China Well-advanced Toward World Dominance in Electric Vehicles
China is well-known for its high levels of pollution and emissions
but what is less well-known is that China is dominating the global migration to
clean technologies, including clean energy and clean transportation.
Nearly 100%
of China’s new electrical generation capacity has for some time now been
sourced from renewables with nearly 2M
people employed in its solar power sector, 690,000 in its solar heating and
cooling industry and 509,000 in its windpower sector.
Now China has also become the disruptive accelerating force for a
global migration of automakers at-large to zero and low emission vehicle. A combination of two factors are playing in
favour of China’s global dominance in this regard.
First, China, as the largest vehicle market
in the world with 28M
new vehicles sold in 2016 compared with 17.5M in the US that year, has the
power to literally dictate the direction of the global auto industry.
Second, with the help of its market power, China
is effectively dictating the direction of the vehicle industry with its quotas
to the effect that 10%
of each automaker’s sales for 2019 must be zero and low emission vehicles
(electric vehicles and plug-in hybrids), 12% for 2020 and 20%
for 2025.
Topping off the stringent quotas, China has the world’s most ambitious Corporate
Average Fuel Economy (CAFE) requirement for 2020 at 5L/100km. CAFE refers to the
average fuel consumption of vehicles sold by a manufacturer in a given year.
China, like India, is also pondering a ban on internal
combustion engines, with 2030 in mind.
In the case of China, it is not if, but when. Apart
from the pollution issue, China wants to end the dependency on foreign oil imports.
China’s automaker BYD, the largest electric vehicle manufacturer in
the world, expects China to have achieved the elimination of lone internal
combustion engine new vehicles by 2030 -- to be replaced with electric, hybrid
and plug-in hybrid vehicles.
Capping its determination to be the global
leader in electric vehicles, as of 2016, 30%
of all light duty vehicles purchased by the Government of China must be
electric.
China’s electric vehicle dominance equally
applies to buses. Of the total of
electric buses presently operational in the world, 98% are on the roads of China. One fifth of all bus sales in China are
electric buses or 100,000 buses/year!
The city of Shenzhen alone now has 14,000
electric buses in its fleet, an accomplishment in less than 5 years. The vast majority of Shenzhen buses are
manufactured by BYD in that city.
Likewise, BYD offers a
full
line-up of electric trucks. The city
of Beijing is now replacing its entire
fleet of sanitation vehicles with 26 different models of BYD trucks.
Contributing to this
impressive China portrait, the ride-sharing service in the country, Didi Chuxing, which in November 2017 had 260,000 electric
vehicles in its network, plans to have 1M electric vehicles by 2020, including
self-driving vehicles.
Summing up, China is well on its way to
achieving its target of manufacturing 2M
eco-vehicle in 2020, with an anticipated 700,000
electric vehicles sales for 2017.
This is coupled with a pending invasion of
Chinese vehicle manufacturers in foreign markets.
Global Automakers Partnering with Chinese Firms
China’s tall order on quotas for zero and
low emission vehicles has got global automakers scrambling. Even
GM sells more vehicles in China than in the US and the same goes for
Volkswagen.
The icing on the cake
are China’s rules of the game that, to sell vehicles in
the world’s largest market, the vehicles must be manufactured in the country
and foreign companies must
have a partner in China.
And batteries
of electric vehicles in the country must be sourced in China. China
is positioning itself for global dominance in lithium-ion batteries.
Exceptions don’t amount to more than 5% of
the Chinese market.
Not surprisingly, in June 2017, Volkswagen
announced that it had partnered with Anhui Jianghuai Automobile Co. (JAC) with the anticipation that this
alliance will deliver 400,000 electric vehicles to the Chinese market in 2020.
In November 2017
Volkswagen revealed it would invest $40B in electric and autonomous vehicles by 2022,
in sharp contrast with its statement of just two months earlier when it said it
would invest $20B in electric vehicles by 2030.
This suggests that a previous Volkswagen projection for 20% to 25% of its sales, or 2M to 3M electric vehicles in annual sales
by 2025 may be conservative.
