Elon Musk’s prediction is that steering wheels will virtually disappear within twenty years, because most people will be transported in autonomous vehicles.
“It will be like having a horse,” the Tesla boss explains. “There will be people who have non-autonomous cars, like people have horses. It would just be unusual to use that as a mode of transport.”
For China’s electric car market the future is already here, however, and Ford is the latest foreign manufacturer to try to prepare for some transformative changes next year.
Last month, it announced that it had signed an MOU with Anhui Zotye, an electric vehicle (EV) specialist which sold more than 16,000 in the first seven months of the year, or 56% more than the same period in 2016. Nonetheless China Daily suspects it’s a case of Ford putting some pressure on its existing joint venture partners Changan Auto and Jiangling Motors. An insider close to the talks told the newspaper that the Anhui Zotye deal may well be a negotiating tactic along the lines of, “If you don’t work with me, I can readily find another partner”.
Ford is a late entrant to China’s EV market and needs to rev up its ambitions quickly. The government’s looming points system will require manufacturers to register 8% of their new sales as EVs by 2018, or pay a carbon tax penalty. That explains some of the urgency surrounding the most significant new EV tie-up between Renault-Nissan and its longtime partner Dongfeng Motor last month, with the Financial Times describing the deal as going “further than other [EV] joint ventures because the groups have agreed to share a technological platform”.
In fact, the FT points out that the new carbon tax and upcoming quotas on sales are forcing the foreign carmakers into an unenviable choice: transfer their technology to their Chinese joint ventures or stagnate in the world’s biggest car market.
Bill Russo, head of Gao Feng Advisory in Shanghai, told the newspaper that the new rules are a “game changer” as the foreign firms “must comply with a new set of regulations for both component localisation and credits for EV sales in order to be in the game”.
“As carmakers will be required to pay fines if they are not selling EVs, they will be required to add EV production in order to sustain their existing businesses in China,” he predicts.
Fellow auto expert Michael Dunne agrees that the new regime “forces” the foreign firms to “bring their best EV technology to China”.
Past experience involving bullet trains suggests that this kind of transfer doesn’t always end well for the overseas parties. But they don’t have much choice, given their reliance on the vast China market. The powerful troika of Audi, BMW and Daimler depend on China sales for a quarter to a third of their global revenues, for instance.
It’s not that the market for electric cars is a guaranteed path to profit. Denza, a 50-50 partnership between BYD and Daimler, has been unprofitable since 2014, when its sole EV model was introduced. As recently as May the German company and its partner ploughed another Rmb1 billion into the flailing brand, which posted a Rmb1.3 billion loss in 2016.
China Auto News says the marque has been beset by high prices, slow upgrades and a perceived lack of enthusiasm from both of its manufacturers. The launch of Tesla’s forthcoming Model 3, which is rumoured to be priced in a similar bracket, is likely to dent Denza’s prospects further
That said, BYD reclaimed China’s EV crown with the month’s best selling vehicle in July – its new (own brand) BYD Song, which shifted 5,069 units. Cumulative sales of 227,000 EV cars have been reported in China over the first seven months of the year.
Nearly 24 million cars were sold in total last year, however, so (theoretically) around 1.9 million EVs will need to be sold in 2018 to meet the quota. The challenge of more than quadrupling EV sales has led the German government to lobby on behalf of its car firms for a delay on the policy till 2019, says Reuters.
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