Lithium Catalyst: China charges into electric cars

   

  Electric Cars can provide the real solution to mobility problem in densely populated urban areas in China and India. Recent pollution outburst in Beijing leaves no other options, which are commercially viable now. People would like to have the right to mobility and Electric Cars can provide it now.

Lithium to the Rescue - Pollution Levels in Beijing Extremely Hazardous

"Will Electric Cars be recognised now as the rescue and the only viable way forward? When the main questions about the cars will be Not How Far and How Much, But Whether It Is Safe?"

Lithium charge: Beijing to waive license plate lottery for electric vehicles 

"All our estimations about the Electric Cars and their adoption rates will be proven wrong in the end. It have happened with all technology, we can not really predict the future here. We can only estimate the trend. And here is another reason to move to Electrification of our transportation - Clean Air. When you have it - you never need it. Just the look at the picture from Beijing tells you why China is so anxious to move fast in the electric cars space. Question is not only about survival economically in the Peak Oil environment, but about surviving physically in our mega cities and China will have majority of them on its soil very soon."

Real Time Beijing Air Quality

Lithium Rush: The Art Of War In The Markets: China Getting Ready For 5 Million Electric Cars by 2020

"We are talking a lot about the economic benefits of electric cars here, and that they will be the only economically viable solution for our personal  mobility after the Oil Crunch. Unfortunately, there is another side of the oil - nobody is talking enough about, oil kills and not only on the battle fields far away during the "liberation" military occupations, but literally on the streets every day. If this price was seriously accounted among the other considerations about electric cars, we think, that our tipping point for the mass market for electric cars would be already here.

  We all have the right for the Clean Air, but why not on the streets? We do not think that the air quality in Los Angeles is any better than it is in London - all mega cities in the world are killing thousands of their residents by allowing to drive ICE cars slowly day by day."

CNNMoney:

China charges into electric cars

By Brian Dumaine, assistant managing editor

Faced with scarce oil supplies and polluted cities, Beijing has ordered its booming auto industry to make a great leap forward in technology.

If you want to get a sense of just how car-crazy China is today, visit Chengdu, a booming city of 5.3 million in the southwestern part of the country. On a crisp Saturday recently, tens of thousands of eager new auto buffs have swarmed the opening of the Chengdu auto show. The would-be buyers pack into eight airplane-hangar-size structures filled with hundreds of sparkling new models being shown off by young Chinese women in cowboy hats and purple hot pants dancing to techno music.

Just a few blocks away the car dealerships along South Railway Road are buzzing too. Audi, Buick, Mitsubishi, Honda, and Volkswagen -- all the big global brands -- have shiny showrooms along this busy thoroughfare. Li Zhou, a medical-supply salesman with a crewcut, a white polo shirt, and a ready smile, is shopping for a new car for his wife at the Nissan lot. Li has just climbed out of a Nissan Xterra. In the back of the dealership, new-car buyers are lining up at the cashier's window to pay cash in full. (Auto loans are almost unheard-of in China.)

Leaning against the SUV, the 43-year-old explains that "status is the most important thing when buying a car," and that the Japanese, Korean, and Western brands have the most cachet. "The quality's not there for Chinese cars," he says through a translator. That's why foreign brands here often command twice the price of a homegrown vehicle.

Has he considered waiting for a Nissan Leaf, the all-electric car set to go on sale in China next year? "Yeah, I've heard of it, and we know the environment is important," he says. "If it works, I'd like to buy one." Li is not alone. A recent survey by Ernst & Young found that 60% of the respondents in China show a strong interest in purchasing an electric vehicle (EV) -- nearly five times the number in the U.S., Britain, Germany, and Japan. That's good news for Beijing, because if the Chinese government has its way, buyers like Li will soon be going electric in big numbers.

China has just launched an Apollo moon shot of sorts: The government recently decreed that 5 million electric cars will be traveling the nation's roads by 2020 -- up from basically none today. According to banking giant HSBC, that will equate to 35% of the global electric-vehicle market.

What that means is that China, which last year rocketed past the U.S. as the world's largest market for new-auto sales, is also determined to become its most innovative. As part of the country's 12th five-year plan (2011--2015), Beijing has pledged that it will do whatever it takes to help the Chinese car industry take the lead in electric vehicles (See: China vs. the U.S. in electric vehicles). (Its long-term plan also calls for building bullet trains, subways, and electric buses to alleviate traffic congestion.) "The Chinese are trailing in the development of internal-combustion engines," says Bill Russo, a senior adviser at Booz & Co. in Beijing who covers the car industry. "They figure, Why not leapfrog that technology and become a dominant global purveyor of battery-powered vehicles?"

