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New energy vehicle development in Shanghai: lessons from policy, market, and consumer behavior change
LIYING 2022/03/24

The automotive industry is one of the major contributors to global greenhouse gas emissions, and as the number of automobiles in China continues to increase, reducing carbon emissions from the automotive industry has become a crucial component of reaching carbon neutrality targets. The road transportation sector can be decarbonized through the growth of the new energy automobile industry. As a result, the central and local governments have continued to introduce relevant policies to promote the development of electric vehicles in recent years, facilitating the rapid growth of China's new energy vehicle sector. In 2018, China’s new energy vehicles sales surpassed one million, accounting for more than half of the global sales that year. By 2020 and 2021, China’s new energy vehicles sales reached 1.367 million [1]and 3.521 million [2], respectively.


As the economic heart of China and the former industrial leader, automobile manufacturing has been one of its pillar industries, Shanghai has long been at the forefront of the country in the promotion and sale of new energy vehicles. In 2021, Shanghai ranked the first in the country with over 244,000 new energy vehicles sold [3]. This article focuses on the compilation and analysis of Shanghai's new energy vehicle policies since 2016, in an effort to provide insights to road transport decarbonization policymakers in other Chinese cities with economic development levels close to that of Shanghai.


Full electrification of vehicles for public sector use

In November 2016, the Shanghai Municipal Government issued the “Implementation Opinions on the City's Deepening Reform to Promote the Healthy Development of the Rental Car Industry”, which proposed that priority should be given to the use of new energy vehicles when adding and renewing rental cars.


“The Implementation Plan for Accelerating the Development of the New Energy Vehicle Industry in Shanghai (2021-2025)”[4] also proposes to promote the full electrification of vehicles used in the public sector. It is planned that new energy vehicles will be fully used in public transport and postal vehicles, the proportion of new energy cars in public service vehicles and sanitation vehicles will exceed 80%, and the proportion of net taxis will surpass 50%.


Talent Incentives

Additionally, Shanghai is committed to introducing exceptional talents into relevant fields. The "Implementation Measures for Encouraging the Purchase and Use of New Energy Vehicles in Shanghai”[5], which was released since 2016, proposes that qualified domestic and foreign outstanding talents in the field of new energy vehicles will be provided with the direct settlement, talent incentives, and other support in accordance with applicable regulations. For example, enterprises related to the field of new energy vehicles, which are engaged in the business of products (technologies) related to the core aspects of integrated circuits and artificial intelligence in the Lingang Special Area and carry out substantial production or R&D activities, will be subject to a reduced corporate income tax rate of 15% for five years from the date of establishment.


Charging facility’s construction requirements

Since the 13th Five-Year Plan, Shanghai has been actively constructing charging infrastructure for electric vehicles. In May 2015, Shanghai issued the “Interim Regulations on the Construction and Management of Electric Vehicle Charging Facilities”[6], which stipulates that public parking spaces in new residential communities, supermarkets, schools, and other locations should be reserved for the installation of charging facilities at a rate of no less than 10%; Among them, charging facilities in residential communities are primarily for self-use and slow charging; office buildings are primarily for exclusive use and a combination of fast and slow charging; and public places such as shopping malls are mainly for public use and fast charging.


In August 2016, the Shanghai Municipal Transportation Commission issued the “Notice on Further Strengthening the Planning, Construction, and Operation Management of Electric Vehicle Charging Infrastructure” [7]to further improve the management of planning, construction, and operation of charging facilities based on the Interim Regulation in 2015. The notice emphasizes that 100 percent of the allocated parking spaces in residential building should be constructed with charging facilities or reserved for the construction and installation of charging facilities.


The construction of electric vehicle charging facilities in Shanghai has been developing rapidly, and by the end of 2021, the total number of charging piles in Shanghai has surpassed 500,000, while the number of new energy vehicles has surpassed 620,000, and the car to pile ratio has been as low as 1.3:1[8], a leading level in China, significantly alleviating consumers' "mileage anxiety" about new energy vehicles.


Subsidies for charging and swapping facilities

Financial subsidies are also utilized to encourage the development of electric vehicle charging and swapping facilities. In April 2016, the Municipal Development and Reform Commission and seven other departments issued the "Shanghai Measures to Encourage the Development of Electric Vehicle Charging and Swapping Facilities"[9], which provides financial subsidies to charging and swapping enterprises that construct charging and swapping facilities. For dedicated and public charging facilities, a 30 percent subsidy on financial funds and a subsidy on operating electric cost are provided. In addition, the development and operation of municipal platforms receive 50% financial capital subsidies for associated R&D and operation costs. Thanks to the high priority given to the development of the charging and swapping industry, Shanghai has become one of the most comprehensive charging network cities in the world.


Encouraging consumers to purchase and use new energy vehicles

In order to accelerate air environment control and energy conservation and emission reduction, and to promote the accelerated development of the new energy vehicle industry, Shanghai has issued the "Implementation Measures to Encourage the Purchase and Use of New Energy Vehicles"[10] (hereinafter collectively referred to as the Implementation Measures) since 2016, and has revised the Implementation Measures on a regular basis based on the specific implementation measures. The policy has been implemented for more than five years, and as the policy has been revised, the content of the implementation measures has tended to improve, and the policy has included more detailed explanation of proper nouns. For example, in the most recent implementation measures for 2021, the types of new energy vehicles to which the policy applies are described, and after 2023, dedicated license plate quotas will no longer be issued for plug-in hybrid (including add-on) vehicles. However, even though the content has been amended, the overall direction and propose of implementation has not deviated much. The implementation measures offers consumers sufficient benefits in the following several areas:

l  Dedicated license plate quota

This includes not only a license plate quota for non-operating new energy vehicles, but also an unlimited number of operating quotas for new energy vehicles. The one-vehicle-one-plate method applies to new energy vehicles for non-operating propose and individual consumers who do not have a new energy vehicle registered in the city.

l  Transportation convenience

Owners of new energy vehicles will not be affected by Shanghai's motor vehicle restriction policy, and the latest policy even stipulates that "freight vehicle permits" will be issued with priority to new energy vehicles used for cargo transportation in accordance with the provisions of the city's relevant departments.

l  Consumer charging subsidies

In addition to consumer subsidies for the purchase of new energy vehicles, Shanghai also provides subsidizes for charging, further reducing the total cost of ownership of new energy vehicles.


