Monday, April 13, 2009

China's Electrifying Car Strategy


Last year a number of electric cars were shown at the Beijing auto show, but most were being manufactured by Japanese firms. Mitsubishi's urban car, the iMiev, (above) plugs into a standard 110 volt power outlet and is capable of 80 miles per charge.  The car is powered solely by electric lithium-ion batteries. However the global economic crisis is hitting the Japanese auto makers hard. 
General Motor's all electric Volt, (above) was scheduled for production in Nov. 2010. But last December, GM announced that it is halting development of the Volt due to the financial crisis. This is not the first time. In 1996 the US had the lead in electric car technology, but GM similarly abandoned the effort and destroyed its fleet of EV1 electric vehicles despite public protests.  The Obama Administration is stressing that GM should keep the Volt project alive, despite its unprofitable outlook in the short-run.  The Volt project has already cost GM $1 billion in research and development, and represents the USA's only fighting chance to wrestle a piece of the electric car market from its competitors in Asia. Today the United States is up against a more formidable competitor than Honda or Toyota. China.  

Last year as Detroit auto manufacturers were closing, China's passenger car market grew 10% in 2008, and is continuing to expand. China's 'compressed development' has seen people go from no telephone to mobile phone, from no PC to wireless laptop and now masses of people are going straight from bicycles to cars.  The reason why China might leapfrog its Japanese and Western counterparts in electric car adoption is because the habits of the middle-class are still being formed. In addition, the centralized government is throwing its support behind electric cars.  China's Minister of Science and Technology is a former Audi engineer from Germany who in April 2009 states, "We need to be sustainable in different sectors, particularly in the auto sector".  To meet this objective domestic firm like BYD (Build Your Dreams), a local battery manufacturer for mobile phones and notebook PCs, is producing battery powered cars.  In addition, the Chinese Ministry of Industry and Information Technology has signed an agreement with Nissan to develop electric cars.  The Government has set a target to have 500,000 non-gasoline cars on the road by 2011.  China's Olympic and Space program have proved that the country is capable of meeting ambitious project deadlines.  Western auto firms can only see the future by looking out the windshield and not staring listlessly in the rear view mirror.   

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