February 21, 2024

Cadillac advertises its electric vehicles in Shanghai, May 23, 2023. A female traffic policeman is standing below.

Hu Guo | Getty Images News | Getty Images

BEIJING — Subsidies for electric vehicles aren’t enough to boost China’s slowing economy.

One of the few detailed stimulus packages announced by Beijing this year was an extension of tax breaks for electric vehicle purchases, according to documents released on Wednesday.

Those incentives, which were set to expire this year, will now run until the end of 2027.

Authorities expect consumers to save an additional 520 billion yuan ($72.43 billion) as a result.

The tax cuts, however, don’t address the fundamental reason why Chinese aren’t buying more EVs: the range issue.

charging challenge

Craig Zeng, chief financial officer of Autohome, an online car information and shopping site, said charging car batteries was still a “relative hassle”. That’s according to a CNBC translation of his Mandarin remarks.

He’s talking about the entire EV market.

He pointed out that the layout of China’s residential areas means that there are not many private parking spaces, and the number of charging piles that can be installed in the community is limited.

Rivian joins other EV makers in Tesla's charging network

Most people live in apartment buildings in Chinese cities, with some underground parking lots or lots around the apartment buildings. In Beijing, the capital, owning an assigned parking spot without a battery charger can cost nearly $100 or more a month, on top of apartment rent.

In such an environment, “after many people buy a car, the problem of charging will gradually become prominent,” Zeng said, noting that the problem will affect people’s decision to buy an electric car in the future.

Read more about EVs from CNBC Pro

At a news conference on Wednesday, Chinese officials pointed to charging problems and called for faster installation of charging infrastructure in residential parking spaces – especially in new developments. That’s according to official transcripts of their speeches.

Officials noted that China has rapidly expanded its charging infrastructure over the past seven years, with charging stations covering the same area as gas stations in central urban areas.

However, China still has a long way to go.

In its report, the IEA said more than 70 percent of public fast chargers are located in just 10 provinces 2023 Electric Vehicle Outlook Report. This is only one-third of the country.

Fast charging allows drivers to top up a car battery in less than an hour, but it still takes longer than filling up a gas tank.

China remains the global leader in the installation of public fast charging stations – accounting for almost 90% of the global increase in such chargers last year, the IEA said.

“Growth in electric vehicle sales will only be sustained if charging demand is met by accessible and affordable infrastructure, whether through private charging at home or at work, or publicly accessible charging stations,” the IEA report said.

Broader economic slowdown

Growing Market Penetration