generated from power plants and stored in rechargeable batteries. When operated in all-electric mode, EVs consume no gasoline and produce zero tailpipe emissions. The stored electricity is generated from fossil fuels or renewable sources. Fossil-fuel power plants produce air pollution but have much better fuel efficiency than internal combustion engines.

The introduction of Nissan Leaf and Chevrolet Volt in 2010 marked the beginning of the mass market for EVs.<sup>1</sup> The United States had an early start in the EV market but the market in China grew rapidly to become by far the largest one by volume in 2015 as shown in Figure 1. After a decade of market development, new passenger EV sales, including both battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), reached 2.2 million units globally in 2019, accounting for about 2.5% of total new passenger vehicles sales. The largest two EV markets, China and the United States, contributed to 50% (1.1 million) and 15% (0.33 million) of all passenger EVs sold. In terms of the share of EVs in the new vehicle market, Norway has by far the world’s highest share at 55.9%, compared with Sweden at 11%, China at 4.7%, and the United States at 1.9%.<sup>23</sup> The transition from ICEVs to EVs is challenging due to various economic and technological reasons including the high upfront purchase cost mainly due to the high cost of batteries, the limited driving range and the need for charging infrastructure, and inherent and perceived

> 1Tesla Motors was instrumental in the come-back of EVs by introducing Tesla Roadster, an all-electric sport car in 2006 and beginning general production in March 2008. But the model with a price tag of over $120,000 was out of the price range of average buyers. When first introduced in the US market in December 2010, Nissan Leaf had a price tag of $33,000 and Chevrolet Volt $41,000.

> 2 Sources: `https://www.marklines.com` and `https://insideevs.com/` .

> 3In China, electric two-wheelers, including electric bikes and electric motorcycles – is another type of alternative fuel vehicle, that has experienced explosive growth over the past few decades. Sales of electric two-wheelers started in 1999 and started to take off in 2004 when 40,000 were sold. Since then, more than 20 million are sold each year and there are now over 300 million motorized two-wheelers on the road. Electric two-wheelers provide a low-cost low-emission mobility that fills an important niche in China’s transportation system. However, because government regulation and incentive policies for the adoption of electric two-wheelers are completely different from those for EVs, it is beyond the scope of this paper to analyze the growth of electric two-wheelers in China.

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