Chinese Scare: The Electric Cars Are Coming!

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.”


BYD Auto introduced its E6 electric vehicle at the 2008 Beijing International Auto Show.

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.

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  • Calvin

    It is the battery technology that matters instead of the electric vehicles! Don’t you get it?

    If someone has a battery technology breakthrough, then electric vehicles are no brainers – add one or two electric motors with power electronics in place of the engine/transmission and ECU in a vehicle is not a challenge any more.

  • 9691

    I don’t get it. GM could produce a car in the nineties that ran for 200 miles on old NiCad batteries(EV-1,2 etc.), but now that we have two more generations of batteries nobody can even duplicate that in an economically viable way?????

  • Bob Howard

    We’ll see. It sure offers some compettion doesn’t it?

  • EV-1 Question

    The question why we can’t duplicate the technology we had prior to 1996 with the GM EV-1, killed by Wagnor CEO of GM, is the same question I have had. Brilliiant question. How come we can’t do a repeat, even better than what we had back then 13 years later? The same question goes for our moon landings, how come we can’t do it again? Who destroyed the tooling, and why? Can’t they mothball it like navy ships and give it rebirth later when needed, or politically correct to bring it out again. What a waste of money and resources.

  • Carl

    The problem is- the EV-1 never made a nickel.
    As long as you are happy paying a lot more for a EV, then you can get one now.

  • boycott

    Boycott ALL Chinese goods until the Chinese government can prove to the world it’s not poisoning our food, environment, and the world.

  • Donald Kwong

    China can marshal up their resources (money and people) brute force a solution. Making it high quality and safe will take some time. They need to get away from the cheap mindset to the quality mindset. Once they can do this, all of the other countries will be in trouble. This is part of the evolution path. Taiwan, Japan and Korea have gone through this. Now the next countries will be China, Russia and India.

  • ekiwibird

    This car looks very nice, don’t you agree? It is good thing there will be such affordable green car in the market.

  • Lost Prius to wife

    ekiwibird, a Chinese plug-in hybrid or EV will only be an “affordable green car” if one is not repairing that “affordable green car” every week or buying another “affordable green car” every year to replacement the one that just fell apart. And should people die in one of those “affordable green cars”, while the people in the Ford Focus, Honda Fit, or Toyota Yaris consistently escaped unharmed from a two car pileup, what kind of “affordable green car” sales will one expect to see?

  • Pickey McPickey

    I think what sells that Chinese car is the lady that comes with it. I’m tellin ya!

  • sean t

    We should think how our competitors advance in the future, not just as is.

  • Scott

    I agree with u. Nothing will last for ever. Things are changing. We won’t know the Chinese cars in the next 10-100 years.

  • Ross Nicholson

    China has more automotive engineers than any other country. Their battery manufacturing expertise is already excellent. Chinese quality is advancing at a rapid rate on all fronts from musical instruments to trucks.
    I bought a single 24V 30 amp hour (.7 kwh) battery pack from China for $355.00 delivered by express mail in less than a week. LiFePO4. That price is lower than the lowest cost batteries that GM plans to buy two years hence for the Volt. China could put airbags in the bumpers and buy American airbags for our market. The safety problems are trivial. The Japanese took thirty years. The Koreans did it in 10 years. The Chinese can do it in two. We must harness this horse if we expect to ride, too.

  • sufipoet

    The electric (alternative energy as a whole) industry is a result of non-investment. This was due to the suppressed price of oil in the last 30 years.

    The oil & gas industry went against Economics 101 logic with INCREASED DEMAND and DECREASED SUPPLY but SUSTAINED OR LOWERED PRICE. This led to a mis-presumption by the bean counters – that price of low oil & gas means a linear growth for everything that runs on it. So they built more diesel generated power plants, built bigger and faster vehicles (from planes to ships to cars) and more roads. What was worse was that our future global economy were planned based on these un-sustainable presumptions! And our society is still being shaped by these infrastructures!

    The current situation (economic and social, globally but especially in US) is a case of interventionist economics gone bad. Intervention to create ‘soft landings’ is acceptable BUT not to create a fundamental lie! Capitalism requires that natural selection happen regularly (on a smaller scale). Or else it would be like daming a river, sooner or later the dam will burst and the effect (as we are now experiencing!) will be much worse.

