The growing population, limited oil supply, and governor’s inclining attitude toward large investment projects have led many auto makers to believe the Chinese market has much great potential to cultivate. According to central authority close to the matter, the Chinese government hopes to see 0.5 million electric vehicles on the road by 2015 and 5 million by 2020.
If the estimate materializes, it will account for 5-10% of the domestic new car purchase by 2020. That is why many auto makers are now keen to break into the market now. However, the cost of establishing market shares in China may increase since the Chinese government, historically speaking, does tend to protect domestic industry by imposing laws on foreign companies to share their intellectual properties and technology achievements with domestic counter partners.
However, EnergyTrend takes a conservative attitude toward this optimistic number and thinks the estimate might be compromised as the guidance published in the end of 2010 stated the goal of 1000 electric vehicles in 25 cities by 2015 which will only total 25000 units.
Nissan and Renault recently released a new series of electric vehicles. Carlos Ghosn, Chairman and CEO of Nissan, pointed out that he will make decision on the number of new vehicles to be manufactured in China after more detailed policy is known. For example, the subsidy might be capped or eligibility might be limited to domestic companies.
The current Chinese market leader is BYD Auto of which Warren Buffet is one of the largest shareholders. However, BYD Auto is also troubled by product launch delay. The new company’s e6 was scheduled to release last year in America but is now still not ready.
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One way to stimulate the market is enforcing adoption of more electric vehicles for taxi and government uses. However, it is harder to persuade consumers to switch to electric vehicles. Electric vehicle makers usually stress how far their automobile can travel without having to recharge the battery again. But the fact is that the travel distance may be shortened by 1/3 if the air conditioner is turned on or sudden acceleration is constantly applied.
China's Prime Minister Wen Jiabao says the technology and product development direction of some emerging industries such as new energy vehicles and the ultimate goal are rather unclear at this stage. For example, is hybrid EV or pure EV the future of auto industry?
He pointed out that the technology development of hybrid EVs has shown progress but still lags behind developed countries. Pure EVs are still at research phase, much of required core technology and auto parts must come from import. There are still many issues including development of core technology, investment, and policy to be addressed before the development of EVs can proceed to the next level.
Prime Minister Wen states it is paramount to accelerate the technology development of various industries, transform the economic composition through technology innovation and utilize advanced technology to upgrade traditional industries. He reports China imported 240 million barrels of oil in 2010 which calculated to be 55% of oil dependence. He believes that the next five years are important for adjusting the economic structure.