Building an electric-car infrastructure won't be easy. Vehicle makers must work with a jumble of different players -- from the utilities, which will provide the power and smart-grid networks, to local governments, which will provide public charging stations. Standards must be set. But China, an authoritarian state, is particularly well positioned to help make the electric car a reality. "China's government is supporting electric-car technology more than any other country on earth," says Kevin Wale, head of GM China Group.

The money is already flowing. Beijing has pledged roughly $17 billion to the effort. That total includes funds for R&D and the installation of charging stations as well as subsidies of as much as $8,800 to electric-car buyers in 26 cities. The provincial governments will chip in billions more, offering automakers cheap land, and consumers additional subsidies.

Already every major Chinese car company either is about to launch an EV or has built prototypes. At the Beijing auto show last spring, manufacturers unveiled some 95 electric models. Chery, one of the largest Chinese automakers, recently completed a $500 million R&D center in Wuhu, dedicated in large part to electrics. "The EV will be seen as high tech and fashionable by the young generation of Chinese," says Yin Tongyao, Chery's president. "I'm optimistic that the market will take off."

The multinationals, of course, want a piece of this potentially enormous market. VW has vowed to be the leading electric-car maker in China and hopes to put an all-electric version of its Lavida sedan on the market within the next three years. GM will start selling its plug-in hybrid Volt in China next year and is building a small all-electric with its Chinese partner, SAIC.

But anyone who wants to get in had better hurry. It's clear that Chinese automakers are racing ahead on electric technology. And China's state-owned utilities and giant oil companies are rushing to build the smart grid and charging infrastructure to make it a reality. Hu Zhaoguang, a vice president and the chief energy specialist at State Grid, China's largest utility, which provides 85% of the country's power, puts it simply: "Electric cars will grow fast in China because the government wants them to," he says. "In the next five years growth will be very rapid."

Starved for oil

Red China is not going electric because it has suddenly turned green. Yes, the environment is an important and hard-to-ignore issue. (The World Bank estimates that 16 of the 20 most polluted cities in the world are in China.) Electric cars could help alleviate the smog that chokes China's traffic-clogged streets -- one traffic jam on a highway outside Beijing this summer lasted 10 days -- by transferring the exhaust from tailpipes to far-off utility smokestacks. And electric cars will generate slightly lower greenhouse-gas emissions than gasoline cars even if the electricity that powers them comes from dirty fossil fuels. (In China around 75% of the power is generated from coal.)

But the biggest reason for Beijing's dramatic action is that China needs to kick its oil addiction. This country of 1.3 billion has about 19% of the world's population but less than 1% of its oil reserves. It currently imports about two-thirds of its oil. And at about $4 a gallon, gasoline is expensive -- especially in a country where the per capita income is only $2,800 a year.

Add a rapidly growing car fleet to the mix, and China's need for oil is poised to skyrocket. According to IHS Global Insight, this year the Chinese are on track to buy 16 million new vehicles -- about 40% more than will be sold in the U.S., now the world's second-largest market. That's 41% growth over 2009. As the base gets larger that growth rate will slow, but even so, experts expect that the 65 million cars and trucks on China's roads today could increase tenfold by mid-century. Where will all the gasoline come from to power those vehicles and at what price? Says Oliver Hazimeh, a partner at consulting firm PRTM: "It most likely will be cheaper for China to subsidize the cost of electric-car batteries than to secure the oil supply." No wonder Beijing is moving fast.

Hailing a cab in Shanghai

The typhoon that has engulfed the southern coast of China on this afternoon is lashing rain onto the highway that leads from downtown Shenzhen to the airport. That, however, doesn't keep Lu Shi Ming, a taxi driver with 16 years behind the wheel, from showing off his new electric vehicle. Emerging from a toll plaza, he pauses, letting the cars ahead speed off, which momentarily opens up an unclogged straightaway -- a rarity in China. Lu, 39, pushes the pedal to the floor, and his Chinese-built taxi -- an all-electric reminiscent of a Lexus RX 350 crossover in shape and size -- peels out. The acceleration, while not neck-snapping, is impressive for a big five-seater car. "I love this taxi," he says. "I'm spreading the word of green just like a moving billboard!"

Since last May, Lu has been part of a 26-city experiment by China's central government. The goal: to learn the ins and outs of electric-car use. His E6 taxi is built by BYD Motors, the Shenzhen company that Berkshire Hathaway (BRKA) bought 10% of in 2008 for $230 million. The company's stake in the publicly traded carmaker is now worth around $1.3 billion. In late September, Warren Buffett's pal Bill Gates joined him on a visit to BYD plants in Shenzhen and Huizhou.