In an earlier
statement, Volkswagen indicated that it would invest $11B in battery
manufacturing facility in Germany. But rumour
has it that Volkswagen’s first battery facility will be in China.
Then there is the matter of the about-turn of Toyota. Toyota, having originally placed all its zero
emission vehicle eggs in the hydrogen fuel cell basket, has since made a major shift to electric vehicle
technologies to be
ready to comply with the swift and strong emphasis on electric vehicles of the
Government of China. To this end, Toyota
has entered into a Chinese joint venture with China FAW Group Corp and Guangzhou
Automobile Group to
manufacture electric vehicles in that country beginning 2020.
To make up for lost time, Toyota has joined up with Mazda to form a partnership with Denso, a parts
manufacturer, to develop and manufacture electric vehicles under the umbrella
of the new EV Common Architecture Spirit
Company. This company is 90% owned by Toyota. Toyota’s about-turn on electric vehicles also
includes a partnership with Panasonic.
General Motors has set more modest global goals
with the aim to sell 500,000 new energy vehicles/year by 2025. These goals include having 20 entirely electric models by 2023 with two of these vehicle to be
on the market around 2019. Much of this
growth will be associated with the GM partnership with SAIC in China.
As is the case of other manufacturers, Mercedes
is working with a partner for a factory in China, BAIC, to build all-electric cars for the Chinese
market. Another Mercedes Chinese
partner, BYD, will have the joint company build all electric vehicles under the
Denza brand.
To power its electric vehicles, Daimler
announced an €500 million ($590M) investment
in a new battery factory in
Kamenz, Germany via its ACCUmotive subsidiary.
But with market considerations in mind, in addition, Daimler will build
a $740M battery factory in China with its partner BAIC and start
production in 2019 with an electric SUV.
Similarly Ford has committed $765M to produce
electric vehicles with its Chinese partner Zoyte.
Electric Taxis
China’s spectacular shift to electric vehicles includes
taxis. The city of Beijing recently announced to would replace 100% of
its fleet of 70,000 taxis with electric vehicles. Shenzhen
too has plan to covert all of its taxis to electric vehicles.
In effect, BYD’s all electric e-6 cross-over vehicle dominates China’s electric taxi market.
Even the iconic London cab is going electric
with China in the picture, via the newly branded London Electric Vehicle Company owned by Geely, the Chinese owner of Volvo
passenger vehicles. Annual production is
expected to be 20,000 vehicles, specifically, range extended vehicles with
gas generators and Volvo electrified vehicle components. The company is aiming to conquer the European
market and recently sold 225 of its vehicle to stakeholders in Amsterdam. One
can conclude these cabs will eventually be on the Chinese market as well.
One other Chinese speciality electric vehicle,
this one aimed at the taxi market as well, but adds on on-demand car sharing,
is China’s NEVS plug-in hybrid version of the former SAAB
brand. NEVS bought out SAAB and through
a joint venture with DiDi Chuxing, and GEIDCO (Global Energy Interconnection
Corporation) to create GNEVS (Global New Energy Vehicle Service Company
Limited), the joint venture will initially produce 50,000 units/year and up
that to 220,000 units/year.
China’s Electric Vehicles are Coming to a
Market Near You
China’s invasion of global markets with its
electric vehicles has already begun. For
example, BYD has a electric bus and truck manufacturing facility in Lancaster,
California and will be constructing an electric truck plant in Ontario Canada.
BYD will be selling classes 5, 6 and 8 trucks in the North American market and has recently
signed a contract to supply UPS.
Another truck soon to enter the North American
market is China’s Chanje all electric medium duty vans
via a partnership with Ryder Systems, one of the largest truck leasing and maintenance companies on
the continent. Under the partnership,
Ryder will be the exclusive distributor, leasing agent and maintenance service
provider. By the end of 2017, Ryder will
have acquired 125 of these vans.
The next step is bringing China’s electric cars
to the North American market. BYD,
already established as the world’s largest electric vehicle manufacturer, will
eventually be introducing the BYD Qin to this market.
China Rules
China Rules! This applies to
clean energy, electric vehicles and their batteries and one cannot count on the
US and Canada to have proportional shares of the pie.
