This is an article I wrote for The City Fix. It can be found in its original form here.
Due to its high rates of urbanization and population density, Taiwan is an ideal nation for electric vehicles (EV). In a country with nearly one vehicle per person, a reformation of the private transportation sector is essential to meaningfully reduce dependence on imported oil and carbon dioxide emissions. However, domestic EV market penetration has been slow and previous initiatives have demonstrated limited results.
In Taiwan, a key component of a successful EV strategy must revolve around electric scooters. Scooters comprise 68 percent of Taiwan’s nearly 22 million registered motor vehicles. Taiwan is already a leading manufacturer of electric scooters, but domestic adoption has lagged far behind production. Between 1998 and 2002, Taiwan’s EPA spent NT $1.8 billion (US $60 million) on electric scooter subsidies, reducing costs to a level comparable to gasoline-powered bikes. However, the program inefficiently stimulated demand because of a lack of consumer confidence in battery reliability and insufficient charging infrastructure. After the subsidies ended, adoption rates have remained low. As of 2009, there were only an estimated 12,000 electric scooters in use.
In “Launching strategy for electric vehicles: Lessons from China and Taiwan,” Dr. Chi-Jen Yang argues that subsidies in Taiwan must be accompanied by policies discouraging the use of gasoline-powered vehicles. An example of such a policy is found in China, where electric scooter use has increased rapidly. Dr. Yang hypothesizes that Chinese electric scooter growth is primarily a result of a policy loophole. Nearly every major Chinese city has banned gasoline-powered motorbikes but electric bicycles (e-bikes) and scooters are frequently classified as non-motorized transportation and thus exempt from the motorcycle prohibition. As a result, China’s electric motorcycle market is expected to grow at an annual rate of 11 percent (nearly three times the rate of gasoline-powered motorbikes), reaching 31.6 million vehicles by 2014.
Although they are outnumbered by scooters by a 2:1 ratio, there are still more than 6 million cars and trucks in Taiwan. Recognizing the strategic importance of both electric car manufacturing and domestic use, the government has initiated a NT $9.7 billion (US $309.2 million) investment package in the domestic EV sector. The investment plan will first set up EV pilot projects and subsidize the purchase of municipal EV fleets through 2013. After 2013, the subsidies will be expanded to all EV consumers in a push to simultaneously raise domestic EV share and boost manufacturing. Taiwanese motor vehicle companies, such as Yulon Motors, are poised to expand their EV manufacturing capabilities. Taiwanese companies are already experienced in the production of high-quality electric components and batteries, supplying Tesla Motors and BMW. It has also been suggested that a lack of large-scale automobile manufacturing in Taiwan may be a strategic advantage as ramping up EV production will not cut into any pre-existing sales of gas-powered autos. Furthering the push for electric vehicles, two Taiwanese government-funded institutes recently announced their formal collaboration with U.S.-based Underwriter Laboratories (UL) to establish improved national standards for Taiwan’s burgeoning electric vehicle market.
In terms of legislative and financial support, the Taiwanese EV market is gaining momentum. However, Taiwan still faces similar problems as it did 10 years prior in regards to a non-existant charging infrastructure and consumer distrust. Given an equally priced electric scooter or car, many Taiwanese will continue to opt for the added convenience and familiarity of gasoline-powered vehicles. Improved battery technology, EV pilot programs and battery swaps are all positive steps. But to significantly raise adoption rates of electric scooters and cars, the government may have to implement disincentives to leverage the strength of their EV policies. At the same time, the government will also need to carefully consider how to power its growing EV infrastructure in a sustainable way, since the environmental impact of EVs depends on the carbon intensity of the source of electricity.