Electric Cars: The Infrastructure Must Come First

Telegraph.Co.UK, April 22, 2009
Reposting from Malcolm Moore blog

Bill Powell, at Time Magazine, captured up the mood at the Shanghai Auto Show this week brilliantly when he described Western car executives as "like drowning men grasping the only piece of buoyant driftwood in sight".

Photo: Reuters

China is the only major car market still growing in the world, and it could mean the difference between life or death for some of these companies.

There's also been a lot of buzz that China is the place where electric cars will take off. Nick Reilly, the head of GM in Asia, said there was a "clear need" in Chinese cities for a small electrified car and that if the government handed out enough subsidies, "there could be very rapid sales growth".

Chinese companies are obviously keen on the idea, and there were eight different electric cars on display in Shanghai.

There's been a lot of hype about how companies such as BYD, which is 10pc-owned by Warren Buffett, has amazing battery technology that will help them lead the field. But the executives I spoke to were very skeptical.

Despite the non-stop news coverage, BYD has only managed to sell 80 of its electrified hybrid cars since they went on sale last December, and many of those were to the Shenzhen government.

Mr Reilly said that a closer look at the range and recharging abilities of the Chinese cars showed they weren't very different from technology elsewhere.

What will make China the leader in electric cars, however, is the infrastructure. Again according to GM, China is already able to absorb the impact of a huge switchover to electric vehicles without much new investment.

Kevin Wale, the former head of Vauxhall who now heads GM in China, said: "We are talking to the power grid, as are all car manufacturers who are interested in electric cars, and we don't think infrastructure is a major issue. The widespread distribution of electric cars can be more than covered by the existing power grid."

On top of that, China is pouring money into new nuclear power stations, wind farms and hydroelectric dams to increase the share of electricity it produces cleanly. As Greenpeace says, an electric car is only as green as the electricity it runs on.

Bill Russo, the president of Synergistics and the former head of Chrysler in Northeast Asia said China's strategy is straightforward: "1. China creates infrastructure first, 2. foreign brands bring electric vehicle technology to the largest market, 3. China "adapts" technology".

It's not a new strategy, but it's been working for the Chinese car industry so far...have a look at this blog or this one. And the UK government might do well to learn from China's example before splashing its cash on subsidising electric vehicles rather than on the grid and power stations supporting them.

Link to Malcolm Moore's blog:


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