JAC's US electric-car deal seen as modest step

Updated: 2013-05-08 11:15

By Michael Barris in New York (China Daily)

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An announced electric-vehicle venture in the United States between Chinese truck maker Anhui Jianghuai Automobile Co and Virginia's GreenTech Automotive is unlikely to generate significant sales, an analyst says.

GreenTech, formerly headed by Terry McAuliffe, a one-time Democratic Party national chairman and currently a candidate for Virginia governor, and Jianghuai announced on April 22 a partnership to build 2,000 four-door electric sedans in Mississippi for sale in North America starting late this year. The deal came just nine days before the opening of two refurbished plants in California from which China's BYD Co plans to produce electric buses.

Tim Dunne, head of global auto operations at market research firm JD Power and Associates, pointed out that Jianghuai, or JAC, "is for the most part a light-vehicle, light-truck maker and always has been. So I don't know what gives them any sort of competitive advantage [in electric-vehicle technology] over a US company or any other electric [vehicle] company in the world."

On its website, JAC is described as a maker of "light, medium and heavy-duty trucks".

The companies said their planned sedan, named Rejoice, will have a battery with 19 kilowatt-hours of electricity, giving it a range of over 100 miles (167 kilometers) per charge. The charging time will be six to eight hours.

GreenTech is known mainly for one product - a small, two-seat electric sedan called MyCar. McAuliffe, in an MSNBC appearance in 2011 while he was still GreenTech chairman, presented the company's decision to shift manufacturing of MyCar hybrid and electric drivetrains to Mississippi from a plant in China as part of a goal to create US jobs.

Dunne said he was unimpressed by the companies' plan to begin producing 2,000 cars this year.

"Based on my experience, 2,000 vehicles is not significant," he said.

The launch of the venture comes as the US Department of Energy backs away from President Barack Obama's stated goal of putting 1 million electric cars on American roads by 2015. Since Obama set the target in his 2011 State of the Union speech, the DOE has moved to embrace the broader category of "advanced-drive vehicles", which include both electrics and hybrids (powered alternately by a conventional internal-combustion engine and an electric motor).

According to the website Hybridcars.com, nearly 488,000 hybrids, plug-in hybrids and electric cars were sold in the United States in 2012, accounting for 3.3 percent of the overall auto market.

Dunne speculates that Chinese companies are in the US electric-vehicle market because the federal government "still has millions and millions of dollars set aside for electric-vehicle development".

Washington's policies to subsidize production of electric vehicles will cost $7.5 billion through the 2019 fiscal year, the Congressional Budget Office reported in September. That includes $2.4 billion in grants to lithium-ion battery makers and projects to promote electric vehicles as well as $3.1 billion in loans to auto companies, intended to spur production of fuel-efficient vehicles.

Dunne also suggested that Chinese automakers could be targeting the US market to attract the attention of the Chinese government, which has called for widespread adoption of electric vehicles to deal with severe air pollution and the costly importation of oil.

"One of the ways to gain notice with the government is to show some action: 'We exported this, we did that, we arranged something.' That shows some movement, rather than not doing anything," Dunne said.

"If they can show some movement, some action, some cooperation, especially that shows international trade or exports, then it looks good for them. People tend to invest in things where they see movement, rather than someone making promises."

Greg Anderson, author of Designated Drivers: How China Plans to Dominate the Global Auto Industry, was quoted by conservative website Watchdog.org as saying that although Chinese automakers excel at copying US, Japanese and South Korean vehicles, he doubts that JAC or GreenTech has the technological expertise to lead in the electric-vehicle market.

"It's hard for me to imagine that a niche of limited-range, limited-speed [vehicles] are going to serve many people," Anderson was quoted as saying.

Easing potential buyers' "range anxiety" - a fear that a vehicle will run out of power before it can be recharged - is a major challenge to developing the electric-vehicle market.

BYD launched its bus-making venture in the Mojave Desert after winning a $12.1 million contract from the city transit authority in Long Beach, California, to build 10 all-electric buses aided by US government subsidies.

BYD, in which famed American investor Warren Buffett is a shareholder, intends to produce 50 electric buses a year by 2015 and 1,000 a year by 2033 from the plant in Lancaster. Fewer than 100 electric buses are sold annually in the US, and most are used for demonstrations or experiments.