New energy vehicles are one of China’s seven strategic emerging industries. Unlike its other “new energy” counterpart industries, NEVs, and electric vehicles in particular, are still waiting for commercial breakthrough.
China’s clean energy targets are usually just temporary placeholders. Targets for wind and solar power installed have been met, surpassed, and updated numerous times. New research from Bloomberg New Energy Finance (BNEF), however, suggests that China’s 2015 and 2020 targets for electric vehicle (EV) rollout will not be met due to “weak capability throughout the supply chain.” China has become a dominant force globally in wind and solar manufacturing and deployment; their supply chains are capable albeit recently consolidated with wavering demand in an oversupplied market. So why is that EV’s may not find similar success? Read the full story
Energy Price Reforms
NDRC announced that it would be removing price caps on coal from next year in a move towards a more market-driven price mechanism. This move comes at an opportune time when coal prices have dropped by 30 to 40% since the summer, but GLF points out an earlier post (see finding #4) on a recent MIT coal report that suggests the upstream coal industry has already moved towards a de facto market price system. Although the NDRC move “is a step in the right direction,” Huang Shengchu, president of Beijing-based China Coal Information Institute says in this interview that government macro-control is still needed to protect the rights of various coal stakeholdres in their contractual dealings with each other, accerlarate industry consolidation of the many small and inefficient mines and to set up a coal price index.
Separately, the proposed auto fuel price reform kicked in earlier than expected. So it turns out that the answer to our confusion (see earlier post) of how the government proposed to hike up taxes and keep fuel prices even was that they would adjust the base fuel price downward, predicated on Read the full story
GLF has been traveling and getting a little caught up on side projects, but let’s play some catchup. Let’s pick things up with two specific appointments by President-elect Obama which have implications for U.S.-China energy relations–one being the 1997 Nobel Prize Laureate Dr. Steve Chu of Lawrence Berkeley Labs (LBL) as the new Secretary of Energy, and the other being Dr. John Holdren, physicist and energy technology policy professor at Harvard and Director of the Woods Hole Research Center (whom yours truly had the pleasure of meeting in the copy room as a policy intern there way back in 2003) as the White House science & technology adviser.
Besides being a director of LBL, Dr. Chu (pictured right) is also a professor of physics and molecular and cell biology at Read the full story
Legendary investor Warren Buffet has had a busy, busy, busy week. (That’s one “busy” for each of the high profile deals he has made and he certainly deserves to take a seat after that, as pictured, if even for a brief moment.)
In the midst of a financial meltdown in Wall Street, Buffet’s Berkshire Hathaway made bold investments in Goldman Sachs, Constellation Energy (which has a nuclear energy storyline) and now BYD Auto, the Shenzhen-based maker of batteries and electric vehicles that this blog has profiled a few times. From Green Car Congress:
MidAmerican Energy Holdings Company, a Berkshire Hathaway Inc. subsidiary, will purchase 225 million shares, representing approximately a 10% interest, in China-based BYD Company Limited. BYD’s corporate focus is researching, developing, manufacturing and selling rechargeable batteries (Li-ion, Nickel batteries), automobiles, electric automobiles and related products. The investment is valued at 1.8 billion HK dollars, or approximately US$230 million. Read the full story
Earlier this spring this blog identified an upstart Chinese auto company called BYD Auto that is, despite is short operating history in the auto industry, introducing one of the most innovative automobile makes in the industry—a fully commercial electric car—ahead the likes of established auto giants like General Motors (and its flagship electric car make—the Chevy Volt). It was reported earlier this month that BYD Auto will start selling its fully electric E6 and plug-in hybrid electric F6DM models in Israel in 2009 (ahead of the commercialization of GM’s Chevy Volt, which will only start being produced in 2010).
Israel is a logical market choice, given Israel’s new embrace of the electric car revolution and its plans to, through Project Better Place (a groundbreaking initiative led by former technology-entrepreneur Shai Agassi) and the aid of tax incentives, build a nation-wide electric car network by 2011. In simple terms, such an infrastructure consists of plug-in electric cars supported by advanced battery technology, a network of recharge stations and battery exchange stations, and a smart grid fed with renewable energy.
