GBA Brief

Leading the charge in the GBA: Evergrande joins the electric car race

New partnerships point to why the GBA is set to be a key market for electric car sales. Property developers are revving up for action with a new venture that could bring a step change for charging stations.

China wants to see millions of new energy cars on the streets, preferably homegrown brands. To make that happen there are two key preconditions. First, automakers need to keep improving the technology and pushing down costs, resulting in lower prices for car buyers. Second, to support an increasing number of electric vehicles (EVs) on the roads, more charging stations need to be built. 

The two priorities feed into each other. A more expansive charging infrastructure will make drivers more likely to go electric. More sales of EVs should help manufacturers drive down costs with scale. And when there are more cars, the charging station business becomes more viable commercially, allowing for a bigger network of charging points.

The GBA has a better chance than most at reaching this virtuous cycle. Guangzhou and Shenzhen are already pushing aggressively for more sales of new energy vehicles, with a policy mix combining purchase subsidies, licence quotas and road restrictions on traditional cars, plus preferential electricity rates for EV owners. 

In doing so they are heeding central government directives. But supporting local firms is an equally important incentive. Shenzhen is home to BYD, the country’s number one electric car maker in sales volumes, and we wrote last month about how Guangzhou’s government had encouraged firms like, an autonomous driving start-up, to experiment in the Nansha special zone. 

Also in Guangzhou, state-backed GAC Group is betting big through a tie-up with EV firm NIO that has just introduced the all-electric brand Hycan. It will go into full commercial launch in the first half of next year, the two partners have promised.

The market potential is drawing newcomers into the sector. Shenzhen-based developer China Evergrande is one of the latest to join the fray, pledging to become one of the top players within five years. 

Evergrande has announced a flurry of acquisitions and investments in different parts of the value chain. In June, it signed a deal with the Guangzhou government to invest Rmb160 billion in Nansha to build a plant producing a million EVs a year, plus another major facility to make batteries. Shortly afterwards it announced another new partnership with State Grid to tap the vehicle charging market. The idea is to combine its property holdings with State Grid’s electricity distribution expertise, and the new venture has also signed agreementswith Country Garden, Vanke and Sunac. Apart from Sunac, the real estate developers are all GBA-based.

Industry analysts have complained that charging infrastructure is lagging behind the rest of the sector and that more charging points are needed in more convenient locations. High set-up costs and lower-than-expected usage have dissuaded some operators from investing more in their networks. But that might change if more charging poles are set up in the car parks of residential blocks, providing a more compelling ‘last-mile’ solution to EV owners. 

The hope is that facilities like these will soon be regarded as a basic amenity, encouraging more of the developers to offer them in the projects that they build and manage. That could mean that more of the real estate firms join the Evergrande alliance, or that they create rival pacts of their own. Either way, this would accelerate the build-out of the charging network and put the GBA into the fast lane of EV adoption. As the GBA’s biggest developers are all national players, rollout experience in the region would soon be shared with projects in other parts of China as well.