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China: Batteries Dead on China’s Electric Vehicle Push? Not So Fast.

Foreign automakers are feeling a whole lot better about China’s drive for electric vehicles, thanks to a set of new guidelines released by Beijing last week.

China had stunned the car-making world in the spring of 2009 when officials in Beijing declared plans to take unilateral leadership of the global electric vehicle industry.

Under the plan, China was to build capacity for 500,000 electric cars a year by 2012, rising to several million by 2020.

Global car companies were expected to transfer key electric vehicle technologies to their Chinese partners in exchange for continued access to the lucrative Chinese car market.

It was the kind of offer that companies from Europe, American and Japan were not sure they could refuse. With Volkswagen and others making more than 30 percent of its global profits from China, Beijing enjoyed all the leverage.

In a twist, foreign firms stalled for time. They lobbied hard for rights to build more of their own gasoline engine powered products while remaining as non-committal as possible about technology transfer.

That slow-walk strategy seems to have paid off, at least for now.

Green: A concept electric car from Daimler and BYD marketed under the Denza brand.

Bloomberg News
Not Green: The Lamborghini SpA Urus sport-utility concept vehicle is unveiled during a Volkswagen AG event in Beijing on April 22, 2012.
After many months of silence on the subject — and just ahead of the 2012 Beijing Auto Show, which officially kicked off on Monday — officials in Beijing released a kinder, gentler version of the master plan for electrics.

Elements of the new guidelines suggest that Beijing is now prepared to step back from its China-takes-all stance in favor of one that is more gradualist and inclusive. For the first time, Beijing appears willing to embrace hybrid technologies as a practical bridge to pure electric vehicles; all-battery powered cars would enter mass production only late in the decade, closer to 2020. Beijing has also backed off from its insistence on transfer of key electric vehicle technologies.

If you are wondering whether it was magnanimity or good old-fashioned Chinese pragmatism that prompted the change of heart in Beijing, facts on the ground suggest the latter.

Of the 18 million vehicles China-based car companies produced in 2011, just 8,159 were electric or hybrid, according to the China Association of Automotive Manufacturers. Most of those were purchased by government agencies and city bus fleets for testing purposes.

China’s private buyers have shown little appetite for electrics. They are reluctant to try the new technology for the same reasons that demand for battery-powered cars has faltered elsewhere: Prohibitive cost, range anxiety and lingering question marks around safety.


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