I was initially skeptical of the true sustainability proposition of hybrid and electric car innovations. In a previous post, I argued that disruptive technologies, by themselves, offer little by way of sustainability if not integrated into the improvement of a greater whole at the systems-level. Thus, it is not enough to push the sales of fuel efficient cars if such a marketing blitz adds more cars on the road and further encourages urban sprawl. However, in that post, I did not discuss the potential for grid-tied plug-in electric vehicles (whether fully electric or of the hybrid sort) to transform our fossil fuel energy system into a renewable and cleaner one.
An Energy Crossroads
The green proposition of electric cars, especially the plug-in variety, is that by promoting the development of electricity generation and energy storage technology development (in the form of energy storage devices such as batteries), electric cars are not only reducing the need for gasoline, but also creates pull factors for the development of grid-connected renewable energy sources such as solar and wind energy by creating new electricity demand and provide energy storage solutions to address the problems of the intermittent nature of solar and wind power. In essence, individual electric cars, each equipped with their batteries, apart from serving as energy storage devices for the use of the car, could serve as energy reservoirs for the grid system, and even feed (and sell) back electricity to the grid if the vehicle is not in use.
Here then is a truly disruptive system, arranging discrete disruptive technologies (electric cars, advanced battery systems, a network of batter recharge stations, an integrated electricity grid) into a cohesive whole. The plug-in electric vehicle is symbolic of the energy crossroads between sustainable transportation and renewable grid power A more detailed explanation on how this renewable energy transformation is enabled by electric cars can be found on here on Better Place’s website.
It was initially unclear if BYD’s entry to Israel would be in collaboration with or competing with Project Better Place. Given the inter-operability of Better Place’s network (website: “Cars outside the Better Place model can re-charge their batteries as “guest vehicles,” so long as the driver acquires an easily-installed converter.”), it would make sense for BYD cars to take advantage of such infrastructure. A separate report suggests, however, that BYD might be building a competing infrastructure with certain Israeli partners. We shall see soon enough how this pan out.
Ahead of this Israeli market entry, BYD plans to launch the sale of grid-independent (i.e. non-plugged in) hybrid electric vehicle, the F3DM, later this year.
Big Cars, More Tax
On the transportation policy front, most of the traffic measures put in place for the Beijing Olympics have, as expected, proved to be short-lived. But the Beijing authorities continue to show their commitment to mass transit, reassuring that fares for public transportation will continue to be maintained at their current low levels to encourage use.
Separately, the Ministry of Finance is relying on tax measures to influence the auto purchases of consumers. Beginning September 1, taxes on bigger cars will be raised while those on smaller ones will be reduced (see diagram right for details). While the stated purpose of the higher taxes is to decrease fuel consumption and pollution, a closer look at the history of taxes on cars in China suggests that this may be more a protectionist move rather than a green one.
The Geneva-based World Trade Organization, based ruled against China this past July on its previous tax measure of preferential tax rates for domestically produced cars violated international trade rules. The newly revised tax rates do not explicitly single out foreign cars over domestic cars, but it just so happens that the smaller cars are mostly dominated by local manufacturers while larger cars are imported. The Economist wryly observes:
China’s new tax is canny. It cuts fuel use, reduces imports, benefits local carmakers and may help to improve air quality. It also prevents any more pesky calls from Geneva.
After writing my post on China car culture, I just had to check out the Beijing Auto Show show for myself. Green was the theme, and nearly every car maker had a “green car” to boast about, whether it was a hybrid car, plug-in electric, or simple more fuel efficient variety. In most cases however, these “green cars” were nothing more than concept cars, and I wonder what proportion of these will every hit the market. I was irked that none of the informational plaques accompanying each car disclosed information on fuel efficiency. I was greatly impressed by the number of Chinese auto makers, and I’ve been told that the floorspace of this year’s exhibition has doubled to 120,000 square meters over last year’s floorspace (unverified). Symptomatic of the explosion of the Chinese auto industry since China joined the WTO in 2001. This blog piece by Jack Perskowski, CEO of auto-components manufacturer Asimco Technologies, tracks all the recent numbers in the Chinese auto industry.
I would like to talk about some of the green car technologies that I had the pleasure of seeing, and then in my next post, I want to crush all your hopes by telling you that none of this really matters by sharing and critiquing a brief exchange I had with Jack Perkowski himself at a talk I attended that same evening I attended the auto show.