In May 2020, the Shanghai Municipal Development and Reform Commission and the Shanghai Municipal Bureau of Finance announced the “Implementation Rules for Charging Subsidies for Consumer Purchasing New Energy Vehicles"[11]. It provides a charging subsidy of 5,000 RMB per person for individual consumers who have purchased a new energy vehicle and registered the vehicle from April 23, 2020, and December 31, 2020. The subsidy will only be used to compensate for power and service fees spent by consumers when charging in the city using their own private charging piles with independent reporting meters, as well as charging at public or dedicated charging facilities. Over a period of more than six months, the government has distributed a cumulative total of $6.39 million in subsidies to approximately 28,000 individuals in five batches. In conjunction with other industrial consumer subsidy schemes, this subsidy policy has served to boost consumer confidence and release consumer demand in the wake of the COVID-19 pandemic.



Shanghai has played a leading role in promoting the development of modern energy in China. Not only does it rank first in the country in terms of sales of new energy vehicles, it is also at the forefront of developing regulations related to consumer consumption and infrastructure to stimulate industrial development. In addition, Shanghai has set an ambitious target for the future growth of electric vehicles: by 2025, more than fifty percent of all newly purchased vehicles will be pure electric vehicles. However, there are still some obstacles in the way of promoting EVs in the future, such as the bias of many consumers towards the cost of purchasing an EV, which is difficult to rely on traditional policies to address.


With the urgency of achieving carbon neutrality goals, the application of behavioral economics "nudges" to hasten the uptake of electric vehicles is a novel approach. "Nudges” are simple, low-cost interventions that influence people's choice structures, are non-coercive, and change behavior in a predictable way. As Shanghai plans to gradually withdraw subsidies for new energy vehicles in the future, a "nudge" policy might help minimize consumer bias, thereby accelerating the adoption of electric vehicles and assisting the government in achieving its carbon neutrality target. In subsequent articles, we will explain what "nudge" measures could help to accelerate the uptake of electric vehicles in Shanghai over the next 5-10 years.



[1] China's new energy vehicle sales hit a record high in 2020

[2] 2021 new energy vehicle industry operation monitoring report: China's new energy vehicle production and sales hit a record high

[3] 2021 new energy vehicle city sales ranking: Shanghai sold 240,000 units furiously Tesla is the most popular

[4] Shanghai Municipal People's Government General Office on the issuance of "Shanghai speed up the development of new energy vehicle industry implementation plan (2021-2025)" notice c76899471d0d4abea77b26d54d7fb972.html

[5] Notice of the General Office of the Municipal Government on the Forwarding of the Interim Measures for Encouraging the Purchase and Use of New Energy Vehicles in Shanghai (Revised in 2016) formulated by the Municipal Development and Reform Commission and seven other departments (Hu Fu Fa Fa [2016] No. 7) 47043.html

Notice of the General Office of the Shanghai Municipal People's Government on the Forwarding of the Implementation Measures for Encouraging the Purchase and Use of New Energy Vehicles in Shanghai (Shanghai Municipal Development and Reform Commission and Other Seven Departments) (Hu Fu Ban Gao [2018] No. 7) html

Notice of the General Office of the Shanghai Municipal People's Government on the Forwarding of the "Implementation Measures for Encouraging the Purchase and Use of New Energy Vehicles in Shanghai" formulated by the Municipal Development and Reform Commission and other five departments (Shanghai Fubu Office Regulations [2021] No. 3) 432b54af74bb48b093d6b0108b2eb286.html

[6] Notice on the issuance of "Interim Regulations on the Construction and Management of Electric Vehicle Charging Facilities in Shanghai" (Shanghai Jiaotongke [2015] No. 553)

[7] Notice on Further Strengthening the Management of Electric Vehicle Charging Infrastructure Planning, Construction and Operation in the City by the Municipal Transportation Commission and Others

[8] Shanghai strengthens the construction of charging and switching infrastructure The layout of charging and switching network enters the era of "refinement" shtml

[9] Notice of the General Office of the Municipal Government on the Forwarding of the "Support Measures for the Development of Electric Vehicle Charging and Switching Facilities in Shanghai" formulated by the Municipal Development and Reform Commission and other seven departments (Shanghai Government Office [2016] No. 16)! productId=2c91c28770e7f1760170f5d9f0812a2b

[10] with 5

[11] Municipal Development and Reform Commission, Municipal Bureau of Finance on the issuance of "consumer purchase of new energy vehicles charging subsidy implementation rules" (Shanghai Development and Reform norms [2020] No. 5) Notice d413ff497c580a202537d42b709fb86e.pdf


Author: Yiming Li, Ziyue Qin, Weichen Xu

Translation: Duan Yuxuan

Proofread: Yuan Yating

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* This is the translation of an article in Chinese. Should there be any inconsistency between Chinese and English version, the Chinese version shall prevail