Introduction

Introduction

Hainan aims to ban the sale of fuel vehicles.

It is widely accepted that new energy is the future of the automotive industry.

This is evident from both the continuously rising market share of new energy vehicles and the current development status of upstream and downstream industries. However, many fuel vehicles are still selling well, ranging from entry-level family cars to mid-to-high-end vehicles, and even luxury and super-luxury cars. So, when will the era of full electrification arrive?

Perhaps, if following the normal development trajectory, fuel vehicles will still have a place, even in the next 10 or 20 years, especially in China, where the development of new energy is the most vigorous globally.

But this is based on a normal development trajectory. There are forces driving rapid changes in the industry, accelerating the development of the automotive market and bringing the era of electrification closer.

If previously, the development of the new energy market was primarily driven by policies, technological innovations, and industrial upgrades, future efforts to promote this market will be more aggressive. The pivotal point between these two eras is Hainan Province's plan to legislate a ban on the sale of fuel vehicles this year.

Hainan initiates the ban on fuel vehicle sales

Recently, Hainan Province announced multiple policies, including the "Hainan Clean Energy Vehicle Development Plan," outlining the goal of a complete ban on the sale of fuel vehicles by 2030 to promote clean energy vehicles.

To ensure the smooth implementation of this plan, Hainan's Department of Industry and Information Technology plans to initiate legislative research for the "Regulations on Promoting the Development of New Energy Vehicles in Hainan Free Trade Port." This move aims to support the promotion of new energy vehicles through legislation.

To ensure the independence and fairness of the research, Hainan will entrust a third-party institution to conduct research covering the current status, challenges, and legislative needs of Hainan's new energy vehicle industry. The research will also analyze difficulties, pain points, and bottlenecks in the development process, proposing targeted recommendations and countermeasures to promote the popularity of new energy vehicles in Hainan.

Additionally, the research will assist in submitting the "Regulations on Promoting the Development of New Energy Vehicles in Hainan Free Trade Port" for review, including drafting regulatory notes, legislative explanations, compilation of regulations, and review responses.

If implemented, Hainan will become the first province in China to ban the sale of fuel vehicles comprehensively.

"I didn't expect this day to come so soon." When reviewing online opinions on this matter, I found many netizens surprised by the announcement, expressing their anticipation but not expecting it to happen so soon.

Why Hainan?

In terms of new energy vehicle production, Shenzhen (1.786 million), Shanghai (1.287 million), and Xi'an (0.984 million) lead the way, significantly ahead of other cities. So why is Hainan the first to initiate legislation to ban the sale of fuel vehicles?

Firstly, Hainan is the only province entirely located in the tropical region, characterized by a mild climate with little seasonal variation, no extreme heat in summer or cold in winter. This provides ideal conditions for the development of new energy vehicles.

As technology advances, new energy vehicles have achieved longer driving ranges through increased battery energy density, optimized energy consumption management, and the adoption of more efficient motors, control systems, and charging technologies. Range anxiety has significantly diminished in recent years, with many pure electric vehicles boasting ranges of up to 1000 kilometers, and plug-in hybrid models exceeding 2000 kilometers.

However, in cold northern regions during winter, the driving range of electric vehicles can still be significantly reduced, with heavy snowfall often revealing the true limitations of battery range. The further north one travels, the lower the penetration rate of new energy vehicles becomes. I vividly remember a trip to Heihe last winter, where almost all vehicles on the road sported blue license plates, and I counted on one hand the number of new energy vehicles I saw in three days.

This anxiety is non-existent in Hainan, with an annual average temperature ranging from 22.5°C to 25.6°C.

Considering Hainan's island geography, with a land area of 35,100 square kilometers, the typical travel distance is relatively short. Today's mainstream new energy vehicles can easily circumnavigate the island on a full charge. Coupled with a dense network of charging facilities, driving a new energy vehicle in Hainan is virtually anxiety-free regarding driving range.

Next, as mentioned earlier, the dense construction of charging facilities provides a strong support system for Hainan's new energy vehicles.

According to statistics, the ratio of new energy vehicles to charging piles in Hainan is approximately 2.5:1, achieving full coverage of charging infrastructure in townships. The average service radius for charging in townships has been shortened to just over 20 kilometers, significantly enhancing the user experience of driving new energy vehicles in Hainan.

Following the development plan, Hainan aims to promote over 500,000 new energy vehicles by 2025, with over 60% of new vehicle additions being new energy vehicles. The overall vehicle-to-pile ratio will remain below 2.5:1, further enhancing the charging experience for new energy vehicles.

