New Energy Vehicles in Beijing - Essay Example

The researcher has established this dissertation into seven parts; Introduction, Literature Review, Methodology, Findings & Discussion, Conclusion & Recommendations, References, and Appendices. The focus of this research is in the area of new energy vehicles in Beijing. Such a study is important in order to research and assess the developmental barriers of new energy vehicles. The research methodology adopted in this dissertation includes qualitative and quantitative methods; the methods include a face-to-face survey, online survey and face-to-face interviews as well as telephone interviews. The findings and discussion provide evidence that personal background and attitude are strongly influenced in the willingness to buy a new energy car. Government policy and marketing investigations indicate that relevant regulations are still in an unclear developmental situation, and the marketing of new energy vehicles is still a difficult endeavour. Therefore, the relevant non-sound rules and regulations, the continued use of fossil fuel, the nearly saturated automotive and second hand vehicles market, as well as some deep-rooted personal views are the main barriers for the development of new energy vehicles in Beijing. The consumer age groups purchasing new energy cars are mainly younger people. The results also show the difference in the development of new energy vehicles between Beijing and cities of other developed countries. The main conclusions and recommendations drawn from this study are that the new energy vehicle cannot replace the motor vehicle directly; they can be only gradually developed because time is required for the establishment of regulations, policies and charging stations, and for people’s attitudes to change. If motor Enterprises produce a car that achieves the requirements of a reliable level of technology, security and an attractive appearance, the popularity of the car will be increased. If new energy vehicles are able to reach this level, new energy vehicles will also be fast to become popular. Acknowledgements and Declaration This dissertation would not have been possible without the help and guidance of certain people. It is a pleasure to thank those who made this dissertation possible, such as my parents who gave me spiritual encouragement and the economic support I required, and my professor, Lynn CROWE, who supervised me and enabled me to develop an understanding of the subject. I owe my deepest gratitude to Education Adviser Viv THOM, who gave me advice about structure and corrected my language errors. I would also like to thank a friend, Minfeng YAN, who introduced two important people to me, one is Teng LI, the consultant of the Audi 4S store, and Feng ZHANG, a salesperson of the Toyota 4S store. I must make a special reference to Minfeng YAN, because without his help I could not have gotten such relevant information. I am thankful to respondents and friends in the support and cooperation of the surveys and interviews. Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the project. It is declared that this Research Report is entirely the product of my own work. 1.1 Overview The questionnaire sample sizes were 65 and 78 for face-to-face and online survey respectively. To ensure the accuracy of the answers, each face-to-face survey was completed by different people and the online survey could only be filled in once for one IP. In order to understand the condition of the auto vehicles market in a short period, the interpretive interviews selected consultants and salespeople from different mainstream 4S stores, where one consultant came from an Audi 4S store, another one came from a Toyota 4S store, and the last one from BYD. 1.2 Personal background The age distribution in the face-to-face survey demonstrates that there is no age limitation. 60% of total respondents were aged from 19 to 30, while 32.3% of them were aged between 31 and 50 years old. In contrast, most of respondents of the online survey (92.3%) were aged between 19 and 30, indicating that young people prefer doing surveys online and the results of the online survey mainly reflected the opinion of younger people. The salary distributions in the face-to-face surveys were mainly in the range of RMB 2,000- to 5,000 (44.6%) and RMB 5,000 to 10,000 (40.0%), while they were mainly < RMB 2,000 (41.0%) and RMB 2,000 to 5,000 (33.3%). The results match the conclusion from the age distribution, that face-to-face surveys have no age and income limitation, while online surveys focus on younger people who are mostly still students with a lower income. In the face-to-face surveys, the education degree distributions were mainly college (47.7%) and undergraduate (38.5%). However, undergraduate (52.6%) and Master/PHD (28.2%) were the major group in the online survey. Detailed cross statistical data of the relationship between gender, education background, age and salary were carried out and shown in Figures 5 and 6. According to the cross statistics in the online surveys, 92.31% of people were in the age range of 19-30. The data proved that the online results were similar to the results of the face-to-face survey. However, in the age focused online survey, people’s willingness as a result of personal background was more regularized. 