Automotive history was made on July 26 when a Chinese customer bought an electric car. Given all that has been written about China’s push into eco-friendly vehicles it is something of a shock that this was the first time an individual had actually purchased a Chinese-made electric car.
The car in question was made by Zhong Tai, a firm that specialises in battery-powered SUVs and whose name translates as ‘peace and safety for the people’. The man paid Rmb108,000 for the car – benefitting from a government rebate that slashed the sticker price by Rmb60,000. He was obviously pleased with the car’s performance. Prior to purchase, he’d been leasing it from Zhong Tai. Aside from city governments purchasing electric vehicles for taxi fleets, most manufacturers have found that the only way to get Chinese consumers to trial their cars is to lease them – in rival firm Chery’s case for as little as Rmb100 per day.
The Chinese government hopes its motorists will soon be a lot more confident about buying electric cars. And last week in a serious statement of intent some of the state’s most powerful firms pledged to enter the nascent business.
An alliance of 16 state-owned firms was announced – termed by media as the ‘electric vehicle union’ – with the aim of investing Rmb100 billion ($14.7 billion) in the industry by 2012. The alliance has been forged by their common shareholder, Sasac (see WiC45 for more on this state holding company). As the China Daily points out: “it underscores the country’s ambition to be a world leader in new energy vehicles… The establishment of a national team to promote electric cars is of great significance to China’s ambition to make the leap from being the world’s biggest auto market to its greenest one.”
As an act of industrial policy some may draw comparisons with Japan’s MITI in its heyday of steering its own national industry to global success. What could make the alliance all the more powerful – aside from its combined financial resources – is the fact that it is combining all the constituent parts required to build a green vehicle industrial chain. The alliance contains two major carmakers (FAW and Dongfeng) and likewise the two top power grid operators (essential to building the battery-charging infrastructure around the country). Additionally it includes the country’s three oil majors – a sensible move, since outside the tent they’d have a vested interest in thwarting vehicles with no need for petrol.
According to the Economic Observer, Sasac says the ‘electric vehicle union’ wants to scale up to a production capacity of 6 million electric cars, and reach this level within a decade. “The union is a good attempt to unify standards and resolve technical issues,” says Wang Binggang, a senior figure in the National 863 Programme, a government body charged with high tech research.
Not everyone seems happy about the new union. Apparently SAIC is displeased. Currently the largest domestic vehicle maker, SAIC has announced its own investment plans of Rmb12 billion for new energy vehicles. It is also a state firm, but is owned by the Shanghai branch of Sasac and is thus not a ‘centrally-owned’ company – and not one of the portfolio of 125 companies under ‘central’ Sasac in Beijing. The bureaucratic complication has led to its exclusion and boss Hu Maoyuan worries that it could lose out as a result to rival First Auto Works (FAW).
There is also a worry that the alliance will crowd out the private sector. BYD, controlled by Wang Chuan-Fu (see Chinese Character, WiC25), is notably absent from the alliance. It has been the highest profile of the country’s green carmakers, in large part because Warren Buffett owns a 10% stake. But its rollout of all-electric vehicles has been slower than anticipated. While it may have a headstart in battery technology, competing with the Sasac-engineered union could prove a challenge. It may even threaten the Sage of Omaha’s investment returns.
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