Rising oil and commodity prices are driving the shift towards smaller, more fuel efficient and economical cars, as this piece identifies. My observations at the auto show backed this up. Every Chinese automaker had at least a few makes of mini cars.
Great Wall Goes Mini
In my ignorance of the Chinese auto industry, I had not previously heard of Great Wall Motor Company before, but apparently, they are among the top 3 independent (i.e. no JVs with foreign makers) automakers in China together with Chery and Geely. According to Wikipedia (of course!), Great Wall is “the first privately owned auto company of China listed on the Hong Kong stock market and has obtained HK$1.7 billion of financial investment.” Great Wall has an annual production of 400,00 vehicles, primarily through large-sized sports utility vehicles (SUVs) and crossover SUVs (CUVs). In order to grow market share, however, the company is undertaking a strategy of making more smaller cars in order to conform to changing consumer tastes. I had the chance to see some of these smaller cars.
The Great Wall Mini SUV (right) is the smallest SUV in China, featuring a 1.3 litre engine, supposedly with all the four wheel drive and other features of an SUV. I was honestly surprised it was an SUV, thinking it to be a rugged-looking version of the GWKULLA. This Mini SUV meets Euro IV emission standards. To put this in perspective, China is only adopting Euro III standards this coming July.
Finally, the GWPERI EV (below), a four-sear all-electric car that uses a permanenet magnet brushless DC motoro and adanced lithium ion batteries was on exhibit. It has a top speed of 130 kmh and can travel up to 180 km on a fully charged battery.
Of course, I have no idea what the exact fuel efficiency of the GWKULLA and Mini SUV are as this information was not disclosed. Nor do I have any idea it any of the above three cars will eventually make it to market.
Build Your Dreams
I hadn’t heard of BYD Auto either. In this case, however, I would probably be forgiven, for BYD Auto did not exist 5 years ago. BYD also stands for “Build Your Dreams”, the company’s mantra. The BYD Company started in 1995 to become one of the world’s leading makers of lithium ion batteries that are commonly found in mobile phones, and went public on the Hong Kong exchange in 2002. It did not get into the auto game until it acquired Shaanxi Qinchuan Auto Company Limited in 2003. It has since sought to capitalize on its competencies in the battery market to focus on building cars with battery-based engine systems, i.e. hybrids and electric vehicles.
At the Beijing auto show, I caught a glimpse of the darling of the F6DM, that made waves at the Detroit auto show earlier this year, as well as the e6, that was making its debut. The superiority of BYD’s cars come from its lithium iron phosphate batteries (or simply known as Fe batteries), which are to be distinguished from the lithium ion batteries that are found in most other electric/hybrid vehicles. The Fe batteries allow for a must quicker recharge, and lasts longer (see this piece that suggests it can last for 2,000 charge cycles) and can be easily recycled.
DM stands for dual mode. The F6DM (above) is an plug-in electric vehicle that incorporates a pure electric driving system and a hybrid electric driving system. Its Fe battery allows for a 50% quick charge in a mere 10 minutes, and can reach a maximum speed of more than 150 kmh. The F6DM will begin production this year, targettng the China market. It may hit the U.S. market in 3 to 5 years according to BYD Chairman Wang Chuanfu.
Debuting at the Beijing auto show was the new pure electric e6 (above). It can reach maximum speeds of 160 kmh and its lithium iron phosphate battery can be quick charged to 80% in a mere 15 minutes. BYD claims that the e6 will have a range of 300km, making it the longest range among all pure electric vehicles in the world. According to a Wall Street Journal article:
BYD Auto’s e6 electric vehicle, in part because of its relatively high price and the need to be plugged in relatively frequently to charge the car’s sizable on-board batteries, will initially be more ideal for use as taxis and other feet vehicles. The “feasibility” of the e6 is “very high as a taxi,” Mr. Wang [Chuanfu, chairman of BYD] said.
The e6 will hit the Chinese market in 2009 or 2010, and will be priced at about RMB 200,000 (about US$28,500) while the F6DM at about RMB 150,000 (about US$21,500). Not bad considering the prices of foreign-made hybrids being sold in China, as discussed in my earlier post.
Exciting stuff, but I’m not sold. I’ll tell you why in my next post.