1.3 Personal Attitude Question 5 was about whether the respondent would purchase a new energy car within 5 years or not. In the cross statistics, percentage is in accordance with willingness and four factors of personal background were taken as main references. If the percentage was less than 30%, they are not shown in the diagram. In the face-to-face surveys, generally speaking, females that were willing to buy a new energy car were of a higher number than males. According to higher qualifications and salaries, there was a higher degree of willingness to buy a new energy car, regardless of gender. A car is a means of private transportation, people can travel alone and go from door to door whenever they like. A car is a commodity that most people will purchase. The numbers of wealthy people in China are increasing, especially in Beijing. They behave much like other wealthy people elsewhere in the world. The questionnaire and interview results can reflect the personal attitudes of these people. 1.3.1 Personal specific concern to buy a car The answer to the question of whether or not people will buy new energy cars is generally negative. The results of Question 10 show which factor is the most important or the least important in this area? Face to face and online surveys yielded similar results. The top 5 important factors were convenience, service, technology, fuel or power consumption and outward appearance. People were also concerned about its costs and brand. There were a number of different attitudes in the age range of 19-30. This group ranked the top 5 important factors as outward appearance, service, technology, convenience and brand. They listed costs and mileage as also important. People desire to show their status symbolically through wealth. People consider that energy vehicles as having inconvenient recharging necessities and costly prices, and also suspect some safety issues. Some of these concerns mean that new energy vehicles are equally unattached to consumers in other countries. People’s Daily Online stated that in 2011, the sales volume of new energy automobiles in China was 8159 units (Anonymous, 2012). However, the China Association of Automobile Manufacturers announced that the auto sales volume in China was 18,505,100 units in 2011, so the total share of new energy vehicles in China is only 0.44%. In the same year, the global sales volume of new energy vehicles was 600,000 units, of which there were up to 330,000 units in Japan, and nearly 190,000 units in U.S. (Jiang, 2012a); 4.21 million cars were sold in Japan in 2011 (Shi, 2012a), and 12.78 million cars were sold in U.S in the same year (Shi, 2012b). Therefore, the share of new energy vehicles in Japan was 7.8% and in US it was only 1.49%. The data of Western Europe for all types of new energy vehicles cannot be found. However the total sales volume of electric vehicles was 11,563 units in 2011. There were 2,630 in France, 2,154 in Germany, 2,038 in Norway and just 1,000 in UK (Tao, 2012). The website of Eulam reported that the total car sales volume in 2011 was 13.5 million units (Liu, 2012). However, LMC Automotive counted 17 countries in Europe; it estimated whole year sales volume was 12,773,575 units (Shi, 2012c). Therefore, it can be shown that at this moment, there are not only a small number of new energy vehicles on the roads in China, there are even fewer new energy vehicles in USA and Europe. Only in Japan is the proportion of new energy vehicles relatively high, but it is negligible compared to the total amount of vehicles. 1.3.2 Car usage It is conspicuous that the results of Question 8 show that 29 people don’t have a car in the face-to-face survey, and 51 people don't’ have a car in the online survey. In addition, because the statistics have no obvious rule, there is no relationship among personal qualification and question 8 and 9. Both face-to-face and online surveys get similar results here again. Cross statistics show that the proportion of female and male are almost the same, and in Beijing, most people drive less than 3 hours every day on average, and most people in the age range of 19-30 drive 1-3 hours and most people in the age range of 31-50 drive less than one hour. Nevertheless, the special characteristics is that in the face-to-face survey, most people, who drive 1-3 hours per day, get a salary in the range of RMB 5,000-10,000, and most people get a salary in the range of RMB 2,000-5,000 in the online survey. Face-to-face and online surveys still yield similar results. The proportion of females and males are almost the same. Most people in the age range of 19-30 spent money in the range of RMB 100 to 400. Most people who get a salary in the range of RMB 2,000 to 5,000 spend RMB 100 to 200. The results indicate that the people who get higher salaries would like to spend more money for their cars. 1.4 Government Policy The government in China is desperate to reduce carbon emissions in