“We are not trying to save the world, we are making money.”
Those were the words of Henry Li, head of Build Your Dreams (BYD) Auto’s export and trade division, as he spoke about the staggering growth of his company which launched one of China’s first electric saloon cars earlier this year. Now, BYD is set to conquer America.
Last week the company announced that it would bring its five-seat E6 electric car in small numbers to the US next year. The vehicle, which takes seven-nine hours to fully recharge and has a 250mile range, will be made available to “government agencies, utilities, and maybe some celebrities” as the company part-owned by Warren Buffet bids to raise brand awareness.
However, anyone who thinks that this is just another upstart company looking for its big break needs to re-evaluate – because it’s clear that China means business in the green car race.
How China plans to dominate the electric car race
In April this year, the Chinese government adopted a plan aimed at turning the country into one of the leading manufacturers of both hybrid and electric cars. Its goal was to be one of the top producers of green cars within three years and a world leader in both electric cars and buses after that.
Though China is clearly way behind the US and Japan in terms of producing petrol powered cars, it hopes to get a jump start on the opposition by skipping this technology and focusing on electrics. Beyond manufacturing, subsidies of 50,000 yuan were offered to taxi fleets and local government agencies in 13 cities for each hybrid or electric vehicle they purchased, while research subsidies were also increased.
Home field advantage
By focusing on the domestic market, China will have a clear advantage in one of the world’s fastest developing economies. Electric cars have practical advantages in China where intercity driving is rare and models that have speeds of 60mph and a range of around 120miles between charges are more than adequate. What’s more is that first-time car buyers make up four-fifths of the Chinese market, and these buyers have yet to grow accustomed to the power and range of petrol cars.
There are environmental incentives too. According to consultancy McKinsey, China’s car market will grow ten-fold from 2005 to 2030 which will increase demand for petrol and diesel from 110million tonnes to 500million tonnes, prompting a sharp rise in carbon emissions in a country that has already overtaken the US as the world’s biggest source of greenhouse gases. Even with a large scale uptake of the new technologies, which could cut emissions by as much as 19 per cent, it is still expected that there will be a four-fold increase in emission levels over the next two decades.
It seems that every few weeks there is news about China upgrading its transport and energy infrastructure with Chery Automobile unveiling the S18EV just last month, which has a range of 150km on a single charge. Xinri Electric Vehicle has also started building an industrial park capable of producing five million electric scooters and bicycles a year; while Tainjin-Qingyuan hopes to beat BYD to the punch with the launch of an electric saloon car in the autumn called Saibao.
Why BYD is positioned to conquer
Of all the emerging Chinese auto manufacturers, BYD Auto appears best placed to emerge as a new super power in auto manufacturing.
The company, which makes about a third of the world’s mobile phone batteries, grabbed the limelight last year by beating Toyota and General Motors to the punch by launching the world’s first mass-produced plug-in hybrid electric vehicle. By February this year it had sold 28,000 cars in China, more than any domestic or foreign rival, and now the E6 is set to be released before the mass-produced electrics from Honda and Nissan.
Our verdict
China, and BYD in particular, have set some ambitious targets despite the fact that there remain questions over the environmental advantages of electric cars particularly given the country’s reliance on coal. The development of renewable energy alongside electric cars may hold the key to the country achieving its goals.
Nevertheless, such strong government support for its own manufacturers to surpass foreign automakers should not be ignored. China may have a long way to go to catch up with its more well-established opponents but its explosion into our consciousness suggests that its rivals in the US and Japan may need to act quickly before this relative unknown sets a pace they may not be able to keep up with.
