'Green' plans going nowhere fast
The mainland's supercharged plans to promote battery-powered and hybrid-electric cars are without doubt the most ambitious in the world. But Beijing's dreams of leading a global green-vehicle revolution have in recent months received a jolt of reality.
Last year, top policymakers rolled out an electric-car programme that can only be called grand: the government pledged to spend 100 billion yuan (HK$122 billion) to get 20 million 'green' cars on the road by 2020. The goal included 5 million cars capable of running on batteries alone some or all of the time.
To that end, officials showered benefits on consumers willing to get behind the wheel of a cutting-edge car. Since June 2010, private buyers of electric cars in selected cities have received subsidies of 60,000 yuan to 120,000 yuan per vehicle.
Beijing's thinking was that only a programme of such dramatic scope could bring change on the scale needed to improve energy independence and curb air pollution in the world's most populous nation.
The emerging nature of electric-car technology also offered the mainland a chance to get in on the ground floor and compete on equal footing against established foreign car giants in a sector most analysts expect to be central to the industry's future.
However, the road to green-car dominance has been paved with false starts and technological setbacks. Now, just one year into the mainland's groundbreaking 10-year plan, policy leaders at the highest levels appear to be mulling a major course correction.
'It remains uncertain whether hybrid and electric cars, which are now the focus of much of the development, will be the winners in the end,' Premier Wen Jiabao wrote last month in Qiushi Journal, a top Communist Party policy magazine. 'Hybrid cars have made some progress, but the technology still lags behind developed countries by a large margin.
'Development of electric cars is only just getting started,' Wen continued. 'The next step in the development of new-energy vehicles needs to resolve these problems: problems with their technical path, problems with core technologies, problems with investment, problems with policy support - all must be addressed as quickly as possible.'
The comments were the first by a top mainland official to question openly what most policymakers, carmakers and overseas observers assumed was China's unswerving goal of becoming the world's biggest producer and consumer of 'green' cars.
To understand the challenges of meeting the mainland's ambitious targets, look no further than BYD Auto. The Shenzhen car and battery producer has been seen widely as the flagbearer for China's drive into the green-vehicle market.
In early 2009, BYD appeared to beat out global rivals including General Motors, Nissan and Toyota when it premiered the world's first plug-in hybrid car and the mainland's first all-electric car at the international car show in Detroit, Michigan.
The American financier Warren Buffett bought a 10 per cent stake in BYD and appeared grinning on the cover of Fortune magazine at the wheel of the company's e6 electric car. 'Buffett hasn't just seen the car of the future, he's sitting in the driver's seat,' the magazine said.
Two years later, the future still looks a long way over the horizon.
BYD disclosed in a May listing document filed with the Shenzhen stock exchangethat it had sold only 365 of its plug-in hybrid car, the F3DM, since its launch in February 2009. Similarly, the company had unloaded a scant 53 battery-powered e6s since March 2010.
More tellingly, nearly all the e6s went to an experimental electric-taxi company in Shenzhen 45-per-cent-owned by BYD.
Nationwide, more than 10,000 electric and hybrid vehicles have been sold in the past two years, mostly to governments and state firms for trials, the Ministry of Industry and Information Technology (MIIT) said last month. Less than a tenth went to private buyers.
In total, 25 cities approved for pilot electric-vehicle programmes have built close to 100 charging or battery-swapping stations with more than 4,500 charging poles. But it's unclear how much use the new facilities are actually getting [see sidebar].
BYD has blamed the slow uptake on a lack of battery-production capacity, even as others globally begin to wonder whether consumers have enough interest to support the green-vehicle goals of world governments.
In the US, consultancy J.D. Power and Associates expects Nissan's all-electric Leaf, GM's plug-in hybrid Chevrolet Volt and other such cars - now halfway through their first full year on the market - to account for just 0.1 per cent of all light-vehicle sales in 2011.
But if, as Wen suggested, the mainland's nascent new-energy vehicle industry is still too reliant on Western know-how, it also appears to be struggling to figure out how that know-how is applied.
Last month, an electric passenger bus caught fire in Shanghai. No one was injured, although the passenger compartment suffered significant burns. Three months earlier, an electric taxi burst into flames on the streets of Hangzhou . In both cases, the problem appeared to originate with the battery.
The more mundane technical challenges to designing, making and operating electric vehicles have also been a source of growing debate and inter-agency squabbling.
Last month, Li Gang, who heads the machinery and equipment office of the National Development and Reform Commission (NDRC), faulted the 'garbage technology' used in low-speed electric cars and dismissed the prospects of such vehicles as 'hopeless'.
Articles in response quoted Hou Shiguo, a former deputy director of the MIIT's industrial policy department. Every industry needs to start somewhere, Hou argued.
Meanwhile, the government has repeatedly delayed the release of details about its 2020 programme.
'There are too many differing interests involved here and a lot of the biggest companies are going in different directions, so there will be some conflict in deciding what direction to take,' J.D. Power analyst Marvin Zhu said.
'The NDRC and MIIT also appear to be arguing with each other and I haven't seen any signs that one side will give way to the other,' he continued. 'The matter isn't likely to be resolved soon.'
Chinese consumers' own attitudes towards electric vehicles appear mixed. A survey published in April by the consultancy Deloitte found an overwhelming 93 per cent of mainland respondents would either be willing to consider buying an electric car, or would definitely consider doing so.
Less promising for the high-priced technology: 51 per cent of those who might buy expect electric cars to cost the same or less than their petrol-powered predecessors.
While 19 per cent would accept paying a premium of 3,400 yuan for an electric car, that falls far short of the current markup. Even after 120,000 yuan in national and local subsidies, BYD's e6 electric taxis still sell for about 180,000 yuan - double the cost of your standard gas-guzzler. Perhaps the biggest challenge to establishing the electric car in China stems not from technology but their source of energy. Electric cars are only as clean as the power grid they plug into.
A background paper for the UN Commission on Sustainable Development helps undermine the claim that electric cars are greener when they feed off China's dirty coal-fried grid.
The May study by the Innovation Centre for Energy and Transportation calculates the 'well to wheel' emissions from an all-electric Nissan Leaf charged from the mainland grid and pits those against the emissions from a comparably sized Nissan Tiida. A manual-transmission Tiida - manual transmissions account for 70 per cent of cars sold on the mainland - consumes 7.3 litres every 100 kilometres.
The results are shocking: on average, the electric Leaf emitted 207.3 grams of carbon dioxide per kilometre, while the Tiida emitted 188.7 grams per kilometre. In other words, the petrol-powered car spewed 9 per cent less pollution into the air than its 'green' counterpart.
'In some regions, electric vehicles are not an environmentally friendlier technology, particularly in terms of greenhouse gas emissions, because of the electricity which powers them,' the report said.
'This technology is not necessarily a 'green' technology.'
Number of cars - both electric- and petrol-propelled - China expects to have on the road by 2020, more than double the number last year