Facing Setbacks, China’s Electric Vehicle Plan Slows
Posted May 11, 2010 at 11:27 am 
Filed in: After a period of bullish, ebullient reporting on China’s economic growth amid a world still mired in recession, China hasn’t had a great week in the press. The Shanghai stock market is at an 8-month low, the property market bubble looks poised to pop, and there are reports of massive bad loans to local governments.
The Chinese electric vehicle program has also had some – perhaps fleeting – setbacks. For years China’s push to deploy electric vehicles has lent itself to glowing articles on this side of the Pacific about the merits of autocratic policymaking; the new energy policies held up as an exemplar for the many ways in which the United States is falling irreparably behind in the race to lead the clean tech revolution. Last year, Beijing announced the establishment of 13 centrally subsidized electric vehicle (EV) pilot programs, and three leading Chinese automakers, BYD , Geely and Chery, had plans to commercially market electric vehicles in 2010. Beijing announced its intention to deploy 60,000 alternative-fueled vehicles by 2012.
In a country where 37,383 new vehicles hit the road every day, however, even the goal seems to fall flat. Indeed, the relatively piddling nature of the alternative vehicle goal belies the fact that China’s EV program isn’t moving as fast as some may have hoped.
The reality on the ground is that a postponing of government incentives (which were supposed to begin in January but remain unsettled), concerns about the electric grid, and caution among automakers has prevented a rapid EV rollout this year. All three companies have postponed their release of an EV.
Take BYD, which started life as a major battery manufacturer. Last year, the company (buoyed by Warren Buffet’s investment) sold around 450,000 vehicles in China and began exporting to other emerging markets. It has big plans to start exporting to the United States, and has even established a U.S. headquarters in Los Angeles. Yet its all-electric vehicle, the lithium-ion powered e6, doesn’t seem to be going anywhere fast. Though the production line in was “ready for manufacturing” in March, it did not produce the planned e6 but instead produced the conventional gasoline-powered F6.
The only projects that have been implemented at all are mass-transit and taxi fleets, where the local government purchased the vehicles. The CEO of BYD, Wang Chuanfu, had said that his company would sell 100 e6 EVs to Shenzhen’s taxi operator in the first half of 2010, but as of May 2010, there are only 10 e6 Shenzhen taxis on the road, and no clear plans to begin selling the electric vehicles to consumers.
Without substantial government incentives, EVs are simply still too expensive for the Chinese market. BusinessWeek interviewed 51 year old Huang Jihai, who decided to buy a conventional vehicle instead of an EV for his daughter, saying that “Some of the hybrids and electric cars look pretty cool, but they are too expensive…I’d rather spend less money on a reliable gasoline car.” The difference between the two vehicles he was considering – one of which could be plugged in – was US$2,500.
Sounding uncannily like the interests and pundits in Washington pushing for government clean tech support , Yang Jian, the editor of Automotive News China, wrote in a December 2009 editorial that “Unless the government adds detailed action plans and centralized direction to its plan, China may well squander the vast opportunity electric vehicles are now offering.”
Similarly, the United States has a tremendous opportunity to electrify its light duty fleet. And as we come face with part of the reality of oil dependence – the costs that large spills can and will periodically impose on our ecological and economic wellbeing – there is a window to push forward policies that will enhance our energy security without impacting our mobility.
Ideally, we should partner with China, taking advantage of our comparative advantages in manufacturing, technology, and market readiness. President Obama made a worthy start to this endeavor last November when he met with President Hu Jintao and announced, among other measures, the U.S.-China Electric Vehicle Initiative. However, action needs to be more aggressively matched to words. Joint pilot programs, cross-border manufacturing incentives and a healthy competitive spirit can work to overcome the obstacles to electrification that exist in both China and the United States.
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