Right business model could unlock electric-car market
Updated: 2013-03-14 11:25
By Michael Barris (China Daily)
Premier Wen Jiabao's charge last week to the incoming Chinese leadership to take "solid preventive and regulating measures" against pollution suggests that environmental protection is gradually moving up the national agenda.
Some observers viewed the outgoing premier's final address to the National People's Congress as having implications for the government's push for electric vehicles.
A BBC report suggested that China's subsidies y scheme for battery-driven vehicles could be expanded from five cities to more than 20.
There's no question that some people would relish seeing China embrace electrics, at least judging by e-mails that followed a China Daily USA story about the outlook for electric-vehicle makers in the country. The March 8 article centered on a plan by California-based Tesla Motors Inc to open its first Chinese dealership, in Beijing.
The article noted that although the government has challenged the nation to produce at least 500,000 hybrid or all-electric cars and buses by 2015, electrics remain "a tough sell", according to Tim Dunne of consumer-research firm JD Power and Associates.
Aaron Rockett, a China Daily reader and documentary-film maker from Washington, took issue with Dunne's breakdown of challenges facing the electric-car market in China.
Dunne had cited several factors to explain why a buyer might decide against buying an electric car: price (a typical electric costs $30,000 or more, compared with $20,000 for a comparable conventional car), lifestyle (the hours it takes for recharging), availability of other environmentally friendly options and "range anxiety" (drivers fear running out of power on a long trip).
Rockett, who according to his LinkedIn profile worked for PBS' "The News Hour With Jim Lehrer" and produced a documentary, "Vacationing in Afghanistan", that aired on US public television, argued that "for electric cars to be successful, you cannot think of them in the same light as ICE (internal combustion engine) cars. It has to be a complete reconceptualization."
Rockett, who said in an e-mail that he owns Nasdaq-listed shares of Kandi Technologies Group Inc, a Jinhua-based vehicle maker at the forefront of the electric-vehicle push in China, believes that both the media and major automakers "approach ICE cars and EVs as the same ... they are not. They are apples and oranges."
His points are well-taken. Policy issues often have complexities that media reports may fail to convey.
Also, the differences between China and other countries in the electric-vehicle market make it difficult if not unwise to view all through the same lens.
In China, the State companies that operate the national power grid are largely leading the drive for electrics, whereas in other nations leadership role is usually filled by automakers.
With the power industry determining when and how electric vehicles are charged, a key consideration is the business model that might be used to spur widespread adoption of electric vehicles.
In September, the State Council's Development Research Center Enterprise Institute released a white paper that envisaged three business models for electric-vehicle adoption in China: using the vehicles for short-haul bus, taxi and other service fleets; setting up a network of battery-swapping and charging stations; and establishing centralized car-rental networks in airports, commercial centers and residential areas.
The battery-swapping model, the paper argued, could potentially overcome the "weaknesses" of slow charging, high initial cost and limited range.
"If electric-vehicle users could find a battery switch station every 50 kilometers in the city, their dependence on the range would be greatly reduced," the institute concluded.
It would take about three minutes to complete a battery swap, less time than is needed to refuel a conventional gasoline-powered car.
Establishing an electric-vehicle rental network in cities would allow consumers to get around the high cost of buying.
Rockett's bullish view on electrics indicates why investors and electric-vehicle makers have continued to wax enthusiastic about the industry's prospects in China despite flat sales globally. .
"If EVs are going to be successful, it is probably going to be in China because they have the reason, the will, the money and the central government," Rockett said.
But he added: "It is the business model that can make electric cars economically viable, affordable, and useful for city traffic, commuters, environmental protection, and available for the masses."
Determining how best to adopt electric vehicles into a mainstream geared to conventional cars will expedite that discussion.
Contact the writer at firstname.lastname@example.org