China: Aims High For Plug-In Electric Vehicles, But Can It Deliver?

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China: Aims High For Plug-In Electric Vehicles, But Can It Deliver?

Beijing Announces $15B Investment Plan, Forms 16-Strong EV Alliance

Boston, MA - August 30, 2010 – The Chinese central government has recently announced the formation of a 16-strong alliance among state-owned car makers, battery makers and manufacturers of recharging points, as well as a $15 Billion investment plan involving energy saving powertrain components and recharging infrastructures. This is on top of subsidies already offered to purchasers of battery electric and plug-in hybrid vehicles. The Strategy Analytics Automotive Electronics Service (AES) report, “China Aims High for Plug-In Electric Vehicles,” predicts that while the size of the investment will have some impact on the Chinese automotive market, this initiative not be as successful as the Chinese government would have hoped.

“There are doubts, however, as to how this alliance will work,” according to the author of this Insight, Kevin Mak, Industry Analyst for the Strategy Analytics Automotive Electronics Service. “The fear is that the alliance will be used to give less innovative state-owned car makers an unfair advantage over the more innovative, mainly privately-owned car makers. The recently-formed BYD-Daimler joint venture is proof positive of how a commercial environment can be more beneficial in developing electric vehicle technology in China.”

“The Beijing administration is keen to reduce its dependence on imported oil and to bring about the indigenous powertrain development. But if it is defending less innovative players—whose only offerings are electric and plug-in hybrid models that are too costly to purchase—while keeping gasoline prices artificially low, plug-in vehicle technology will not flourish under its proposals. Mandating systems that will bring about a more rapid remedial effect through cost effective, volume deployment – such as stop-start systems – would be more effective.”

At the 2010 Auto China show in Beijing, many new models were launched with stop-start powertrains.

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