RMI Outlet

Two weeks ago, The Washington Post called Shenzhen, the tech hub in Southern China, a “pacesetter,” when reporting on how it became the first city in the world to turn nearly all of its buses and taxis electric. But it is not just public and for-hire fleets electrifying in Shenzhen.

In the last three years nearly 60,000 electric light trucks and vans have been deployed for urban freight movement, representing approximately 35 percent of the city’s overall fleet of urban delivery vehicles.

RMI’s latest report, A New EV Horizon: Insights From Shenzhen’s Path to Global Leadership in Electric Logistics Vehicles, explores Shenzhen’s experience in the deployment of electric logistics vehicles and takes on one of the most important questions to accelerating adoption of EVs in urban delivery: how to effectively provide charging infrastructure.

The analysis and conclusions are based on telemetric data gathered from electric logistics vehicles (ELVs) and a series of interviews with stakeholders, including charging station owners, logistics and leasing companies, and vehicle operators.

We believe a deeper understanding of Shenzhen’s experience in ELV deployment can be a guidepost for other cities across the world aiming for a cleaner, low-carbon future.

Exhibit 1: Shenzhen Electric Vehicle Population 2015–2018

Shenzhen’s Innovative Policies Driving EV Adoption

Driving Shenzhen’s rapid growth is a novel portfolio of economic policies designed to make electric logistics vehicles an economically viable alternative to their fossil fuel counterparts. Shenzhen’s multipronged policy approach includes:

Subsidies for electric vehicles, which create near cost parity between ELVs and internal combustion engine (ICE) vehicles.

Subsidies for charging infrastructure, resulting in rapid growth of a robust charging network.

Road restrictions on vehicles with internal combustion engines, creating a strong incentive to shift to lower-emission delivery vehicles.

Preferential electricity rates and fee exemptions for charging operators, providing ELV operators lower fuel costs.

Mandates and targets at the city and district levels for the number of chargers to support growth of the charging network.

The effects of these policies are taking hold and the ELV market is seeing economies of scale in manufacturing and a resulting drop in prices. Shenzhen is now beginning to take its foot off the gas, reducing subsidies and allowing the market forces that they set in motion to take over.

Integrating Electric Vehicles into the Grid is a Key Challenge for Policymakers

The rapid deployment of electric logistics vehicles driven by economic policy has tested Shenzhen’s ability to provide sufficient charging capacity.

The balance between charging demand and capacity is a challenge that policymakers, not just in Shenzhen, will have to overcome not only for electric vehicles to be scaled at the levels envisioned but also to support a clean transportation economy.