The New York Times last week reported that China plans to boost its annual production of electric and hybrid cars to 500,000 in the next two years from just 2,100 last year. In the report by Keith Bradsher, the author of High and Mighty: The Dangerous Rise of the SUV, he states: “The goal, which radiates from the very top of the Chinese government, suggests that Detroit’s Big Three, already struggling to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today.”
The Indianapolis Star picked up the story and pits China’s electric car industry directly against economic efforts in Indiana. Brook Tuttle, the president of Indiana-based LHP Technologies, is quoted, “When China gets behind a project, Katie bar the door, because they are going to accomplish it.” The Indy Star reminds us that Central Indiana was the heart of General Motors’ battery research for more than 70 years, and the home of an EV-1 research center where “hundreds of engineers put their brains around the problems of converting electricity in batteries to fuel for a car.”
Warnings about China’s super-efficient vehicles are not new. In 2007, Gal Luft, executive director of the Institute for the Analysis of Global Security, wrote an essay “China’s Sputnik,” published in the San Francisco Chronicle. He warned: “China is now on track to provide our auto and energy sectors with what the Soviets provided our weapons and space industries—a jolt. If a Chinese Sputnik is what’s needed to awaken Detroit and Congress to boost investment and speed up the commercialization of vehicles that run on clean and cheap non-petroleum fuels, then so be it.”
Hold the phone. Before we could get too worked up about the latest Chinese plug-in hybrid, or announcements about ground-up electric and hybrid cars debuting in China in a few years, consider two points:
- 1. Chinese cars are not yet safe enough for US markets.
Chinese cars continue to fail miserably on safety tests. The reputation for quality is even worse for Chinese rechargeable lithium ion batteries, which have to be proven safe and reliable before hitting mainstream markets. In fact, the Wall Street Journal reported last week that SAIC Motor Corp., one of China’s biggest state-owned automakers, is turning to American technology suppliers to engineer its hybrid. SAIC is planning to use batteries from Massachusetts-based A123 Systems and parts from Michigan-based Delphi Corp. China could eventually solve its safety and quality problems, but that could take a decade or more.
- 2. Chinese electric cars are too expensive for domestic markets.
According to the New York Times article, the Tianjin-Qingyuan Electric Vehicle Company will begin offering its all-electric Saibao midsize sedan this autumn—using a car body from a gas-powered sedan that normally sells for $14,600. But the battery pack and electric motor for the vehicle is expected to cost $14,000, according to Wu Zhixin, the company’s general manager. At nearly $30,000, the Saibao EV will be out of range for Chinese consumers, even with a government subsidy of $8,800.
There’s a reason that Ford and Chinese automaker Changan are in negotiations to develop an all-electric car for the US market. And it makes sense that in September 2007 the US Department of Energy signed a five-year agreement with China’s Ministry of Science and Technology to promote large-scale deployment of next-generation vehicle technologies in both countries. Many other Sino-American collaborations are in the works. For now, we don’t need to worry too much about China’s nascent hybrid and electric car industry.
China faces an uphill battle to boost its electric and hybrid production capacity by any significant percentage. And the bigger issues of safety and cost will take many years. Meanwhile, Japan and South Korea—countries with powerful and mature auto industries and trustworthy battery-manufacturing capacities—are well on their way to making hybrid and all-electric vehicles by the millions. When the economy bounces back, Toyota, Honda, and Nissan might be unstoppable forces in the US hybrid and electric car market. If US automakers can compete against those hybrid giants, then China will be of little concern.