Quest to produce an electric car for China in high gear (Feature)

By Andreas Landwehr Jun 9, 2010, 4:07 GMT

Shanghai - China is seeking to electrify the car with an unparalleled aid programme.

Its government is investing billions of dollars in the development of electric engines, and Chinese and international producers are in a hard-fought race to be the first to put an electric car suitable for daily use on sale in the world's largest car market.

The promotion of electric cars is a central point in China's new five-year plan, which begins next year, along with the consolidation of the country's car industry, aimed at making it competitive on the world stage.

The plan is ambitious: It aims to put 500,000 electric cars on the road by 2012, up from 2,100 today.

The government also announced a pilot programme this month for the cities of Shanghai, Shenzhen, Changchun, Hangzhou and Hefei in which customers purchasing electric cars would get 50,000 to 60,000 yuan (7,300 to 8,770 dollars) shaved off the price.

About 5 billion yuan have been set aside for the incentive programme and another 1 billion yuan is to go to research and development. Cities and provinces are also making more money available to promote their local producers.

'We want to profit from that,' said Winfried Vahland, head of Volkswagen AG's China operations.

Europe's biggest carmaker plans to bring a marketable as well as 'safe and affordable' electric car to the Chinese market by 2013 or 2014, he said.

Daimler AG also plans to introduce an electric car on the Chinese market by 2013 with its Chinese partner, the battery- and carmaker BYD Co. Daimler chief Dieter Zetsche said he sees 'enormous potential for electric mobility in China.'

China's car industry is charging ahead itself with some of its carmakers announcing plans to produce their own electric cars this year or next year.

'Everything is about speed nowadays,' said Zhao Fuquan, vice president of the quickly growing Geely Automobile Holdings Ltd, which recently bought the Swedish brand Volvo. 'It isn't about how big you are but how fast.'

'It is clear to us that the Chinese producers are making a big push,' said Joern Hasenfuss, deputy managing director of the joint venture Shanghai Volkswagen Automotive Co Ltd. 'We must be on the lookout.'

Chinese producers have a slight lead with their development of affordable batteries for the mass market, but engineers and technicians in Europe, Japan and the United States aren't anything to sneeze at in terms of battery technology, namely in developing a battery that produces a lot of energy in a small package at a low weight and a good price.

China seems to be a country especially made for electric cars. Chinese drivers make few long-distance trips. Most commuters drive short distances at slow speeds, often because of traffic-clogged streets.

According to opinion polls, about 60 per cent of Chinese consumers would consider buying an electric or plug-in hybrid car - more than in any other country in the world. The Chinese are also more ready to try out new technology, and Chinese cities are already facilitating the massive expansion of charging stations for electric cars.

For China, a country of 1.3 billion people, the development of the electric car is also a question of survival. At this point, two in every 100 Chinese own a conventional car. If that number approaches Germany's ratio of 56 of every 100, the world's oil wells would be drained.

The fact that two-thirds of China's electricity is produced by coal-fired plants, making electric cars there by no means climate-friendly, plays a secondary role for Chinese authorities. Such cars would not add to the smog of China's large cities, even though they would cause environmental problems elsewhere and would continue to contribute to global warming.

At the same time, however, China is promoting the development of renewable energy, such as solar and wind power. It is also investing in the construction of nuclear power plants to ensure the energy supply for the world's most populous country.