How a shift to electric vehicles is driving change in 'China's Silicon Valley'

Lost in the current news around trade tensions between China and Canada, which have been tied to the arrest of Huawei executive Meng Wanzhou, is the dizzying progress made in Shenzhen the very city that is home to the world's largest telecom equipment maker and second-largest smartphone maker.

Once suffocating from the effects of smog, Shenzhen now has some of the cleanest air among cities in China, and in 2018 had its highest air quality index recorded in over 15 years.

What's driven this change? In short, it's what Shenzen is driving a large variety ofelectric vehicles.

Shenzhen, a sleepy fishing village only 40 years ago, is located at the Pearl River Delta in southeastern China, bordering Hong Kong. Its transformation started in the early 1980s, when the central government designated it as the country's first special economic development zone China's initial foray into a market-based economy.

Shenzhen has since grown at an incredible pace (it was one of the world's fastest growing cities in both the 1990s and 2000s) to a population well over 12 million. It is now known as China's most innovative city and commonly referred to as the next Silicon Valley.

The rapid growth of Shenzhen's population and economy (its GDP was over $350 billion US in 2018, similar to that of the entire province of Quebec) has had environmental impacts, including air pollution issues. This was one of the main reasons for Shenzhen's drive to reduce fossil fuel usage and vehicle emissions.

A fully electric bus fleet

It certainly helps that BYD, the world's largest electric vehicle maker, is headquartered in the city.

Shenzhen gained worldwide attention when it announced at the end of 2017 that all of its 16,359 transit buses were battery-electric, a transition achieved in less than seven years.

It followed this with a recent announcement that almost all of its 21,689 commercial taxis are also now battery-electric. The few hundred that are still driving on gasoline will be off the roads soon.

These two initiatives alone have reduced diesel consumption by over 120 million litres per year and gasoline consumption by over 300 million litres per year within the city.

Although Shenzhen still relies on coal for some of its electricity supply, the greenhouse gas benefits of transitioning to electric bus and taxi transportation have been significant, with the combined reduction estimated at 2.2 million tons of carbon dioxide per year. That is equal to taking about 500,000 cars off the road.

But that is not all. Shenzhen has committed to buying 500 electric garbage trucks from BYD. These trucks can complete a full-day shift of collecting household refuse with one charge and substantially reduce neighborhood noise and air emissions. They are currently being tested in a number of cities worldwide, including in Palo Alto, Calif.

Next in line are electric road sweepers, utility vans, forklifts, and even cement-mixing trucks, all part of a lineup of BYD electric vehicles that are being used in, or in the planning stages for, Shenzhen.

The city has also mandated that all ride-hailing services must now use a fleet of electric vehicles. Food delivery services and mail and parcel delivery businesses are utilizing electric vans and e-bikes. The city is requiring the local port authority and airport to utilize electric vehicles for cargo and human transport.

China leads way in adopting electric vehicles

Electrification of transportation makes the most economic sense when daily usage is high, applications require frequent stop and go, routes are set to allow for easy charging, and restrictions are in place for noise and air pollution in sensitive areas. This is the reason transit and school buses, delivery vans, garbage trucks, street sweepers, and forklifts have seen rapid uptake.

Commercial taxis and ride-hailing fleets require a more extensive charging network due to route uncertainty, but these constraints can be overcome with municipal leadership and planning.

The complaints by taxi drivers in Shenzhen primarily centrearound charging convenience and the driving range of BYD cars. Significant progress is being made on both fronts, with better battery technology in vehicles and widescale expansion of charging poles and stations.

With Shenzhen paving the way, other Chinese cities have followed suit. China has over 420,000 electric buses, which represents 99 per cent of the world's market. It is by far the largest market for electric cars (with over 61 per cent of global sales in 2018), including most of the world's electric taxis.

Much of the early demand was driven by government incentives, local and national subsidies, and the need to combat smog in large urban areas. But with costs dropping quickly, it is estimated that China could sell its last conventional car by 2030.

While much of the Western world struggles with the concept and implementation of carbon pricing policies, China has taken a quiet lead in decarbonizing its economy through wide-scale electrification.

This is being supported by a rapid expansion in renewable electricity production, as China leads the world in the manufacturing, sale, and use of wind turbines, solar panels, and batteries. As the world transitions from fossil fuels to renewables, cities like Shenzhen, and China overall, are poised to take strong leadership roles.

Next time you see a Huawei commercial during the NHL playoffs, think beyond the current dispute between China and the West. There is much to be learned from how quickly things are changing in a city like Shenzhen.

As Charles Darwin notes: "It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change."

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