China's Big Leap Forward: $15 Billion for EVs
The Chinese government just made a great leap forward in terms of supporting electric vehicles, pledging an impressive $15 billion to support an alliance of 16 state-owned companies. The money, intended to develop standards for EVs and hybrids (as well as new R&D), could help China in its emerging strategy of overtaking the West -- where standardization is a significant issue, especially for the fast charging that could put EVs back on the road in 30 minutes.
As part of the announcement in Beijing, the government's powerful Assets Supervision and Administration Commission (SASAC) said that over the next three years, China would develop the ability to deliver 500,000 green cars annually, and that these would soon amount to five percent of China's auto market (set to reach 17 million in 2010, further outdistancing the once-mighty U.S.)
"The Chinese could certainly leapfrog the U.S. in many aspects of the EV, including volume," said Phil Gott, director for automotive consulting at IHS Global Insight. "If they're focusing on standards, that's certainly an area that's been lacking in the West."
I know, I know, "standards" is a boring subject, but it matters a whole lot. After all, you don't want to drive your EV into a charging station and discover that the plug doesn't fit into your car. We don't have two different types of gas station nozzle. But in the '90s, when the GM EV1 and the electric Toyota RAV4 were still on the road, we did have two different types of EV plug (inductive and conductive), and they were totally incompatible, creating no end of inconvenience.
A lot of those old "legacy chargers" are still in place, including at Costco. And that's why the state of California just appropriated $1.9 million to update several hundred of them. Fortunately, the Society of Automotive Engineers has now standardized a Level II 220-volt plug (the kind used for most public charging), but they're still wrangling over a standard for Level III "fast charging" (480 volts). Because fast charging is still up in the air, several automakers are making no provision for it on early EVs.
Fast charging stations are well established in Japan, and China is sure to develop them quickly, but the U.S. has only one such station now -- operated by Pacific Gas & Electric, a California utility.
Gott points out that the Chinese government has taken up EVs as "a national cause," which it can pursue "with the benefit of totalitarian control." Producing EVs is already a priority in China's burgeoning New Economic Zones, which offer tax benefits and streamlined government red tape. (Just one such zone, Lianjiang, plans to produce an incredible 750,000 green cars annually by 2020.) But the Chinese government may stop short of actually forcing people to buy electric cars. So China's myriad EV vendors will need to develop market-friendly cars with features consumers will pay for.
The Chinese master plan sweetens the pot for car buyers by offering lucrative $8,800 subsidies that would be paid directly to carmakers selling vehicles in five key markets, including Shanghai (but also Shenzeh, Hefei, Hangzhou and Changchun).
Developing an export market is a longer-term strategy. Chinese cars may not be ready for western roads now, especially because of safety issues, but Gott said "they'll get there, just as the Japanese did, and the Koreans did. It's part of the learning curve."
The rapid growth of the Chinese domestic EV market creates an opportunity for U.S. and European suppliers to supply parts not yet readily available from Asian companies. California's AC Propulsion, for instance, built the concept cars that evolved into the Tesla Roadster, and put electric drivetrains in BMW's Mini E. And now the company is putting its equipment under the hoods of EV minivans that will be sold in China by Taiwan's largest automaker, Yulon Motor. "Their growth curve for EVs is up," said Tom Gage, CEO of AC Propulsion. "The Chinese government is really getting behind it."
Related:
- China's $8,800 EV Subsidies Can Jumpstart a Big Market for Electric Cars
- China's Goal: 3 Million Cars Annually in the Lianjiang New Economic Zone