According to a recent announcenment, China will inject more than RMB100bn ($14.8bn) into promoting the adoption of energy efficient vehicles in the coming decade.
The country's Ministry of Industry and Information Technology has drafted a plan to invest RMB60bn ($8.8bn) out of the total financing into spurring the development of pure energy efficiency techniques. The Chinese government is planning to assist five fuel efficient automakers and several part manufactures and suppliers to assist the industry. Five Chinese cities are set to subsidise electric and hybrid vehicles under the initiative.
Electric, hybrid and other fuel efficient vehicles are all candidates for support under the new funding and some of the funds will be used to build infrastructure for the energy efficient vehicles, this being the main impediment to widespread adoption. In the US, Coulomb, Ford, Chevrolet and smart USA have collaborated to deliver the $37m ChargePoint America initiative to aid the deployment of electric vehicles and it is likely that China will be moving forward on an even grander scale. A scheme to subsidise fuel efficient cars was rolled out in Beijing in June 2010. It aims to get four million eco-friendly vehicles on the road before 2012.
Major companies in China are strongly influenced by the state and this is another source of finance for the EV industry as they eagerly purchase intellectual property and major brands from abroad. Zhejiang Geely Holding Group, China's biggest privately owned car firm, has this week finalised acquisition of Sweden's Volvo Cars for $1.5 billion. After a slow start, Geely, which means "lucky" in Mandarin, has the potential to compete with the joint ventures between Chinese and Western firms that dominate what is now the world's biggest vehicle market.
Over the next year or so CEO Mr Li is promising a range of 25 cars spread out over five platforms and three brands. This year sales of Geely's range of still mainly cheap, compact cars should reach 400,000, of which about 5% will be exported to countries with undemanding safety and emissions standards. In Cuba the Geely CK is now the car of choice for the police. By 2015 Mr Li aims to be producing 2m vehicles, half for export.
Acquiring Volvo gives Geely an international profile and a degree of credibility it could never have achieved on its own. It has only modest work on electric vehicles as yet. The purchase is a huge gamble. Although Volvo is currently close to breaking even (Ford says it is operating at "sustainable levels"), last year it lost $1.3 billion and sold only 335,000 cars. (At its peak in 2007, it sold 458,000.) Volvo's revenues are five times greater than Geely's because of its much higher prices.
Armed with $900m of working capital from Geely and a commitment to build a Volvo factory in China, Mr Li's target is to raise Volvo sales to 600,000 by 2015. Some Swedes worry that if things do not go well, Mr Li may cut costs by moving all production to China. This happened with the London taxis made by Manganese Bronze, which Geely part-owns IDTechEx thinks that this is certainly likely and, in the meantime, Volvo's intellectual property will be applied to Geely's cars.
For more read: Electric Vehicles in East Asia 2011-2021
Also attend: Future of Electric Vehicles which uniquely covers the whole electric vehicle market - land, sea, air whether hybrid or pure EV - with emphasis on future breakthroughs. There will be presentations on the market for all forms of electric vehicle in East Asia and Professor Wu of Tianjin Polytechnic University in China presents on the Infrastructure and Environment to Develop Electric Vehicles in China. Everspring Global of Hong Kong presents on Single Large Capacity Lithium-ion Cells for EVs. Nissan, BAE Systems and others with interests in China also present and there is a new product announcement from India.
