China's dream of electric car leadership elusive

By Joe Mcdonald

Associated Press

Published: Tuesday, April 24 2012 12:50 p.m. MDT

"They don't expect the EV or hybrid can be the only way for China to maintain its future sustainable mobility," Zeng said. "They think they need multiple initiatives to achieve that target."

Plus, gasoline and diesel technologies are advancing, luring consumers with the promise of lower operating costs.

U.S. sales of electric cars have also been disappointing. After a year on the market, electric cars still make up less than 1 percent of total U.S. sales. General Motors Co. fell short of its goal of selling 10,000 Chevrolet Volt electric cars in 2011, ending up with sales just over 7,500. Nissan sold 9,674 Leaf electric cars, also short of its goal of 10,000.

As in China, the lack of a recharging infrastructure and anxiety about the range of electric cars are big barriers for consumers. Cost is another issue. The Chevrolet Volt, for example, costs nearly $8,000 more than the similarly sized gas-powered Chevrolet Cruze. Auto shopping site Edmunds.com estimates it would take a Volt owner six years of gas savings to pay off that premium.

The Chinese government launched research into electric, fuel cell and other alternative power sources in 2001. It followed in 2004 with a plan to create a competitive electric car and promised financial support to developers.

Automakers responded to Beijing's enthusiasm. General Motors Co. announced plans in 2007 for a $250 million alternative fuel research center in Shanghai. Germany's Daimler AG teamed up with BYD to create an electric car joint venture dubbed Denza. They unveiled a display version of its first model this week at the Beijing auto show.

China's initiative prompted some in the United States and Europe to worry they might fall behind in a key technology. An assistant U.S. energy secretary, David Sandalow, visited Beijing in 2009 and warned China had "the potential to be ahead" if the United States failed to invest in development.

Beijing's 2009 plan called for world-class electric cars by this year, followed by trucks and buses. To encourage buyers, the government started paying buyers rebates of up to 60,000 yuan ($8,800) per car the following year in five cities including Shanghai.

But Wen, China's top economic official, expressed frustration at the slow pace of development in an article published last July.

"We are no match for developed countries in technology," Wen wrote in Qiushi, the ruling party's main theoretical journal.

"We've only just begun in electric car development," the premier wrote. Wen said Chinese leaders shared in the blame: "We have not set clear enough goals of which way to go."

Beijing strained relations with the United States and other trading partners by rolling out rules limiting access to its auto market unless foreign developers shared technology to Chinese partners.

Daimler has said it formed its venture with BYD not due to official pressure but because it wanted to create a low-cost brand for China. Daimler said their car, due to go on sale next year, should have a range of 200-250 kilometers (125-155 miles) on one charge.

Other manufacturers such as Nissan Motor Co., maker of the electric Leaf, and General Motors Co. have chosen to pay the higher taxes required to import electric and hybrid vehicles rather than disclose expensive know-how to Chinese partners that might become rivals.

GM is taking orders for its all-electric Volt in China but expects limited sales due to a relatively high price of 498,000 yuan ($79,000).

"It's expensive in China at the moment because of import duties, and we don't qualify for incentives," said Kevin Wale, president of GM China. "But we still think it's important that we demonstrate its capabilities here in China."

Chinese producers have unveiled a series of display models of electric and hybrid cars, some sprouting tiny solar panels or wind turbines for recharging, though most say they are not ready for mass-market sales.

LMC Automotive's Zeng said that aside from BYD, which has spent heavily on development, most have done only the minimum required to qualify for research grants.

"I think it's more to create a PR bubble or fight for government subsidies," he said.

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