  • John K

    Heh – let’s do a bit of substitution, shall we?

    Boycott ALL American goods until the US government can prove to the world it’s not poisoning our food, environment, and the world.

    For example, not significantly contributing to that garbage pile floating in the Pacific Ocean that’s three times the size of Texas.

  • Lost Prius to wife

    Ross Nicholson, to a great degree, you are right. But it really depends on what kind of direction management is providing at the top of the various Chinese companies. Too many times the directive is “do not add any more cost; it is good enough as it is”. This is where safety issues start. Add in the tendency to accept substandard parts, or material that is dangerous to humans, instead of rejecting their use, the safety issues escalate even higher. It is entirely possible that “The Chinese can do it in two.” But I seriously doubt that they will because of the directions from the top management, in general, that the world has observed in the past.

  • Charlie

    i agree with Ross Nicholson. Too many people drastically underestimate the speed with which China is progressing. And the extent of everything they do. For every person in the U.S. there are four people in China. Yes, many of them are very, very poor. But that number is decreasing dramatically. The number of Chinese engineers graduating annually dwarfs our output. Is the quality of our graduates better. Maybe our top 20% is as good as their top 5%, but they still win. I have found “the rule of 4” to be a useful rule of thumb for calibrating my thinking about China and their progress: at equilibrium, everything there is 4 times more than here; and everything is progressing 4 times faster than here. They clearly understand every shortcoming they have, and are focused on overcoming them. If you have lived there for a year of two (recently) you will see what I mean. If you haven’t you might check with someone who has before summarily dismissing everything Chinese.

  • Dave K.

    I agree with Ross and also with 9691, I have a friend with a 12 year old EV with NiCd batteries, technology from the ’70s.
    It has a 70 mile range on a FRENCH made $10K battery pack(Saft) that is good for 150K miles, so tell me the big 3 couldn’t have made a “Volt like” car in the 70s. they just really don’t want to.
    Buy the time we drag them kicking and screaming into the 21st century the Chinese will have eaten their lunch.

  • Samie

    As someone said battery costs are key in bring affordable EV vehicles to the U.S. An advantage the Chinese may have is in their R&D in that if backed by the government the advances into battery technology will have a greater chance of making it in to real production. In the U.S we often create great innovations through advances in technology but if it hurts another industry we sometimes find it more viable to hold patents with no intention on production to control the change in markets. Example could be the patent on the flat- less tire for cars that was bought up by one of the tire companies in the 1970’s. The U.S can not be complacent in this type of manner in developing affordable EV’s. Also special interests like the oil companies are seeking ways to control the market of alt. energies and battery production by buying large shares in some of these companies which allows them to sometimes micro manage and underfund r&d this helps slow down in the short-term changes or faster expansion of these markets. In my opinion this is why there could be an opportunity for foreign automakers to make serous inroads into the U.S EV market if we keep this type of attitude and don’t start getting serious about being a leader and game changer as was Toyota and the Japanese Government with the full hybrid development and production of the Prius.

  • Joe

    GM must be joking. This “vehicle” is a pointed stick in the public eye. They deserve to go under, I’ll never buy a GM car again, what an insult.

  • Verne

    This is crazy. I just don’t understand why the US, European, and Asian automakers cannot build an electric car. The Tesla and Tango exist – yes for alot of money, but if they had the resources of the big boys, we could have an electric vehicle next year that was affordable. Aptera should be out later this year and it is affordable. Let’s stop this nonsense that this will take years to develop. If it takes the Chinese to push the envelope, I’m all for it.

  • michael e. v. knight

    Heres a Chinese Hybrid electric car for under $22,000 that goes 62 miles on electric power alone:

  • Peter

    Dear article writer,

    1. What NYT says is “China wants to raise its annual production capacity to 500,000 hybrid or all-electric cars and BUSES (emph. added) by the end of 2011”, not cars only as you wrote in the first sentence.

    2. The upto (again, missed) $8,800 subsidy you referred to the NYT article was ‘offered to taxi fleets and local government agencies in 13 Chinese cities for each hybrid or all-electric vehicle they purchase’, not aimed at chinese consumers. How about consumers in China? “(A)n interagency panel is planning tax credits for consumers who buy alternative energy vehicles”.