Originally published April 24, 2012 at 6:39 PM | Page modified April 25, 2012 at 6:55 AM
China's electric-car leadership dream slow to awaken
In 2009, China announced bold plans to cash in on demand for clean vehicles. But it is finding out it's more complicated than it looks.
The Associated Press
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BEIJING — China's leaders are finding it's a lot tougher to create a world-beating electric-car industry than they hoped.
In 2009, they announced bold plans to cash in on demand for clean vehicles by making China a global power in electric-car manufacturing. They pledged billions of dollars for research and called for annual sales of 500,000 cars by 2015.
But developers have yet to achieve breakthroughs and will be lucky to sell 2,000 cars this year, mostly taxis. The government has hedged its bets by broadening the industry's official goals to include cleaner gasoline engines.
The "technology isn't advancing quite as fast as people had hoped," said Joe Hinrichs, Ford's president for Asia, at this week's Beijing auto show.
The government has yet to lower sales goals of 5 million vehicles a year by 2020. But officials including Premier Wen Jiabao started acknowledging last year that progress was slow and developers need to improve quality instead of rushing models to market.
About 13,000 all-electric and other alternative energy vehicles are being tested in 25 cities, but that is "still small despite government subsidies," the deputy director of the Ministry of Science and Technology's electric-vehicle bureau, Zhen Zijian, said in March, according to the business magazine Caixin.
China's most advanced developer, BYD, in which American investor Warren Buffett's Berkshire Hathaway owns a 10 percent stake, says its electric e6 sedan can travel 190 miles on a charge, similar to Western models.
BYD has sold 300 taxis and 200 electric buses used in the southern city of Shenzhen, a center for business and technology near Hong Kong, according to Henry Li, general manager of its export division.
BYD has invested heavily in research and has thousands of engineers working on battery and motor technology.
Chinese leaders saw electric cars as a way to curb demand for imported oil, which they regard as a strategic danger, and to help transform China from what amounts to a low-cost factory into a creator of profitable technology.
"China has run up against the same technical obstacles as anyone else," said Michael Dunne, president of Dunne & Co., a Hong Kong-based industry researcher. "They said: Hold on, maybe we shouldn't marry ourselves to electrics just yet. Let's look at the alternatives. Maybe we have to take an incremental approach, just like everyone else."
Wary consumers have been put off by news reports of batteries in Chinese-made cars catching fire. A lack of charging stations is causing "range anxiety" — fears a car might run out of power, leaving the driver stranded.
U.S. sales of electric cars have also been disappointing. After a year on the market, electric cars still make up less than 1 percent of total U.S. sales. General Motors fell short of its goal of selling 10,000 Chevrolet Volt electric cars in 2011, ending up with sales just over 7,500. Nissan sold 9,674 Leaf electric cars, also short of its goal of 10,000.
As in China, the lack of a recharging infrastructure and anxiety about the range of electric cars are big barriers for consumers. Cost is another issue. The Chevrolet Volt, for example, costs nearly $8,000 more than the similarly sized gas-powered Chevrolet Cruze. Auto shopping site Edmunds.com estimates it would take a Volt owner six years of gas savings to pay off that premium.
An assistant U.S. energy secretary, David Sandalow, visited Beijing in 2009 and warned that China had "the potential to be ahead" if the United States failed to invest in development.
GM announced plans in 2007 for a $250 million alternative fuel research center in Shanghai. Germany's Daimler teamed up with BYD to create an electric-car joint venture dubbed Denza. They unveiled a display version of its first model this week at the Beijing auto show.
China's 2009 plan called for world-class electric cars by this year, followed by trucks and buses. To encourage buyers, the government started paying buyers rebates of up to $8,800 per car the following year in five cities including Shanghai.
China strained relations with the United States and other trading partners by rolling out rules limiting access to its auto market unless foreign developers shared technology with Chinese partners.
Daimler said their car, due to go on sale next year, should have a range of 125-155 miles on one charge.
Other manufacturers such as Nissan, maker of the electric Leaf, and GM have chosen to pay the higher taxes required to import electric and hybrid vehicles rather than disclose expensive know-how to Chinese partners that might become rivals.
GM is taking orders for its all-electric Volt in China but expects limited sales due to a relatively high price of $79,000.











