China committed to new-energy green cars

Shanghai, March 25 (Gasgoo.com) The Chinese government supports eco-friendly new-energy cars in a series of new measures intended to boost the auto market demand. This year to date, China has announced a tax cut to 5% for cars with engines below 1.6 liters and subsidies for rural residents buying greener vehicles. The latest stimulus package involves a $1.5 billion research subsidy plan over the next three years for automakers to improve their electric-vehicle technology.

China wants to see 500,000 "new energy" vehicles produced this year, such as all-electric cars and plug-in hybrid vehicles. The plan aims to increase sales of such new-energy cars to account for about 5% of China's passenger vehicle sales. Chinese automakers are asked to narrow the gap with bigger foreign rivals and guarantee the industry's steady long-term growth by exploring the alternative-energy vehicle technology and market.

There are three types of new energy cars in China: hybrid, fuel-cell, and electric. The hybrid models are currently the most likely to be commercially successful in China as battery technology for electric cars still needs improvement. To be more energy-saving, a hybrid model should use more electricity and less gasoline, but this requires higher technology at higher costs.

Many automakers in China have announced their plans to make new-energy vehicles while BYD Auto and Chery Auto have launched their electric (hybrid) cars. In addition, global auto giants such as General Motors and Volkswagen AG are also jumping on the new-energy bandwagon in China to seek sustainable growth in the world's second largest auto market.

BYD began selling its F3DM hybrid electric car on December 15, 2008 in the domestic market. China's first mass-produced electric hybrid vehicle, the F3DM model is equipped with the world's first dual hybrid power system to switch between EV and HEV modes. It is capable of traveling 100km (62 miles) on electric power provided by the battery. BYD may release two more electric models this year: the F6DM sedan and an all-electric van the E6.

Chery Auto rolled out its first own-brand plug-in electric car model Chery S18 on February 20, 2009. The company says the electric car can run up to 150km on a single charge. The Chery S18 electric model has a top speed of 120 km per hour and can be fully charged at a home electrical outlet. The car uses iron-phosphate-based lithium-ion batteries.

SAIC Motor will start to deliver home-grown gas-electric hybrid cars in large quantities to the market by late 2011 or early 2012, SAIC president Chen Hong said in early March. The largest Chinese carmaker, a partner of General Motors, has the new-energy vehicles labeled under its own brand. Currently its hybrid models have been put into trial production.

FAW Group, Chinese partner of Volkswagen AG, has planned to roll out 1,600 hybrid cars and 800 hybrid buses by 2012, by which time its hybrid vehicle manufacturing base will already start operation. The Chinese auto giant said its hybrid car facility will have an annual capacity of 11,000 hybrid cars and 1,000 buses by 2012.

Beiqi Foton set up China's first renewable-energy vehicle design and manufacturing base in Beijing on December 28, 2008. The company has four engineering centers for hybrid and electric cars, hydrogen battery, and high-power energy-saving engines. Beiqi Foton's hybrid buses are in mass production. During the 2008 Beijing Olympics, Foton's zero-emission, pollution-free fuel-cell buses were also used to improve air quality.

Harbin Hafei Auto will put its self-developed dual-fuel sedan in to mass production soon. This dual-fuel Hafei Saibao sedan model is low in emission and in price -- clean and cheap. The dual-fuel Saibao sedan model independently developed by Hafei Auto can use gasoline and natural gas as its fuel.

Geely Auto, one of China's biggest privately owned carmakers, may start mass production of its new alternative-energy cars in the second half of this year. The Zhejiang-based carmaker unveiled its methanol-powered Haifeng last year.

German carmaker Volkswagen (VW) will introduce clean-energy cars to China. Unveiled and offering services during the 2008 Beijing Olympics, VW clean-energy cars and commercial vehicles have appealed to Chinese consumers. VW joint ventures in China have got such clean-energy models. It is easier for VW to introduce natural gas hybrid cars, but the automaker needs to make sure a satisfied supply on natural gas filling station in cities.

U.S auto giant General Motors (GM) is seeking its further growth in the China market by promoting the new-energy technologies and launching more new-energy models. On October 21, 2008, GM displayed its zero-oil, zero-pollution Chevrolet Equinox hydrogen-fuel cell car in Beijing, kicking off the China tour of GM's hydrogen-powered car to demonstrate GM's cutting-edge technologies of clean energy vehicles.

Toyota Motor is reportedly trying to sell its Prius hybrid technology to Chinese automakers, aiming to dominate China's fast-growing new-energy auto market. But this attempt is unlikely to follow through, as China's leading hybrid-car makers, such as BYD, are strong at making battery-powered electric vehicles and this battery-based auto technology will be used by more Chinese automakers. Lexus GS450h is expected to be introduced to China this year as the fourth hybrid model by Toyota following Prius, LS600hl and RX400h.

Nissan China has recently announced Nissan's global plan to mass-produce electric vehicles in 2010. The Japanese carmaker is also in talks with China's auto industry authorities for local production of Nissan electric cars for the Chinese market. The joint venture Dongfeng Nissan may choose Beijing or Shanghai for a new facility to make the Nissan electric cars.

The currently biggest bottleneck for China's new-energy vehicles is how to cut their costs and then prices. These days, the new-energy car's price is more than 20% higher than that of a conventional-energy car of the same emission level. While Chinese automakers are growing enthusiastic about producing new-energy vehicles, the purchasing powers of buyers and the market demand also remain outstanding concerns.

As the country's first mass-produced electric hybrid vehicle, the BYD F3DM is expected to retail for 149,800 yuan ($21,200) in China. And the Chery S18 electric model will come to the market by early 2010 for about 100,000 yuan.

Still, new energy is "a must" for China's auto industry. Development of new energy will be established as an important strategy for China to address energy shortage and environmental woes. The promotion of energy-efficient new-energy vehicles is a necessary step in the country's energy development and in the revival of its auto industry.