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How China is driving the future of electric cars

In China, the world’s largest emitter of greenhouse gases, putting more electric vehicles on the road is critical. Determined to become a world leader in the market, that nation has imposed a requirement that’s compelling international manufacturers to go more green. Special correspondent Katrina Yu reports as part of "China: Power and Prosperity," with support from the Pulitzer Center.

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  • Judy Woodruff:

    China has historically been known more for the pollution it produces than the gas it saves.

    But China is now also the world's largest market for electric cars. And China's electric vehicle market is transforming not only Chinese automakers, but forcing international companies to ramp up production as well.

    With the support of the Pulitzer Center, we return to our series "China: Power & Prosperity."

    Special correspondent Katrina Yu begins her report in Hefei, China.

  • Katrina Yu:

    In one of the world's most advanced factories, a start-up is working to ensure the future of electric cars is driven by China.

    NIO is described as China's Tesla. It produces electric SUVs for environmentally conscious millennials. Each vehicle comes with an artificially intelligent dashboard robot, access to drive-through NIO power stations that swap out dead batteries, and exclusive NIO clubhouses.

    CEO William Li says NIO is more than a car.

  • William Li (through translator):

    NIO doesn't only want to be an electric car brand, but a lifestyle brand. We hope to create a community which starts from the car. It's about living well, living consciously, and creating a happy way of living.

  • Katrina Yu:

    That happiness is mostly for China's upper middle class,

    The ES6 and ES8 are priced between $40,000 to $70,000. Li says Chinese drivers are slowly seeing the benefits of owning an electric vehicle, but many still need to be convinced to make the switch from gas or diesel.

  • William Li (through translator):

    These days people still aren't familiar with electric cars and can have some misunderstandings. We need to provide a better environment for customers, so they can better understand the benefits.

  • Katrina Yu:

    Providing this better environment is exactly what the Chinese government is trying to do.

    Earlier this year, a state-owned fund injected NIO with $1.4 billion. And the government doesn't just support companies. It also incentivizes consumers.

    In Beijing, Zhu Mengxiao's electric car is worth about $30,000 dollars. But after government subsidies, she only paid $18,000. Zhu took me for a spin.

    In China, owning a car is one thing. Having the right to drive it can be another. To reduce overcrowding on roads, the government carefully manages license plates. Residents can only get one through a lottery, but the odds of winning are low if you're driving a gas guzzler.

  • Zhu Mengxiao (through translator):

    It's like a real lottery. There's a chance that you won't win anything your whole life.

    When we first applied for a license plate, we were waiting a long time and didn't receive one for a gas-powered car. Only after the exceptions appeared for electric cars could we buy this car.

  • Katrina Yu:

    Zhu received her electric car license plate within a few months. She was initially worried about the car's battery life, but says the pros outweigh the cons.

  • Zhu Mengxiao (through translator):

    With more advanced technologies, more people are likely to choose electric cars, especially since the price of petrol fluctuates and often jumps. Electric cars can be cheaper to use and more eco-friendly.

  • Katrina Yu:

    Putting more eco-friendly cars on China's roads is critical.

    Just outside Beijing, a coal plant belches smoke, a reminder that China remains the world's largest emitter of greenhouse gases. Two-thirds of China's electricity comes from coal. And it often leads to days like this.

    Reducing air pollution is central to China's campaign to make cars green, says industry analyst Qiu Kaijin.

  • Qiu Kaijin (through translator):

    The government's goal of cutting emissions is aligned with its promotion of the electric vehicle industry. In total, there are about 400 million vehicles in China. And, every day, they produce a huge amount of emissions.

    If a number of those become electric, then it will have a great impact.

  • Katrina Yu:

    Electric cars are also key to reducing the country's reliance on foreign oil, says government adviser Wei Jianguo.

  • Wei Jianguo (through translator):

    China is a country with few resources. Local production doesn't meet the country's needs, so China needs electric cars. Since encouraging them, we reduced petrol consumption by nine million tons.

  • Katrina Yu:

    That's a reduction of less than 1 percent. But with public transportation increasingly going green, that figure is set to grow.

    Top-selling electric vehicle manufacturer BYD has turned the southern metropolis of Shenzhen into the world's first city to rely only on electric buses. Shenzhen alone now operates more electric buses than every city in the world outside of China combined.

    BYD is also greening the city's taxi fleet. Almost all of the city's 22,000 cabs are electric. But some drivers wish they weren't forced to make the switch.

  • Yue Zhanwen (through translator):

    Electric taxi drivers definitely earn less because it takes several hours to recharge the car. Sometimes, we have to wait in line. Two months ago, I waited in line one hour or more for a charging station. Then it took me two hours to recharge. Those are hours I could have been working.

  • Katrina Yu:

    But he has no choice. The central planners of China's government say they're committed to ensuring the electric vehicle market becomes a world leader.

    This year China, imposed an emissions credit system that requires car manufacturers to reduce emissions below a certain level, or pay for credits from other companies. That's an expenditure they want to avoid, so they are being compelled to go more green. And that applies to domestic and international carmakers.

    At a plant in Foshan in China's south, German automaker Audi is building its first fully electric car designed especially for the Chinese market. Audi plans to launch 30 hybrid and electric models around the world by 2025.

    China is Audi's biggest market. And China's drive for new energy vehicles, or NEVs, is impossible to ignore, says director executive Heinz-Willi Vassen.

  • Heinz-Willi Vassen:

    This is a key element here in China, so it would be a very big risk not to be able to offer NEV technology in the Chinese market, so, for us, not acceptable. We sell more than 30 percent of our cars, we target to have 40 percent of our cars sold in China. So, for us, it's a key market.

  • Katrina Yu:

    Audi isn't the only global brand lining up to comply with China's e-strategy. Ford and General Motors will also launch electric models made specifically for the Chinese market by the end of this year, while Tesla's first factory outside the U.S. is nearing completion in Shanghai.

    But for Chinese brands, there have been some speed bumps. NIO is struggling with months of sluggish sales and reports of battery fires. The company has had to fire 10 percent of its work force.

    And across the country, a weakening economy has reduced auto sales, including a 7 percent slump in electric vehicle sales. It hasn't helped that consumer subsidies began being scaled back in June, driving up the cost to buy one.

    NIO CEO William Li downplays concerns. He says his company and the electric industry overall are just starting to get on the road.

  • William Li (through translator):

    The car industry is constantly changing. There are always new challenges. We have more and more customers, and their situation is changing too. It is not easy and it takes time.

  • Katrina Yu:

    But government regulations and a massive market will help ensure momentum toward green cars and that policy-makers in Beijing, not Washington or California, are in the driver's seat.

    For the "PBS NewsHour," I'm Katrina Yu in Hefei.

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