Sunday, February 22, 2009

China: Taking the Lead on Alternative Vehicle Technologies?

This past week, China’s largest independent automobile manufacturer, Chery Automobile, unveiled its first plug-in electric vehicle, called the S18. The S18 can go up to 93 miles on one charge with a maximum speed of 72 miles an hour. The battery can be fully charged within six hours using a standard 220 volt home outlet and 80 percent of the battery can be charged within 30 minutes. This car will not be available as a hybrid that can operate on petrol as well and it is unclear when it will be available. Chinese automaker BYD Auto has a more ambitious goal; to become the world leader in freeing the world from its dependence on oil. A series of electric and plug-in hybrids have been unveiled that they hope to enter the US and European markets by 2011. Next month it will begin delivering the F3DM which can go 63 miles on its battery or 360 miles when in hybrid mode with petrol.

This is only the latest in a series of innovative alternative energy vehicles coming out of China, a country whom many view as a laggard on clean energy technology adoption. China has a relatively young car industry that is developing at a strong pace. New car manufacturers in China see alternative vehicles as an opportunity to take advantage of a new and expanding global market. In April 2007 Chinese automakers showcased a diverse array of alternative vehicles at the Shanghai Auto Show. President Chen Hong of Shanghai Automotive Industries Corp. summed up the reason for China taking the lead on clean technologies saying that, “While foreign automakers have a lead in conventional technology, in new energy we're starting from almost the same line." During the 2008 Beijing Olympics hundreds of alternative vehicles were used by Olympic organizers to provide “zero-emission transportation” during the Olympic Games.

Chinese auto manufacturers continue to expand and are now looking to establish an international presence by exporting vehicles outside of China and producing vehicles in other countries. In 2007 China passed Japan as the world’s second largest vehicle market. It could pass the US in years to come. It appears that the global recession is not hitting the Chinese auto industry as hard as other auto industries in the world and it is anticipated that China could pass the US in unit sales this year (with 10.7 million vehicles sold). However, US and other international automakers account for a strong portion of these sales (GM accounted for 1.1 million vehicles in 2008). However, GM and other international automakers see China as an opportune market to develop alternative vehicles due to government support and public acceptance.

The Chinese government has recently supported alternative energy vehicles as a way to bring clean and affordable vehicles to account for the rising demand for vehicles and increasing amount of pollution around population centers. Vehicle sales from 2006 to 2007 jumped 25.1 percent. In January China (the world’s second biggest oil user, behind the US), revealed its plan to have 60,000 altnerative energy vehicles on the roads by 2012. Earlier this month the Chinese government issued a provisional measure on the management of subsidies for energy-saving and alternative energy automobiles (including hybrid, electric, and fuel cell vehicles).

With growing auto demand, a growing number of new emerging auto manufacturers, and a country supportive of alternative technologies China may emerge as the world’s leader in production and use of alternative vehicles.

3 comments:

David Wogan said...

How do you think the US auto makers will fair with competition from the Chinese? Do you think that Chinese cars will gain a foothold here in the US? The US auto makers would love to exploit the huge markets in China, India and other places in the world, but they may have some tough competition.

Click Tappet said...

Chinese automakers have a few problems when it comes to the US market.

1. Have you seen the BYD F3DM? Look at this picture of it and the USDM Toyota Corolla. Many automakers designs are being copied by Chinese companies and I think it might pose a problem as these companies try and move into other markets. The argument made is often that they copy much higher quality cars, so it makes no difference - the buyer will not be confused. Still, I imagine some automakers will raise hell when confronted with cheaper product that looks a lot like theirs.

2. Their quality control is poor...1980s Hyundai poor. Some companies can get away with that - Hyundai has become successful, but their product had to improve. Kia almost went bankrupt because they didn't improve their product fast enough for people to continue buying, even at bargain-basement prices.

3. This, this and this are also reasons why Americans might not bite just yet.

SC_Tang said...

I watched the video posted by Tappet on the crush test of a Chinese automobile. It is very scary. I can see that type of car may not be very safe right now. However, I do not believe the American auto maker should be sitting comfortably and not worry about it. As we can see from news and media, China is capturing the world's attention on their electric vehicles. While the current vehicle may not be up to the U.S. standard but I believe they are closing the gap, eventually they will be able to produce reasonably priced, safe, and well-made cars. Just like what Tappet said about Hyundai. Hyundai has proven to be great cars, I believe Chinese cars will follow the same path.