Author: CHUNG Yoon Ngan
Date: 05-12-12 08:39
China follows green car trail
By Karl Wilson
May 11, 2012 - 12:47pm http://www.chinadailyapac.com
A model poses with a luxury vehicle at the Auto China 2012 exhibition in Beijing. Carmakers unveiled scores of clean energy vehicles at the show in April. (Photo by AFP)
In less than 10 years Auto China, the international automotive exhibition held in Beijing, has become the premier showcase for the world’s automobile industry. This year’s show, which ended on May 2, was no exception.
One clear message that came across as new designs and models were unveiled was that manufacturers have not given up the pursuit of the ultimate “green” car.
The Auto China 2012 exhibition saw the launch of a number of electric cars that promised everything their gas-guzzling cousins offer and more – clean air.
One of them was the all-electric, battery-driven Denza, a joint venture between German manufacturer Daimler and China’s BYD Auto, a domestic electric vehicle leader based in Shenzhen and partially owned by Warren Buffett’s Berkshire Hathaway.
The joint venture’s chief operating officer, Arno Röhringer, said: “We are creating Denza not only for the people of today, but also for inspiring our next generations.”
Despite poor sales of electric cars in China there has been no sign that manufacturers — local and foreign — are abandoning the push for electric vehicles or plug-in hybrids that can use petrol or electricity.
Three years ago the government announced plans to turn China into the world’s leading center for electric car manufacturing.
Since then billions of dollars have been poured into research and development but the target of annual sales of 500,000 by 2015 and five million by 2020 looks highly ambitious.
According to The Economist around 16,000 electric vehicles were sold in China last year.
Chinese officials have acknowledged that progress has been slow. Manufacturers need to improve quality instead of rushing models to market.
About 13,000 all-electric and other alternative energy vehicles are being tested in 25 cities around China, the deputy director of the Ministry of Science and Technology’s electric vehicle bureau, Zhen Zijian, told the business magazine Caixin.
Chinese auto manufacturers are facing the same obstacles to mass-market electric vehicles that have challenged the major global automakers: The cost and weight of batteries and indifferent consumers who want nice-looking and safe cars but at a low price.
The lack of recharging stations is also a problem. The 16,000 stations installed last year are a tenth of the official target.
Even so, China’s manufacturers have not abandoned electric car technology.
General Motors (GM) and China’s SAIC Motor Corporation recently announced a joint venture to develop “new electric-vehicle architecture” — essentially a chassis that can serve as the underpinning for numerous vehicles.
The partnership, Pan Asia Technical Automotive Center, will bring together GM’s technical expertise and global network with SAIC’s knowledge of the domestic market, distribution channels and cash, GM said in a statement.
According to SAIC President Chen Hong, the two companies expect to see new innovations hit the market faster and improved economies of scale.
GM and SAIC Motor both stand to benefit significantly from the Chinese government’s plans in this sector.
China’s 12th Five-Year Plan (2011-2015) aims to increase the country’s production capacity of new-energy vehicles to one million.
Pure electric cars, such as those produced by GM, along with plug-in hybrids, will account for 50 percent of this output.
Roughly $15.67 billion in government funds will be pumped into the sector over the next 10 years, according to a report in China Briefing.
Last month, China’s Great Wall Motors announced a joint venture with Los Angeles-based electric car start-up CODA Holdings to produce “the most affordable electric vehicle on the market”.
CODA says it will provide the propulsion technology, including the battery systems, for the electric car, while Great Wall will likely provide the car chassis and other systems. The cars will be assembled in both China and the United States.
“Electric cars will undoubtedly play an increasingly large role in many countries’ plans in the decades ahead as energy independence and environmental concerns intensify,” according to Xavier Mosquet, a senior partner with the management consulting firm Boston Consulting Group.
Mosquet, co-leader of the group’s automotive practice unit and lead author of Powering Autos in 2020: the Era of the Electric Car?, says electric cars will gain only “modest ground” till 2020.
“Gasoline- and diesel-powered vehicles are improving faster than expected and will continue to dominate the global landscape,” he predicts.
However, he adds that despite the cost, electric vehicles will see a “relatively strong uptake from a distinct segment of environment-conscious consumers around the world who are willing to pay an average up-front premium of $4,500 to $6,000 to purchase a green vehicle”.
Mosquet calls China a “major wildcard”.
If the government of China remains committed to electric vehicles, sales could represent seven percent of the country’s new car sales in 2020.
“Despite this moderate penetration, China will become the world’s largest market for electric vehicles due to its overall market size,” he says.