原标题：China's huge hidden electric vehicle market

2017 may be the year when China's secret low-speed electric vehicle (LSEV) industry goes mainstream and the entire world discovers just how substantial the country's lead in the EV industry really is. LSEVs are legal in the U.S., Europe and Japan but collectively sales in these markets amount to less than 100,000 units per year. LSEVs are technically illegal to drive on the roads according to national law in China, but in 2016 sales of these vehicles in the country easily topped 1 million units.

Shandong Province is the center of the world's LSEV industry and yet LSEVs are legal to drive on public roads in only 5 of the 17 prefecture-level cities. Despite this, there are between 600,000 and 1 million LSEVs on the roads in Shandong today.

Twice a year the city of Jinan, the provincial capital of Shandong, hosts the world's largest EV trade show. During the first week of March over 500 vehicle and component manufacturers came together at the 11th China (Shandong) International Electric New Energy Vehicle Exposition to flog their wares.

This year the key theme of the spring exhibition was growth. Where a couple of years ago there would have been 200 vehicle manufacturers squeezed inside the exhibition center in smaller booths, this year there were 120 vehicle manufacturers with substantially larger booths together with better organized branding themes.

The shortage of space inside led five larger manufacturers to build huge outdoor tents creating their own miniature (800 square meters) exhibition centers. One manufacturer even rented out the entire restaurant adjacent to the exhibition center and used the restaurants parking and sidewalks to exhibit their vehicles. While LSEVs are illegal according to national law, dozens of provincial and municipal regulations exist as exceptions to allow these vehicles to be driven on some roads. Last year China's central government began drafting new legislation to regulate LSEVs, so manufacturers are gearing up in preparation for the upcoming national legalization of the industry. One key aspect of the new legislation will be the replacement of lead-acid batteries with more “environmentally friendly” lithium-ion batteries. 2017 showed a concerted effort to impress government officials with the size, growth, manufacturing and technology capabilities of vehicle manufacturers. Twenty-two different manufacturers announced lithium-ion versions of their EVs including Yogomo, Levdeo, Dojo, Lichi, Baoya, Eastman, T-King and GreenWheel, but only a handful of these vehicles were actually available for sale at the show. The auto industry has fought tooth and nail against the LSEV industry because they are both going after the same huge rural market. Present LSEV designs are notoriously dangerous; in a government test none of the major manufacturer designs were able to meet 30-km/h crash test standards. The auto industry has lobbied to set LSEV manufacturing requirements on par with automobiles to raise the cost of manufacturing to match traditional highway speed vehicles. This year many major automobile manufacturers, including FAW, Chery, Chang'an, BAIC Motor, Zotye and Lifan were in attendance or had formed partnerships with manufacturers at the exhibition. The new LSEV regulation is closely connected to China's substantial investment in lithium-ion battery manufacturing capability and the auto industry's shift away from LiFePO4 (lithium-iron phosphate) battery technology. In 2016 China's Ministry of Industry and Information Technology (MIIT) announced power-density subsidy requirements for EVs that will realistically eliminate LiFePO4 batteries in the auto industry in China after 2018. Part of the compromise when deciding to eliminate LiFePO4 battery technology from the auto industry was to expand the market for LiFePO4 batteries into the LSEV market. Industry insiders believe the national law legalizing the manufacture of LSEVs will be announced sometime during 2017. When this happens the market for LSEVs in rural China will explode because the risk of incarceration or vehicle confiscation will be gone. And the race for registration of LSEV manufacturing licenses will begin in earnest, as will the race to bring vehicle designs in line with basic safety standards and obtain crash test approvals for different vehicle designs. As yet it remains unclear whether foreign companies will be permitted to compete openly in China's LSEV market, or whether foreign firms will be forced to find a joint venture partner, as is required in the auto industry. If national LSEV legislation is enacted in 2017, China's annual sales of these vehicles will also see dramatic growth, from today's 1 million units per year to 5 million units in 2018, as fast as manufacturing capacity will allow. Some industry insiders even predict the market for LSEVs will grow to match the size of conventional automobiles, in the range of 30 million units per year. With the legalization of LSEVs, China's EV manufacturing statistics will change dramatically overnight. Had LSEVs been considered legal in 2016, China's annual production of EVs would have quadrupled in size to 1.3 million vehicles, dwarfing the combined production of EV in the rest of the world. A week after Jinan hosted the spring show the city declared driving a LSEV illegal within city limits, punishable by a ¥2,000 ($300) fine or 15 days in jail. Even with the threat of incarceration, over 1 million LSEVs will be sold in China during 2017. About the author: Charlie Paglee is the CEO of Brannan Auto, an American automobile engineering and manufacturing company with multiple factories in China. Paglee has three decades of experience doing business in China and speaks Chinese Mandarin fluently. He can be reached via email at charlie@brannanauto.com. The original version of this article appeared in the April 2017 (Vol. 12, No. 4) issue of China Automotive Review (CAR),our monthly tabloid magazine in English on the Chinese auto industry. ©本刊所有图片、文字及版式版权均为【中国汽车要闻】（China Business Update）所有，未经授权许可，不得复制或用作其它商业用途，其他网站及平面媒体如需转载，须注明作者及出处。返回搜狐，查看更多

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