Lu's taxi is one of more than 50 such electric vehicles on the road in Shenzhen, the first and by far the largest pilot program in China yet. The Chinese plan to deploy electrics initially in taxi companies and fleet operators. Why? Taxis and delivery vans generally drive set routes, which means easier access to charging stations. Also, city governments and big companies care more about lifetime operating costs than upfront investments. The BYD electric taxis cost around $40,000 before subsidies -- about twice the price of comparable gas-powered vehicles. But the electricity for the cars costs only about a quarter as much as gasoline for a regular vehicle. BYD has calculated that each taxi will save about $9,000 a year in fuel costs.

The biggest drawback of electric taxis is range. The E6 taxis get about 120 miles per charge -- excellent by electric-car standards but not enough for taxi drivers to take passengers on a long trip at the end of a shift without getting stranded. The range will no doubt improve in future models. (Lu, the taxi driver, says about 300 miles would be ideal.) In the meantime, Shenzhen Bus, the owner of the taxis, has installed four charging stations at different bus depots around the city where the taxis can recharge twice a day. And Southern Grid, the utility that serves Shenzhen, has installed a handful of others.

Warren Buffett (left) and Bill Gates at a ceremony for Chinese automaker and electric-car-battery manufacturer BYD in Beijing in September. Buffett bought a 10% stake in BYD in 2008 for $230 million that's now worth $1.3 billion.

One goal of the pilot program is to gauge what number and combination of chargers will work best for a society that drives electric cars. China (like the rest of the world) is experimenting with a few approaches. There are so-called trickle chargers, which can take six to eight hours -- good for overnight charging or when the car is parked in the office lot. Medium chargers can refresh a battery in about an hour and a half -- convenient for taxi drivers stopping to hand over the car to the next shift. And then there are superfast chargers that take only 20 minutes -- but require huge amounts of energy -- and would be good for drivers who need to refill during long trips on the highway.

The Chinese oil company CNOOC is exploring battery-swapping stations -- drive in, drop off your depleted battery, and drive off with a fresh one in less than a minute. Yasuaki Hashimoto, the president of Nissan China, believes that swapping may work for buses that have fixed routes and a standard battery. He worries that it won't work as well for passenger cars where each battery has to be designed to fit with different body shapes and vehicle weights. Says Hashimoto: "How could one swap station hold all brands of battery?"

Shai Agassi, the founder and CEO of Better Place, a startup that has raised $700 million and is building a battery-swapping and charging station infrastructure in Israel and Denmark, disagrees. (Better Place also has a partnership with Chinese automaker Chery, which has a prototype car with swappable batteries.) "Our swapping stations," says Agassi, "could easily handle five different kinds or more."

Agassi argues that China is the perfect place for swappable batteries because most urbanites live in highrises without easy access to charging stations. Also, Beijing seems to favor swapping over superfast charging, which can add strain to the grid.

To reduce the high purchase cost of electric cars, Better Place plans to own the expensive batteries and sell miles to consumers, much as phone companies sell minutes to mobile customers. As economies of scale kick in, says Agassi, an electric car could sell for $3,500 less than a gasoline version. "At that point China will hit a tipping point," he says. "I think everyone is going to be surprised at how fast this is going to unfold. In 10 years China will be a 100% electric vehicle market."

A mad scramble

Agassi may be a tad optimistic, but there's no doubt that every car company operating in China believes electric is the future. The question is, Who will dominate this burgeoning market for electric vehicles?

Right now it's up for grabs. According to the consultancy Booz & Co., about 120 auto companies are operating in China, although the top 10 control 83% of the market. The industry breaks down into three main sectors: There are the big state-owned companies such as Shanghai Automotive Industry Corp. (SAIC), FAW Group, BAIC, and Chang'an. There are independents like BYD, Great Wall, Geely (which recently bought Volvo), and Chery (which is owned by the local government in Wuhu but is scheduled to be privatized). And there are the multinationals: Daimler, GM, Hyundai, Toyota (TM), VW, and more. To operate in China, foreign companies must form joint ventures with Chinese companies. GM and VW, for example, have joint ventures with SAIC, yet SAIC also sells cars under its own brand. Currently the nimbler independents -- BYD, Chery, and Geely -- and the foreign carmakers lead in market share for gasoline-powered cars.

The big government-owned carmakers such as SAIC and Chang'an will have to scramble to keep up as China shifts to electric vehicles. "They're too high-cost and too slow," says Marco Gerrits, a former Daimler auto engineer and a consultant with Boston Consulting Group in Beijing. "Because they're controlled by the government, they can't fire people."

