With meaty statements the Chinese government in 2010 aimed for the leading position in electric mobility. Today one might ask oneself what happened to the grandiose plans of leap-frogging the worlds carmakers and having over half a million battery electric cars on China’s streets by 2012.

China’s streets today, just as all around the world show a different picture with just a couple of thousand battery electric cars. The German National Platform for Electric Mobility (NPE) shows the new car registrations of China compared to Germany, Japan, and the United States (NPE 2012).

In Beijing it is way more likely to pass by an e-scooter, or one of the seldom hybrid cars than it is to see an actual electric vehicle. The reason, pretty basic, is all about customer demand; people just did not buy the promoted cars for being too expensive as one major reason. A BYD E6 at over 40,000 US-Dollar is not attractive when compared to gas-driven alternatives such as the VW Magotan. At the same time even in the big cities only a couple of hundred charging stations are at place (in total 16,000 of for 2015 planned 400,000 charging stations have been installed until the beginning of 2012). The e-scooters at the same time profit from a ban of motor scooters in certain city centers and the possibility to charge electrical ones at home. For cities in the North such as Changchun at the same time the climate is a deal breaker for the technology of current battery electric cars, eating up battery strength when it is cold.

So what is China doing about the failure of incentives such as the ’10 Cities, 1,000 cars program’?

Basically more incentives, just as extending the buyer’s incentives to plug-in hybrids (for battery electric cars currently 50,000 RMB) (Kasperk et al. 2011). Therewith the Chinese carmakers present plug-in-hybrid cars such as SAIC’s Roewe 550, the Geely Emgrand GE, or Great Wall with its G7.

At the same time, the 12^th Five-Year Plan puts high priority on e-mobility, which is also defined as one of the seven strategic emerging industries by the National Development and Reform Commission. The Chinese Ministry of Industry and Information Technology drafted a plan for the development of a new energy vehicle industry until 2020. The target is still to become the leading electric mobility market of the world. In a first step, intellectual property in the core technologies is build up further. In a second step, from 2015 on the focus is on the development of battery electric cars and plug-in-hybrid cars. About 15 billion US-Dollar flow in all the activities planned, reaching from special funds for research and development in the electric vehicle industry, over demonstration components and projects as well as money flowing into the promotion of the new energy vehicles. Also pilot urban infrastructure projects and the automotive component industry are supported (Li 2010).

The state-owned companies in the fields of automotive, battery, electricity and real estate development also got together in the state-owned enterprise electrical vehicle industry alliance (SEVIA) to coordinate platforms and technology development, planning to invest together another about 15 billion US-Dollar (Li 2010). Already with those two examples it becomes clear, that China is heavily striving towards becoming the lead market of electric mobility. A systematic approach linking different ministries and actions as well as related goals, however is, as in most countries, a difficult task.

New Joint-Venture brands are established to support the further path to e-mobility

Western carmakers are required by the state to set up new joint venture brands, to gain knowledge of how to build a brand on the one hand, but at the same time to transfer further technology knowledge. The new joint venture brands are in most cases used for battery electric cars, trying to profit from incentivizing policies and to gain experience in production processes, as in the case of Denza found by Daimler and BYD.

Earlier this year I wrote about those new joint venture brands, where also the specificity of e-mobility showed up as major goal of about half of the planned partnerships (and of course goal of the government). The joint venture self-owned brands known today with stated plans for electric cars are

• GAC-Honda Everus
• SAIC-GM-Wuling Baojun
• BYD-Daimler Denza
• Chery-Israel Corporation Qoros
• DFM-Nissan Venucia
• DFM-Yueda-Kia Dianyue
• FAW-VW Kaili
• SAIC-VW Tantos

Currently unknown brand names of announced brand launches with plans for electric cars come from BAIC-Hyundai, Brilliance-BMW, GAC-Toyota, and FAW-Toyota.

To turn the power for e-mobility on again, the production of core components is an important key factor

The Chinese government regulates, that at least one of the three core components battery, engine, or power electronics originates from a local supplier (Wen 2012). With the automobile industry requirements in terms of quality, security, and quantity, the establishment of a proper working supply chain is tough in China. Therefore carmakers eager to produce electric cars in China need to qualify relevant suppliers to make use of the already available knowledge in producing batteries. The same accounts for power electronics and engines.

In China, opposed to other countries, the necessary raw materials are available. Rare earth elements such as neodymium are needed for permanent magnets in engines for instance and are mainly produced in China. With the export restrictions, a decreasing export quota for rare earth elements can be shown with data from the Chinese Ministry of Commerce. This implicates also a strengthening of China’s position in producing the rare earth element dependent core components of electric cars.

 Adding up to the core components, China is currently very active in implementing electric busses in many cities. This again could help to improve the chances of a fast break-through of battery electric cars bringing with economies of scale and practical experience regarding the named core components. .

Therewith in my opinion the “Blackout for E-Mobility in China” is only a temporary phenomenon which did not change the goal, but added further activities. Using plug-in hybrids and developing core components towards series hybrids could relieve China’s smog-affected metropolises at least from the daily short distance drives in cars with combustion engine in the near future.

For the advance of Western companies in combustion engines, the car market growth and the resulting increase of oil consumption and air pollution, China has no alternative to inventing individual mobility anew. Still, the new goal of 5 million electric vehicles in 2020 seems more than ambitious.

Kasperk, G., Drauz, R., Wilhelm, J. & Laeuppi, U. 2011, Internationalization of Chinese Automobile Companies, Lulu, Raleigh.

National Platform for Electric Mobility (NPE), 2012. Fortschrittsbericht der Nationalen Plattform Elektromobilität, Federal Ministry of Environment, Nature Conservation and Nuclear Safety, Berlin.

Li, G., 2010. Outlook of the planning for new energy vehicles – the goal to be number one in 2020, auto.sina.com.cn.

Wen, M., 2012. New energy automobile focus of politics, auto.sina.com.cn.