China's electric car leadership elusive
25 April 2012, 16:09
Beijing - China's leaders are finding it's a lot tougher to create a world-beating electric car industry than they hoped.
2009, they announced bold plans to cash in on demand for clean vehicles
by making China a global power in electric car manufacturing. They
pledged billions of dollars for research and called for annual sales of
500 000 cars by 2015.
Today, Beijing is scaling back its
ambitions, chastened by technological hurdles and lack of buyer
interest. Developers have yet to achieve breakthroughs and will be lucky
to sell 2 000 cars this year, mostly taxis. The government has hedged
its bets by broadening the industry's official goals to include cleaner
The government has repeatedly changed targets
because the "technology isn't advancing quite as fast as people had
hoped," said Joe Hinrichs, Ford Motor president for Asia, at this week's
Beijing auto show.
The government has yet to lower sales goals
that ramp up to 5 million vehicles a year by 2020. But officials
including Premier Wen Jiabao started acknowledging last year that
progress was slow and developers 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, but that is
"still small despite government subsidies," the deputy director of the
Ministry of Science and Technology's electric vehicle bureau, Zhen
Zijian, said in March, according to the business magazine Caixin.
most advanced developer, BYD, in which American investor Warren
Buffett's Berkshire Hathaway owns a 10% stake, says its electric e6
sedan can travel 300km on a charge, similar to Western models.
has sold 300 taxis and 200 electric buses used in the southern city of
Shenzhen, a centre for business and technology near Hong Kong, according
to Henry Li, general manager of its export division. BYD has invested
heavily in research and has thousands of engineers working on battery
and motor technology.
"We think our EV [electric vehicle] platform
is one of the most advanced in the world, and our capability for mass
production is quite high," Li said.
as for the rest of the industry, "there are not many manufacturers with
really reliable or commercialised products," he said.
leaders saw electric cars as a way to curb demand for imported oil,
which they regard as a strategic danger, and to help transform China
from a low-cost factory into a creator of profitable technology.
has run up against the same technical obstacles as anyone else," said
Michael Dunne, president of Dunne & Co, a Hong Kong-based industry
"They said: Hold on, maybe we shouldn't marry
ourselves to electrics just yet. Let's look at the alternatives. Maybe
we have to take an incremental approach, just like everyone else," Dunne
Wary consumers have been put off by news reports of
batteries in Chinese-made cars catching fire. A lack of charging
stations is causing "range anxiety" - fears a car might run out of
power, leaving the driver stranded.
Under the Communist Party's
latest five-year development plan for China's economy, issued in 2011,
the government has released guidelines for other industries but not for
alternative vehicles - a possible sign officials have gone back to the
Developers were encouraged last week by a Cabinet
statement that repeated support for electric vehicles. But it also
called for work on developing non-plug-in hybrids and energy-saving
internal combustion engines.
"The momentum has been slowed down," said John Zeng, chief of Asian forecasting for LMC Automotive, a research firm.
don't expect the EV or hybrid can be the only way for China to maintain
its future sustainable mobility," Zeng said. "They think they need
multiple initiatives to achieve that target."
Plus, petrol and diesel technologies are advancing, luring consumers with the promise of lower operating costs.
government launched research into electric, fuel cell and other
alternative power sources in 2001. It followed in 2004 with a plan to
create a competitive electric car and promised financial support to
China pulling ahead
responded to Beijing's enthusiasm. General Motors announced plans in
2007 for a $250m alternative fuel research centre in Shanghai. Germany's
Daimler teamed up with BYD to create an electric car joint venture
dubbed Denza. They unveiled a display version of its first model this
week at the Beijing auto show.
China's initiative prompted some in
the United States and Europe to worry they might fall behind in a key
technology. An assistant US energy secretary, David Sandalow, visited
Beijing in 2009 and warned China had "the potential to be ahead" if the
United States failed to invest in development.
Beijing's 2009 plan
called for world-class electric cars by this year, followed by trucks
and buses. To encourage buyers, the government started paying buyers
rebates of up to $8 800 per car the following year in five cities
But Wen, China's top economic official, expressed frustration at the slow pace of development in an article published last July.
"We are no match for developed countries in technology," Wen wrote in Qiushi, the ruling party's main theoretical journal.
only just begun in electric car development," the premier wrote. Wen
said Chinese leaders shared in the blame: "We have not set clear enough
goals of which way to go".
Beijing strained relations with the
United States and other trading partners by rolling out rules limiting
access to its auto market unless foreign developers shared technology to
Daimler has said
it formed its venture with BYD not due to official pressure but because
it wanted to create a low-cost brand for China. Daimler said their car,
due to go on sale next year, should have a range of 200-250km on one
Other manufacturers such as Nissan Motor, maker of the
electric Leaf, and General Motors have chosen to pay the higher taxes
required to import electric and hybrid vehicles rather than disclose
expensive know-how to Chinese partners that might become rivals.
GM is taking orders for its all-electric Volt in China but expects limited sales due to a relatively high price of $79 000.
expensive in China at the moment because of import duties, and we don't
qualify for incentives," said Kevin Wale, president of GM China. "But
we still think it's important that we demonstrate its capabilities here
Chinese producers have unveiled a series of display
models of electric and hybrid cars, some sprouting tiny solar panels or
wind turbines for recharging, though most say they are not ready for
LMC Automotive's Zeng said that aside from BYD,
which has spent heavily on development, most have done only the minimum
required to qualify for research grants.
"I think it's more to create a PR bubble or fight for government subsidies," he said.