There's a danger that in its zeal to create an electric-car industry, the leadership in Beijing is pushing the state-owned companies -- whose gasoline cars are of below-average quality -- to make electric cars before they're ready to tackle such new technology. Gerrits believes that if the foreign companies play the game right and don't alienate Beijing, they could capture half the electric-vehicle market -- roughly what they have of today's car market.

Challenging America

Before it can take the lead in electric cars, China has some catching up to do. Right now U.S. engineers are competitive with those from Japan, Korea, and Europe when it comes to electric-car technology, and are generally superior to China's engineers when it comes to designing sophisticated battery-control systems and integrating them into cars. GM's Volt, for instance, is an impressive -- if costly -- display of hybrid technology. Both Daimler and Toyota have formed partnerships with Tesla (TSLA), the California electric-car company that raised more than $200 million in an IPO earlier this year, to learn the secrets behind the battery technology that powers its $109,000 roadster.

But unless the U.S. acts decisively, its edge is not likely to last long. While China is setting an industrial policy to dominate the electric car industry, the U.S. government is largely depending on the free market to develop and launch the technology. Yes, the Obama administration has earmarked roughly $5 billion of stimulus funds to help American automakers develop alternative vehicles and to install charging stations in selected cities. The White House predicts that the U.S. will have the capacity to produce 40% of the world's advanced vehicle batteries by 2015.

The administration's investment, however, is dwarfed by what the Chinese will spend. And with gasoline still relatively cheap in the U.S. and carbon regulation uncertain, getting American consumers to accept expensive green cars will be a steep climb.

No matter how things turn out, it's likely that electric cars in the future will be assembled in the U.S., simply because it's expensive to ship heavy batteries over the ocean. The real question is whether in 10 years the U.S. will be a world leader in electric-vehicle technology and thereby benefit from tens of thousands of high-value engineering and design jobs.

One area where Chinese carmakers may have an advantage in this competition is in lithium-ion batteries -- a key strategic technology for electric cars. When the U.S. ceded consumer electronics manufacturing to Asia starting in the 1980s, it also sacrificed some of the expertise necessary to build the batteries to power all those cellphones and laptops. According to a study done by Intel, 33,200 people work in lithium-battery production in China today. In the U.S. the number is only 1,100. Chinese companies such as BYD already make some of the cheapest car batteries in the world.

However, Kevin Czinger, the CEO of Coda Motors, which will launch an electric five-seat sedan in California this winter, doesn't buy the idea that the Chinese have a technological edge. (For more on Coda, see: A new American electric car, via China.) Czinger explains that the real challenge with an electric car is to get all the systems -- the battery, the electric motor, the cooling systems -- working together. The car needs to perform well whether starting up when it's zero degrees in Minnesota or 100 degrees in the Mojave Desert. Ever since GM built the EV1 electric car in the 1990s -- the subject of the documentary "Who Killed the Electric Car?" -- American automakers have had serious in-house programs to develop electric technology. "American engineers know how to do this, compared with the Chinese," says Czinger. "It's like the difference between having played chess once and having played it 20,000 times."

China shouldn't be underestimated, however. "The Chinese are building passenger jets and bullet trains," says Better Place's Agassi. "Do you think they won't be able to figure out how to build an electric car?"

One of the best examples of their rapid progress is fast-growing Chery, which is on track to sell more than 600,000 gasoline-powered cars in 2010. This fall Chery will launch an all-electric subcompact in China. A version with a swappable battery will follow. Yin, the company president, says he is hiring engineers from around the world for his new $500 million research center. He believes that when the electric vehicle hits the economy of scale offered by around 500,000 cars, the costs will become competitive with gas-powered cars. "We have to do this for competitive reasons," says Yin. "This is the future."

Clean skies in Shanghai?

As China begins to build the electric cars, smart grids, and charging stations to transform its auto industry, one important question hangs above the effort: Will the public buy these New Age vehicles? The car companies have already begun the marketing effort.

GM, along with its Chinese partner SAIC, built a massive pavilion at the Shanghai World Expo -- the world's fair that has attracted some 70 million visitors this year -- with the theme "Drive to 2030." Inside, an IMAX-like movie explores what life with the electric car could be like 20 years from now. Podlike "personal" electric vehicles guide themselves to their destinations accident-free. The skies over Shanghai are clean. The traffic is moving swiftly. When the film ends, a strobe-lit celebration begins with dancers in jumpsuits and crash helmets who swirl around prototypes of the cars of 2030 -- imagine a cross between Tron and Kung-Fu Panda.

Of course, visions of the future often miss the mark. (Weren't we supposed to have flying cars by now?) And it's too soon to tell whether the Chinese will buy into the government's master plan. But one metric suggests they're at least open to the idea: The wait to get into the exhibition hall? More than two hours."