Both universities and vehicle manufacturers have already responded to the government initiatives. For example, Tsinghua University has established an alternative powertrain research lab. Chinese auto brands are participating in NEV development (some with foreign partners) and have included plans in their long-term strategies. Developments include the following:
- SAIC: Invested RMB 2 billion for NEV development
- Chang 'An: Established NEV JV and plans first hybrid car for 2009
- FAW / DFM: Have hybrid buses in pilot operation
- Chery: Introduced plans for the hybrid car A5 and electric car S18
- BYD: Introduced plans for the F3DM dual-mode electric car
Replacing internal combustion engines with other technologies- such as hybrid electric, full electric, hydrogen powered vehicles or clean diesel - requires collaboration between business and government to develop the infrastructure in tandem with development of the technology. The economics of the product itself and ultimate market acceptance is very much dependent on the availability of the infrastructure to recharge or replenish the fuel. It’s not realistic to expect a company to reinvent the technological underpinnings of the automobile unless there is a concurrent development and investment in the infrastructure to support that new technology vehicle. This is especially true in today’s weakened global economy.
As the largest automotive market, and because the China government has the capacity and willingness to invest in the infrastructure for alternative propulsion, the technology will eventually come to the market. What makes the development of alternative propulsion technology particularly challenging is not simply the vehicle itself - but the need for invention of the infrastructure for delivering renewable sources of electricity and installation of battery charging/replacement stations.
As the largest car market, and the place with the largest need for alternative energy solutions, we can expect to see China place a heavy emphasis on development of the electric vehicle (EV) infrastructure. The country that leads the development of this infrastructure will undoubtedly lead in attracting the investment in development of the technologies that plug in to that infrastructure.
Consumer acceptance of new energy vehicles is yet another challenge. While the infrastructure investments already described will help tip the scales in favor of new energy vehicles, consumers must also be convinced that the price and performance of the new energy vehicle can in fact meet their expectations. As a national priority, we can expect the China government to help by offering incentives for the retail consumer to purchase new energy vehicles. Chinese consumers have less experience with gasoline-powered cars, and are already accustomed to short distance, low-speed commuting – conditions very favorable for electric cars.
The China government’s willingness to invest in the infrastructure to support alternative propulsion technology will ultimately help drive market acceptance. This is where China has the opportunity to take the lead, and that will drive investment in new technology. It takes a combination of business and government working together to make such a transformational change possible – and nowhere in the world is there a closer link between business and government than in China.
In the next posting in this series, I will describe the "Utilization of China's Automotive Capacities for Global Expansion".