Electric vehicles

FAW eyes sales of electric vehicles in China's most polluted cities

PUBLISHED : Thursday, 01 May, 2014, 11:51am
UPDATED : Thursday, 01 May, 2014, 11:36pm


FAW Group, the mainland's third largest carmaker, hopes to sell several thousand electric vehicles by next year, especially in cities choked by smog, after launching models at last month's Beijing Auto Show.

"We will first target cities that are under the greatest pressure to cut air pollution, particularly those that have set limits on new [non-electric] car licences," Dai Dali, general manager of the Changchun-based firm's new energy vehicle unit, told the South China Morning Post.

They include Beijing, Tianjin, Shanghai, Hangzhou and Guangzhou, where buyers have to bid or join a lottery for the right to buy.

Shenzhen is also a prime target as it has one of the nation's biggest networks of recharging stations and policy backing for electric vehicles, while Chongqing and Chengdu's large market size is also attractive to FAW, Dai said.

Philip Securities analyst Zhang Jing said in a research note that the "no-queue" licence plate policy for electric vehicles is equivalent to a large "invisible subsidy".

FAW, a 60-year-old state-owned carmaker formerly known as First Automobile Works, spent about 100 million yuan (HK$126 million) in 2010 to build a production base for electric vehicles with an annual output capacity of 20,000 cars.

Since production started in 2011, it has made about 300 cars on a trial basis. They have been used as taxis and government vehicles in the northeast where coal consumption is at its highest.

"We have accumulated ample experience in electric vehicles' batteries recharging and maintenance in extremely cold climates," he said. "We hope to sell several thousand units by next year."

He said the marketing of new energy vehicles has been constrained by lagging construction of battery recharging infrastructure, and FAW is taking part in efforts to boost demand instead of relying on government policies.

To build its market presence, FAW is providing subsidies to some users to set up battery charging facilities where they live. It plans to build 10 charging stations in Changchun, each with 10 to 20 chargers, Dai said.

The Changchun government, through the local power grid company, plans to build 30 charging stations for public transport in two years. It plans to build a total of 5,000 charging stations, including those for private cars. Despite a lack of investment in the nascent battery recharging business, Dai said FAW is willing to "get its hands dirty" to better understand the market.

"The [financial] return on independently invested recharging stations is very low, but this does not mean it won't be lucrative in the future," he said. "We are also looking at the business model, that's why we are building some charging stations ourselves to gain some experience."

He noted China Putian's success as an independent recharging station operator. China Business News last month quoted Putian's new energy unit's deputy general manager Zhang Zhigang as saying its Shenzhen operation has broken even. It also has stations in Beijing, Shanghai and Hangzhou.