Beijing especially, just like other world power. However legislation is not that effective in China. In the 2011 Copenhagen World Climate Conference, countries committed until 2020. The United States will reduce greenhouse gas emissions by about 4% on the basis of 1994; Russia will reduce by 25% on the basis of 1990, while the EU will reduce by 30% and achieve 95% by 2050. India will decrease by 20% -25% on the basis of 2005, and Australia will decrease 5% to 15%. Furthermore, England stressed that the parties should reach a legally binding agreement and developed countries should help underdeveloped countries, especially via financial assistance. In recent years, China’s economy has entered a period of rapid development; numbers of wealthy people squeeze into Beijing to show their status. The majority of them have chosen to buy a car, most of which are likely to be large engines. In addition, the second-hand vehicles industry is currently optimistic in Beijing. Public transport services are strongly supported by the Beijing Government. For example, the cost of a single adult ticket in public transport is RMB 0.4, and for students only RMB 0.2 (The original price is RMB 1 for each person). A single way ticket for the Subway costs RMB 2 (The original price is RMB 3 for each person); and these reasons are similar in developed countries and developed cities, hence, if fossil fuels are adequate and people are able to afford the price, the market for new energy vehicles is narrow. Nevertheless, even though the Beijing Government encourages the cheap fares of public transport, air pollution is still a serious problem. Questions 6 and 7 in the two surveys yield similar results, except that most respondents in the online survey didn’t have a car. Cross statistics obtained the link between question 6 and 7; it showed that whether people had a car or not, most people expected that the government should improve relevant policies for new energy vehicles, and it indicates that most people are concerned about new energy vehicles and are waiting for evidence of government support. Questions 1 and 4 highlighted the links between knowledge and personal point of view. It is clear that blue columns are getting lower percentages in both surveys. It indicates that the knowledge of new energy cars is limited but most people believe it will help air quality. Question 2 clearly indicates that most people are positive or remain neutral to supporting car engines in Beijing. Question 3 indicates that people prefer cars with low engines, few people do not support having a limit to the amount of large engine cars in Beijing. The main reason for this is that they love luxury cars, and large engine cars are usually luxury cars, however, wealthy people are indeed in a minority group, there is a high possibility that they do not support this argument. Most people were shown to prefer Hybrid ICE-Electric Vehicles in both surveys. There are perhaps two reasons for this. One is that people are still dependent on oil and its convenience; and the other is because hybrid ICE-Electric vehicles are generally recognized by the various countries as good vehicles to research and manufacture. Even though the development of solar energy vehicles is conceptualised, the cross statistics diagram shows that more than 20% of people who were over 19 years old prefer solar energy vehicles. This explains that 20% of people are concerned about solar energy vehicles. According to question 12 and 13, the results in both survey types were still similar. Most people expected that when new energy cars become fully charged, they can drive as far as they can, however, the car with the longest mileage (300 km) has just been produced recently. If people drive a car with 50 kilometer per hours,there will be 180 kilometers reached when people drive 3 hours. Hence, most people who drive less than 3 hours do not have to consider about the plug-in station, nevertheless, logically speaking; research technology is the premise of the plug-in station, if the research technology is not good enough, the government cannot support these plug-in stations. According to the cross statistics diagram, 55.56% people accepted the similar price of a non-new energy car when buying a new energy car and daily expense; 40.63% people accepted a 20% lower price than non-new energy cars of the same category in daily expense, and 20% higher price than non-new energy cars of the same category when buying a new energy car. 46.67% people expected that the price of a new energy car and daily expense would be cheaper than non-new energy cars in the same category. According to the online survey, most people in the age range of 19-30 accepted similar prices in buying a new energy car, and more people expected the daily expense to be 50% lower than non-new energy cars of the same category. 