Monday, November 16, 2009

Beneficiaries of Chinese Government Investment in Electric Vehicles

Already a leader in lithium ion batteries, China plans to continue investing in "new-energy vehicles." China lays claim to the world’s largest reserve of rare earth and second largest reserve of lithium. Both are indispensible raw materials for producing electric vehicles (EVs). The government is urging joint action in the Chinese automotive industry to reduce costs and risks.

Wan Gang, the Chinese minister of technology, said, "Sustainable development of the auto industry is the common goal of all the country’s auto manufacturers and the auto market. The government will work out stricter emission controls and fuel consumption standards to advocate environmentally-friendly vehicle technologies and make sure that the emission control and fuel consumption efficiency of the country’s vehicles will be among the best in the world by 2020."

More than 30 Chinese automakers have invested in research and development of cars fuelled by alternative energy or electricity. The Chinese government is urging China's domestic carmakers to work together to get hybrids and electric vehicles on the market more quickly. Dong Yang, secretary general of the China Association of Automobile Manufacturers, said that state-owned carmakers have agreed to work collectively on the industrialization of hybrid and EVs.

"The cooperation could involve the establishment of industrial standard(s) for electric cars as well as joint investment and production," Dong told reporters. Here are some of the Chinese car makers that will benefit from government investment and lead the Chinese automotive industry.

In July, China's largest automaker, Shanghai Automotive Industry Corporation Group (SAIC), announced plans to invest 12 billion yuan in research and development of hybrid engines. SAIC plans to begin manufacturing its own brand of fuel-saving cars in 2010, the company said. Altogether, the company will invest in 41 major projects, including hybrid and electric cars.

Dongfeng Motor Group, China's third-largest automotive company, will cooperate with the Dutch electric car startup Detroit Electric to research, develop and sell EVs in China.

Chongqing Chang'an Automobile Group recently announced that it is creating a new manufacturing base with an investment of 2.5 billion yuan for alternative energy vehicles. The new manufacturing base will help Chang'an Motors produce 300,000 alternative energy cars and 1 million engines per year after manufacturing begins in 2012, according to the company.

Privately owned companies are also investing in new energy programs. Geely, a Zhejiang-based company, plans to develop five hybrid sedan models. Geely's goal is to sell 10,000 hybrid cars by 2010. Geely announced plans to release its first electric car, the Geely Panda, within the next year. Privately owned battery and automobile maker, BYD Co, has established an EV manufacturing base with a capacity of 400,000 units in Changsha, Hunan province. BYD has nine new-energy models that will begin domestic production, including the F3 dual-mode (DM) electric car. BYD is backed by billionaire Warren Buffett and recently acquired bus maker Hunan Midea Coach.

Regional governments are also working to support the proliferation of new energy vehicles in China. The Beijing municipal government recently announced plans to have 10,000 alternative energy vehicles produced and sold by Beijing Automotive Industry Corporation (BAIC) in 2010.

However, some government and industry officials have recently warned against the possibility of an overheated market. The chief of the industry policy department, Xin Guobin, recently said that the rush to produce green cars has raised the risk of redundant projects and potential overcapacity.

There are questions as to whether there is adequate demand from Chinese consumers. BYD's F3DM, the first mass-produced plug-in hybrid to hit the international market last December, has reported stagnant sales due to recharging problems. Even Toyota's top selling Prius sold only 899 units in China last year.

Consulting firm PricewaterhouseCoopers recently added to these concerns with a report that cited higher prices as a reason for lower acceptance in the marketplace.
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2 comments:

Canada Guy said...

Electric cars are useful in small doses, and can be beneficial for the environment. However, they cannot, and should not, be used to replace cars on the mass scale. We need more efficient long distance transportation systems for cargo and passengers, such as electrified rail.

http://www.selfdestructivebastards.com/2009/10/electric-cars-in-small-doses.html

antiquities said...

Great blog!!... it is everyone's duty to creat a good invironment...