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Future of transport

Car-hailing apps make Shenzhen’s electric taxi plan 'too risky', operators say

PUBLISHED : Wednesday, 01 July, 2015, 3:50pm
UPDATED : Friday, 10 July, 2015, 8:17pm

An ambitious plan to promote the use of electric taxis in Shenzhen, a pioneering manufacturing base across the border from Hong Kong, may fall flat as car-hailing apps like Uber and Chinese market leader Didi Kuaidi continue to grow in popularity, according to industry insiders.

In April, the city government announced it would replace more than a quarter of Shenzhen’s 15,000 taxis with electric vehicles this year. It also promised generous subsidies

Under the scheme, the government plans to have 4,000 more electric taxis on the road by the end of the year, adding to the 850 currently in use.

However, the project is expected to fall behind schedule as most taxi operators and cabbies in Shenzhen, in southern Guangdong province, claim to have no interest in signing up for a new electric cab just yet.

“There hasn’t been a new e-taxi to hit the road in Shenzhen since April … due to the huge impact from those car-hailing apps,” said a manager at government-supported Shenzhen Pengcheng Electric Taxi. He declined to give his name.

The company is responsible for operating all of the electric taxis now running in the city.

In fact, more drivers want to quit the quit the industry as car-hailing apps encroach on their business and income, the man said.

“All taxi operators are waiting to see how the market will change,” he claimed. 

“No one dares to buy a new taxi with a petrol engine in the short term, let alone an electric-fuelled one.”

Car-hailing apps have faced increasing opposition from Chinese taxi drivers this year, leading to protests and strikes across the Chinese mainland, as well as government raids of several of Uber's offices in recent months.

“Many taxi drivers are now thinking of going to work for car-hailing apps,” said the man at Shenzhen Pengcheng.

“Moreover, it’s too risky for taxi operators to invest in a lot of new electric taxis right now.”

All of the electric taxis in Shenzhen are E6 models made by China’s BYD, which is partly owned by Warren Buffett's Berkshire Hathaway.

A new e6 cab costs about 300,000 yuan (US$48,375) while a new petrol taxi costs between 100,000 and 120,000 yuan. 

Car-hailing apps have fundamentally changed the market, and the situation is only getting worse for licensed taxi drivers, cabbies claim.

“Cabbies who work nights have already seen their monthly income drop by one-third,” said Wang Hongju, a Shenzhen taxi driver. “I used to earn 8,000 yuan a month if I worked 10 hours a day. Now I get about 5,000 yuan.”

Drivers of electric cabs, like himself, also need to fork out more to the operators each month, he said.

As a further incentive to migrate over to electric vehicles, the city’s transport commission said in April it would begin issuing 10-year operating licences to companies that make the switch. 

Those that replace 300 vehicles at one time will get 15 of the new, longer licences, while those that replace 1,500 will get 225.

Taxi licences in Shenzhen could be sold for up to 1 million yuan on the city’s informal trading market before car-hailing app services began heavily influencing the market this year.

The Shenzhen government launched its electric taxi project in 2010, but progress has been slow due to concerns about the availability of charging stations, running times and safety.