Producing Clean Cars as Extensively as Mobile Phones

By Jinping Huang; translated and edited by Yan Liu

The eruption of Eyjafjallajökull in Iceland did not stop CEOs of European auto corporations from attending the 2010 Beijing International Automotive Exhibition (Auto China 2010). Under the slogan “For a Greener Tomorrow,” ninety five types of clean-energy cars—approximately 10 percent of the exhibition—came under the spotlight in April 2010. Automakers seemed to be sending a clear message: applying renewable energy technology in the auto industry is an easy task.

Source: Global Times

As Common as Cell Phones?

“Like mobile phones… previously only the rich were able to afford them, now everybody has one. Clean-energy vehicles will follow the same path,” said Nanshao Xu, the VP of the Research Department at Lifan Group—a Chinese automobile manufacturer.  

Best known for its motorcycles, Lifan was the most surprising exhibitor at Auto China 2010. Without any prior notice, the company presented two electric cars. “Many people make a lot of noise before taking action, but Lifan has a different style: we talk after we meet our target,” said Lifan’s sales manager. A month ago, Lifan had produced a small number of electric cars and donated them to Shanghai’s police force for Expo 2010.

This new product was the result of a joint effort between Lifan and the Chinese Academy of Sciences. The power system came from the Academy, the control system was designed collaboratively, and the battery was purchased from a domestic maker. The entire process took only one year.

Source: infzm.com

Nanshao Xu indicated that Lifan would establish its own taxi company with 100 electric cars in Shanghai and Chongqing, as a preparatory step before such products enter the real market. When these electric vehicles prove reliable, production will extend to meet private demands. 

Lifan’s production schedule was almost synchronous with Beijing’s policies. In early 2009, China’s State Council released a plan that would increase the number of clean-energy vehicles to half a million by 2012. That is about 5 percent of all cars in China. By 2020, the proportion is supposed to rise to 50 percent.

Another big surprise was Hunan University’s Technology Garden LLC. They presented a self-designed electrical car as well. The University’s President, Zhihua Zhong, is one of the two automobile experts at the Chinese Academic of Sciences. He has always been an advocate for domestic innovation.

Additionally, with approximately $300,000,000 dollars, the Beijing Automotive Industry Holding Co. Ltd. has established an industrial area in Beijing’s suburbs. By 2012, this area is supposed to be capable of producing 500,000 electric cars annually.

Regionally, Guangdong Province released its own plan regarding electrical vehicle development in March 2009. The plan explicitly listed the region’s automobile industry as a “new strategic” sector. By 2015, Guangdong is supposed be capable of producing 200,000 electrical cars annually.

According to a report from Roland Berger, the gross production of China’s electric car market will exceed 10 billion Euros ($13.6 billion) by 2020.

Fake Clean Cars or a New Path?

In June 2009, the Chinese government issued a law stipulating that only manufacturers with “core technology” will be issued the certificate to produce clean cars. Most Chinese automakers, however, lack the expertise in producing reliable batteries and have to purchase them from abroad. This is not an embarrassing fact since most automakers in the world lack such knowledge and skills. Only a few Japanese auto companies are able to produce their own batteries.

China has started to invest in car energy research (source: Qipei.com)

In October 2009, the Chinese media covered a scandal involving “fake” electrical cars. These vehicles ran not on renewable energy, but on lead-acid batteries. On the one hand, although these cars were poorly designed and short of safety measures, they more or less reflected China’s demand for clean-energy cars. On the other hand, this case indicated that producing electric vehicles could be a simple process. Cars that run on lead-acid batteries may set the stage for more advanced electrical cars in the future. This strategy has been practiced by ZENN, a Canadian automaker that had started with cars powered by traditional batteries and, after taking root in the market, decided to research new power systems.

Joint products—Chinese clean cars with foreign power system—might eventually challenge the role of traditional cars. Yongyuan Automobile, a Chinese firm, has collaborated with ZAP (U.S.) and exhibited their most recent product ZAP Taxi at Auto China 2010. With Yongyuan producing the body of the car and ZAP the power system, the production process took slightly over a year. These mixed products will be introduced to California’s car rental market.  

Source: JRJ.com

A study shows that without the price factor, 75 percent of Chinese consumers would like to purchase electric cars. Other consumers expressed concerns regarding the reliability of the new technology, especially in terms of battery charging. In response, several Chinese manufacturers have started investing in replaceable batteries.

Between the Exhibition and the Road

Multiple exhibitors expressed interest in future government subsidies. They believed that subsidies were the key to the growth of the clean car market.

“Like mobile phone batteries… without a market, battery won’t reduce in size, the price won’t fall. The only way to spread renewable-energy cars is through the market. When the market is mature, government subsidies will become unnecessary,” Nanshao Xu said.

Yet, long before the coming of national subsidies, local governments had found various ways to support clean car manufacturers. In June 2009, the city of Chongqing established a subsidy for private consumers that totaled $6,000.

In spite of that, private purchases were rare. In 2009, China’s manufacturers sold fewer than 300 clean cars, whereas total nationwide car transactions numbered 1,360,000.

                                              

As a matter of fact, aside from lead-acid batteries, most other batteries for car use are still under development. That is to say, the production level of clean cars will remain limited in specified regions and under certain conditions. China’s clean-energy auto industry is still a test.

Additionally, although automakers will eventually find a way to produce electric cars as extensively as mobile phones, consumers won’t be ready to purchase them with the same level of confidence as they buy cell phones.

In January 2010, a Boston-based consulting firm reported that the production cost of car batteries won’t fall rapidly within the next ten years. Electric cars will remain expensive to the majority of consumers. The report predicted that between 2009 and 2020, producing a battery for GM’s Volt will cost 64% less than its current level, that is, a gradual fall to $10,000. Yet, it may still take 15 years before the price of clean cars becomes comparable to that of traditional cars. 

Yan Liu is a Program Coordinator at Bridging Nations. This article was written in Chinese by Jinping Huang. Click here to read the original article.