Overtaking on a Curve

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Overtaking on a Curve OVERTAKING ON A CURVE China is ahead of the rest of the world when it comes to electric vehicles, with more than 800,000 sold last year alone n the past few years the electric car has gone from science fiction dream to practical reality. Most international auto manufacturers now sell hybrid vehicles, and either already offer, or are working towards, fully electric models. In China, the growth of New Energy IVehicles (NEVs), which include pure battery elec- tric vehicles (BEVs) and plug-in hybrids (PHEVs), is streets ahead of the rest of the world. Last year “There is a saying in China: ‘You should overtake 804,000 were sold in China, accounting for 2.4 on a curve.’ The Chinese auto industry is behind per cent of vehicle sales, far in excess of any other the rest of the world with internal combustion region. In the second-biggest NEV market, the vehicles, but not so much with NEVs, so they see EU, sales reached 307,000 last year, comprising an opportunity to overtake the rest of the world in 1.7 per cent of the market, according to figures that area; in the longer term, when you combine from EVvolumes.com, which compiles sales sta- NEVs with autonomous driving technology, there is tistics for electric vehicles worldwide; it predicts even more opportunity to lead,” says Lei Xing, chief that 2018 will see 1.1 million NEV cars sold in editor of the China Automotive Review. China, making up 3.6 per cent of the country’s car Established domestic manufacturers like BYD market. Current government targets call for two Auto, Lifan Group, SAIC Motor and Great Wall million NEVs to be sold in China every year by Motors are being joined by more than 100 new 2020, and five million by 2025. start-ups, many of which currently operate in a The Chinese government has helped kickstart legal grey area without the licences the govern- the industry, both with generous subsidies ment requires auto manufacturers to hold. to manufacturers and by making it easier for Foreign manufacturers, who can only build consumers to acquire a licence plate for an NEV cars in China as the minority shareholder in a joint than for a traditional car. venture (JV) with a local firm, are trailing behind, The environmental advantages of the new although most have now either already entered or OVERTAKING technology are not driving this state-sponsored announced plans to enter the NEV market; foreign effort, however. China produces more than car makers were previously limited to involvement 70 per cent of its electricity from coal-fired in just two JV companies each, but the government power stations; according to figures from global is now allowing them to form a third JV company, management consultancy McKinsey & Company, as long as it only builds NEVs. ON A CURVE the CO2 reduction from building and running an Tesla, perhaps the best-known EV manufac- electric car compared to an internal combustion turer in the West, has long had plans to open model is just 29 per cent in China, compared to production facilities in China, but talks have Gregor McClenaghan looks at China’s efforts CO2 reductions of 44 per cent in Germany and reportedly stalled, and imported cars are subject 50 51 to lead the world in electric vehicles 89 per cent in France, both of which use cleaner to punishing 25 per cent tariffs. methods to generate power. “Chinese companies are already leading the Industry analysts say the Chinese government’s world in many ways when it comes to NEVs; support for the technology is less about trying to there’s a huge overseas market for electric buses, improve China’s notoriously poor air pollution, which BYD already sells to Europe and parts of and more about raw geopolitical competition. the US, especially California,” says Xing. OVERTAKING ON A CURVE OVERTAKING ON A CURVE “Combating pollution is a factor, but you are really just changing from localised to centralised pollution” “Europe has relied on diesel for a long time and the European manufacturers are some way behind the Chinese companies when it comes to NEVs; the opportunity is that as cities and companies try to electrify their fleets, the Chinese manufacturers already have vehicles ready to meet that demand.” Energy security also factors in to the govern- ment’s support for NEVs. “Twenty years ago China exported oil and gas, Sales of pure battery electric vehicles, however, right, but nobody is able to produce figures for but China is now the world’s largest oil importer are largely driven by the growth in the last few who is really buying these cars,” says Andrews. and will soon be the world’s largest importer of gas, years of ride-sharing platforms, where users “What’s interesting is that a lot of car sharing so from a strategic point of view it doesn’t want find a car using a smartphone app, pay by the schemes are funded by the car makers; they’re to be doing this, as it is vulnerable to fluctuations minute while they drive, and then leave it for the essentially selling cars to themselves, and getting the in supply and foreign exchange rates. However, next person. These services are widely used in government subsidies. Most private consumers don’t it does have a lot of coal itself, so it makes sense cities, including by people who have their own go down the route of buying a pure electric vehicle if it can power cars by just producing electricity car but appreciate the convenience of being able because they are worried about the range issue.” in-country,” says Mark Andrews, a Shanghai-based to use one on an ad hoc basis. Many of the pure Traditionally, Chinese motorists have tended auto industry expert and journalist who has test electric BEVs rolling off the production lines go to do most of their driving within cities, and driven many of China’s NEVs. to these ride-sharing platforms, several of which although that has started to change in recent “Air pollution is perhaps a factor; the govern- are owned by the car manufacturers years, the country’s high-speed ment certainly claims it is, but really with NEVs themselves, like state-owned SAIC rail network make trains a faster what you’re doing is changing from localised pol- Motor’s EVCard, which operates “A lot of and more efficient option for many lution to centralised pollution. There is some in 32 cities and has more than China’s car- people travelling between cities. reduction in CO2 emissions, but burning more 3,000 pick-up points in Shanghai However, individual freedom is an coal increases emissions of sulphur dioxide and alone; and Chongqing-based Pand sharing essential part of what makes private other pollutants.” Auto, owned by the private-sector schemes car ownership attractive, and not Plug-in hybrids are becoming more popular manufacturer Lifan Group. are funded having the option to make longer with private consumers in cities, largely because “It’s very difficult to find out journeys is a major factor stopping the government has made it easier to get licence where the true purchasing power by the car consumers from buying BEVs, both plates for them; private license plates for internal comes from; I’ve always contend- makers as in China and the rest of the world. 52 Eectric cars lined up at Kandi Electric 53 ed that plug-in hybrids are mostly Current BEVs vary in range from combustion cars are expensive, and in some cities are Vehicles in Changxing County they get only issued through a lottery system. Various cities being bought by private consumers around 100 to 400 kilometres (60 have introduced additional measures to cut traffic and the battery electric vehicles are government to 250 miles), but Chinese models and pollution, for example by only allowing cars with being bought by fleet users like the subsidies” have tended to be at the low end of specific licence numbers on the road on certain days; car sharing schemes, and people in that scale, often using technology these measures mostly do not apply to NEVs. the industry tell me that’s probably that is a few years behind that OVERTAKING ON A CURVE OVERTAKING ON A CURVE “It’s important that there are more charging stations built, and they are conveniently located” Those issues mean some of the western manufacturers operating in China are taking a cautious approach to pure battery electric vehicles, moving ahead with plans to enter the BEV market while keeping their focus on hybrids in the short to medium term. Ford, which recently signed a new JV deal with Zotye to produce BEVs, will start manufacturing the Mondeo Energi PHEV in China this year, and plans to release at least 15 NEVs in the country by 2025. “By then, 100 per cent of the nameplates manufactured through our Changan Ford JV, and 70 per cent of all Ford nameplates in China, of the leading international firms. That could capitals,” says Andrews, who has test-driven dozens will include electrified options,” says Trevor be about to change, however; recent changes to of Chinese NEVs in recent years. Worthington, president of product development government subsidies are shifting the focus away “Over the last few years new manufacturers for Ford Motor Company Asia Pacific, adding that from the sheer number of cars that are built, to have been popping up almost by the week, most Ford expects more NEVs to be on sale than petrol focus more on their quality and technology.
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