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China Vies to Be World’s Leader in
Electric Cars
April 1, 2009 - TIANJIN, China — Chinese leaders
have adopted a plan aimed at turning the country into one of the
leading producers of hybrid and all-electric vehicles within three
years, and making it the world leader in electric cars and buses
after that.
Doug Kanter for The New York Times:
Chinese leaders have adopted a plan aimed at turning the country
into one of the leading producers of hybrid and all-electric
vehicles within three years.
The goal, which radiates from the very top of the Chinese
government, suggests that Detroit’s Big Three, already struggling to
stay alive, will face even stiffer foreign competition on the next
field of automotive technology than they do today.
“China is well positioned to lead in this,” said David Tulauskas,
director of China government policy at General Motors.
To some extent, China is making a virtue of a liability. It is
behind the United States, Japan and other countries when it comes to
making gas-powered vehicles, but by skipping the current technology,
China hopes to get a jump on the next.
Japan is the market leader in hybrids today, which run on both
electricity and gasoline, with cars like the Toyota Prius and Honda
Insight. The United States has been a laggard in alternative
vehicles. G.M.’s plug-in hybrid Chevrolet Volt is scheduled to go on
sale next year, and will be assembled in Michigan using rechargeable
batteries imported from LG in South Korea.
China’s intention, in addition to creating a world-leading industry
that will produce jobs and exports, is to reduce urban pollution and
decrease its dependence on oil, which comes from the Mideast and
travels over sea routes controlled by the United States Navy.
But electric vehicles may do little to clear the country’s
smog-darkened sky or curb its rapidly rising emissions of global
warming gases. China gets three-fourths of its electricity from
coal, which produces more soot and more greenhouse gases than other
fuels.
A report by McKinsey & Company last autumn estimated that replacing
a gasoline-powered car with a similar-size electric car in China
would reduce greenhouse emissions by only 19 percent. It would
reduce urban pollution, however, by shifting the source of smog from
car exhaust pipes to power plants, which are often located outside
cities.
Beyond manufacturing, subsidies of up to $8,800 are being offered to
taxi fleets and local government agencies in 13 Chinese cities for
each hybrid or all-electric vehicle they purchase. The state
electricity grid has been ordered to set up electric car charging
stations in Beijing, Shanghai and Tianjin.
Government research subsidies for electric car designs are
increasing rapidly. And an interagency panel is planning tax credits
for consumers who buy alternative energy vehicles.
China wants to raise its annual production capacity to 500,000
hybrid or all-electric cars and buses by the end of 2011, from 2,100
last year, government officials and Chinese auto executives said. By
comparison, CSM Worldwide, a consulting firm that does forecasts for
automakers, predicts that Japan and South Korea together will be
producing 1.1 million hybrid or all-electric light vehicles by then
and North America will be making 267,000.
The United States Department of Energy has its own $25 billion
program to develop electric-powered cars and improve battery
technology, and will receive another $2 billion for battery
development as part of the economic stimulus program enacted by
Congress.
Premier Wen Jiabao highlighted the importance of electric cars two
years ago with his unlikely choice to become minister of science and
technology: Wan Gang, a Shanghai-born former Audi auto engineer in
Germany who later became the chief scientist for the Chinese
government’s research panel on electric vehicles.
Mr. Wan is the first minister in at least three decades who is not a
member of the Communist Party.
And Premier Wen has his own connection to the electric car industry.
He was born and grew up here in Tianjin, the longtime capital of
China’s battery industry, 70 miles southeast of Beijing.
Tianjin has thrived in the six years since Mr. Wen became premier.
It now has China’s first bullet train service (to Beijing), a new
Airbus factory and an immaculate new airport. Tianjin has also
received a surge of research subsidies for enterprises like the
Tianjin-Qingyuan Electric Vehicle Company.
Electric cars have several practical advantages in China. Intercity
driving is rare. Commutes are fairly short and frequently at low
speeds because of traffic jams. So the limitations of all-electric
cars — the latest models in China have a top speed of 60 miles an
hour and a range of 120 miles between charges — are less of a
problem.
First-time car buyers also make up four-fifths of the Chinese
market, and these buyers have not yet grown accustomed to the
greater power and range of gasoline-powered cars.
But the electric car industry faces several obstacles here too. Most
urban Chinese live in apartments, and cannot install recharging
devices in driveways, so more public charging centers need to be set
up.
Rechargeable lithium-ion batteries also have a poor reputation in
China. Counterfeit lithium-ion batteries in cellphones occasionally
explode, causing injuries. And Sony had to recall genuine
lithium-ion batteries in laptops in 2006 and 2008 after some
overheated and caught fire or exploded.
These safety problems have been associated with lithium-ion cobalt
batteries, however, not the more chemically stable lithium-ion
phosphate batteries now being adapted to automotive use.
The tougher challenge is that all lithium-ion batteries are
expensive, whether made with cobalt or phosphate. That will be a
hurdle for thrifty Chinese consumers, especially if gas prices stay
relatively low compared to their highs last summer.
China is tackling the challenges with the same tools that helped it
speed industrialization and put on the Olympics: immense amounts of
energy, money and people.
BYD has 5,000 auto engineers and an equal number of battery
engineers, most of them living at its headquarters in Shenzhen in a
cluster of 15 yellow apartment buildings, each 18 stories high.
Young engineers earn less than $600 a month, including benefits.
When Tianjin-Qingyuan puts its entirely battery-powered Saibao
midsize sedan on sale this autumn, the body will come from a sedan
that normally sells for $14,600 when equipped with a gasoline
engine. But the engine and gas tank will be replaced with a $14,000
battery pack and electric motor, said Wu Zhixin, the company’s
general manager.
That means the retail price will nearly double, to almost $30,000.
Even if the government awards the maximum subsidy of $8,800 to
buyers, that is a hefty premium.
Large-scale production could drive down the cost of the battery pack
and electric motor by 30 or 40 percent, still leaving electric cars
more expensive than gasoline-powered ones, Mr. Wu said.
But Mr. Wu has plenty of money to pursue improvements. He
interrupted an interview at his company’s headquarters on Thursday
to take a call on his cellphone, politely declined an offer from the
caller, and hung up.
The general manager of a state-controlled bank had called to ask if
he needed a loan, he explained. |