1.5 Face-to-face interviews Of the interviewees in the face-to-face interviews, two professionals think that people will not buy new energy cars in a couple of years because they believe the development of battery technology severely restricts the development of new energy vehicles. Furthermore, the male interviewee considered that people rely on fossil fuels, and new energy vehicles have poor reliability. In addition, there were three staff members used for the face-to-face interviews; one was a consultant in an Audi 4S Store, one was a salesperson in the Toyota 4S Store, and one was a staff member in the BYD 4S store. Due to investment and technology problems, the Audi Company does not have new energy vehicles on sale. Consultant Teng LI supported the development of new energy vehicles and considered that policies are ineffective and need to be improved in at least 5-10 years; the people who younger than 30 years old accept new products easier, and they are more accepting of conceptual changes, such as the size of a car, the energy resources or space utilization. The development of new energy needs time and government planning. Regulation and government support are important to the car market and to auto enterprises. However, the Toyota 4S store has been selling new energy cars for about two years and the cost is more expensive than non-new energy cars of same category. Salesperson Feng ZHANG said that they don’t have increased profits, because they sold them fixedly to a company every year, and low costs-effective cars cannot be a private car. Governments should be leading people to go to the revolution of vehicles development. BYD is has entered a developmental declining period. They spent a large amount of time and effort in the research of new energy technologies and the developmental prospects are less optimistic. Nevertheless, once research and development of BYD have reached outstanding achievements, they must have substantial development space in China in the next couple of years. 1.6 About The History Marketing of China and UK Historical patterns in other countries, such as the UK, is relevant here. From the 1920’s, car ownership was only possible for the very wealthy. People on lower incomes liked public transport, bicycles and walking, however, from the 1950’s, cars became cheaper and more accessible. In the future, the development prospects and profit margins of the car industry looks optimistic (Tao, 2012). In the beginning of the 21 century, in the UK, the used-car sales volume has become nearly three times that of new cars. Data indicates that the scrapped cars cycle in the UK car market is about 11 years, and the auto updating cycle is only about four years. This clearly shows that the used car market has considerable space to expand (Wu, 2006). Nevertheless in China, car production and sales were 9.3451 million units and 9.3805 million units in 2008, while second-hand car trading volume was 2.7373 million units. This means that second-hand car trading volume is less than 1/3 of new car sales, and it is contrary to the structure of the mature markets (Tao, 2012). Hence, second-hand car market development has been gradually growing at this moment so as to also inhibit the marketing development of new energy vehicles. Traffic jams and pollution In Beijing: Lee Yuk Lun, the city CPPCC members from Hong Kong, showed that after comparison, the distribution is in opposition to the trend of cities of the world's vehicle ownership; more than 80% of motor vehicles in Beijing are concentrated in the sixth ring road (Appendix A.9). The average household private car ownership in the Beijing urban area is 1.8 times of the same comparable area in Paris, 2.3 times of that in New York. Meanwhile, the average annual mileage of Beijing's "bus" is 20,000 km and private car average mileage is 15,000 km; it is 1.5 times in London, more than 2 times in Tokyo. Compared with the cities of the world, private cars exhaust more emissions, and cause heavier pollution, and yet the phenomenon of high growth, high-intensity and high-density aggregation exists (Duan, 2012). In London: In the 19th century, the United Kingdom entered a period of industrial rapid development. London factory emissions formed a thick greyish yellow smoke. Since the 1980s, traffic pollution replaced the industrial pollution, becoming a primary air quality threat in London. To this end, the government introduced a series of measures to suppress traffic pollution, including the development of the public transportation network, suppressing private car developments, reducing vehicle emissions, and the remediation of traffic congestion. In 1995, the United Kingdom developed a national air quality strategy, on the provision that each city should conduct the evaluation and review of air quality in areas. Within this scheme, the government drew up air quality management areas and forced standards within the prescribed period, if an area did not measure up to the standard. EU Member States in 2012, required that the air of non-compliance days is not allowed for more than 35 days (otherwise the country will be fined $ 450 million). In order to meet the standards, as early as 2003, the London government imposed congestion charges on private cars when they enter the city center, and this revenue can be used for improving the development of the public transport system (Huang, 2011). Read More