Moreover, as a free trade port, Hainan's development relies on tourism, services, and high-tech industries. In this context, advocating green economy is crucial to attracting foreign investment. Hainan also boasts a diverse range of new energy supply modes, including solar, wind, tidal, and nuclear energy, which have been successfully implemented in the region.

These conditions uniquely position Hainan to vigorously develop new energy vehicles.

Hainan has lived up to expectations. Since promoting new energy vehicles in 2016, it has issued over 40 supporting policies covering research and development, production, purchase subsidies, usage and operation, and charging infrastructure construction. Hainan's policy incentives and regulatory frameworks for promoting new energy vehicles have matured.

Data shows that in April 2024, Hainan promoted 9,400 new energy vehicles, and 35,600 in the first four months, accounting for 52.59% of newly registered vehicles.

By the end of April 2024, Hainan had 328,000 new energy vehicles, accounting for about 16% of the total vehicle population. The top five cities/counties in terms of new energy vehicle ownership are Dongfang (21.52%), Sanya (20.67%), Lingshui (20.10%), Haikou (16.89%), and Qionghai (13.86%), exhibiting high ownership rates and even distribution.

With a focus on new energy vehicles throughout the province, Hainan has the highest proportion of new energy vehicles in China. In the first half of 2024, Hainan's new energy vehicles accounted for 56.8% of the total, ranking first nationally and significantly ahead of Zhejiang (50.5%) and Guangxi (50.3%).

This explains why Hainan has the courage to initiate legislation to ban the sale of fuel vehicles.

Banning fuel vehicle sales is not straightforward

However, as a pilot province, Hainan's goals are ambitious: by 2025, 100% of new and replacement vehicles in public service and social operation sectors will use clean energy; by 2030, the entire island will ban the sale of fuel vehicles.

Executing these plans will not be easy.

Firstly, while Hainan vigorously promotes new energy vehicles, fuel vehicles still dominate the region. Data shows that as of the end of April 2024, Hainan had 2.045 million vehicles, of which 328,000 were new energy vehicles, accounting for only about 16%.

Fuel vehicles, accounting for over 80% of the total, remain the mainstay in Hainan. Such a large proportion will not transition quickly, considering factors like the industrial chain, vehicle maintenance, fueling efficiency over charging, product stability, and residual value. Fuel vehicles still offer advantages, so more time is needed to phase them out.

Therefore, regarding whether new energy vehicles will replace fuel vehicles, PetroChina has responded that fuel vehicles can still be used in the next decade, and electric vehicles cannot replace them yet.

Furthermore, new energy vehicles face their own challenges.

Many may recall the difficulties faced by new energy vehicle owners during the Lunar New Year holiday in 2012, struggling to secure ferry tickets to cross the Qiongzhou Strait.

Due to the scarcity of ferry tickets out of Hainan, especially for new energy vehicles, some owners waited days without success, leading to widespread complaints among out-of-town new energy vehicle owners traveling to Hainan. This issue quickly gained attention online.

The reason for this was the Qiongzhou Strait ferry regulations limiting the number of new energy vehicles per voyage to no more than 10% of the total capacity, with a maximum of 18 vehicles. Moreover, for safety reasons, new energy vehicles could only be placed at the bow or stern of the deck.

This regulation not only gave new energy vehicle owners a sense of discrimination but also significantly increased waiting times. One eyewitness reported spending over 12 hours on the journey, both ways, describing the experience as "extremely poor."

Such regulations impacting new energy vehicle owners' experiences can lead to negative sentiments and poor experiences during holidays, highlighting issues that need addressing as Hainan vigorously promotes new energy vehicles and bans fuel vehicle sales.

Domestically, Hainan is the first province to initiate legislation banning fuel vehicle sales. Internationally, many countries have also enacted policies banning fuel vehicle sales, but many have since expressed regret.

As the birthplace of the internal combustion engine era, Germany initially set 2030 as the target year for banning fuel vehicle sales. Other countries like the Netherlands, the UK, and France also announced bans between 2030 and 2035. Last year, the European Parliament passed a resolution to ban the sale of fuel-powered vehicles in Europe by 2035, reflecting a widespread consensus.

However, shortly after passing the 2035 ban, many countries began to reconsider. A coalition of countries, including Germany, the Czech Republic, Italy, Poland, Romania, Hungary, Slovakia, and others, formed an alliance against the ban, demanding exemptions for internal combustion engine vehicles using electronic fuels.

Evidently, phasing out fuel vehicles is not a swift process. Both legislative bans on the development of internal combustion engines and the sale of fuel vehicles require long-term and comprehensive preparations. Difficulties and obstacles must be carefully addressed to avoid negative experiences for vehicle owners, market rejection, or industrial disruptions during the electrification transition.