Jump-starting the green car market

Aiming to bypass rival overseas car makers and avoid an environmental meltdown at home, Chinese leaders have begun a major push for hybrid and electric vehicles. Jonathan Watts reports.

When BYD Auto launches one of China’s first mass produced fully electric sedans later this year, it will be trying to conquer the world rather than save it. But such is the explosive growth of China’s car market and thirst for petrol that the two goals are likely to become ever more synonymous.

The E6 plug-in is currently under wraps at the company’s sprawling industrial complex in Shenzhen, but it will soon be at the vanguard of a company’s – and a nation’s – plans to dominate the global market for “clean transport”.

Senior government leaders have initiated a major push for hybrid and electric vehicles in a bid to bypass car makers overseas and avoid an environmental meltdown at home.

The consultancy McKinsey and Company estimates that China’s car market will grow tenfold between 2005 and 2030, which will drive up demand for diesel and petrol from 110 million tonnes to 500 million tonnes. That will mean a sharp rise in carbon emissions from a country that has already overtaken the United States as the world’s biggest source of greenhouse gases.

Hybrid, electric and fuel-cell vehicles could ease the burden, but they will not solve the problem because at the moment more than 70% of China’s electricity is powered by coal, the dirtiest of all fossil fuels. Even if there is a large-scale take-up of the new technologies, which could cut emissions by 19%, McKinsey estimates that the combined emissions from road transport would still increase more than fourfold within the next two decades.

Faced by this nightmare, the Chinese authorities recently announced plans for 50,000-yuan rebates for electric and hybrid cars, encouraged city taxi fleets to buy vehicles with the new technology, and prompted state and regional grids to set up charging stations.

BYD is likely to be a major beneficiary. The initials stand for Build Your Dreams, which prompted snickers when the company debuted in US car shows last year, as did the soaring ambitions of the founder Wang Chuanfu, who has stated that BYD will be the biggest carmaker in China by 2015 and the biggest in the world by 2025.

Despite it making a third of the world’s mobile phone batteries, until recently few people outside of China had heard of BYD. But the company exploded into the international consciousness late last year by beating Toyota and General Motors to launch the world’s first mass-produced plug-in hybrid.

At the company’s sprawling headquarters in Guangdong Province, there is little outward sign that BYD is a world beater. Apart from the golden pillars at the entrance, the company’s offices are as grimly utilitarian as any other factory in the workshop of the world.

But style is not the point. The company has built an empire by offering cheap, high-quality batteries and now it aims to do the same for cars.

In February, just six years after it was formed, the firm sold 28,000 gasoline (petrol) and diesel cars in China, more than any foreign or domestic rival. Its 10,000 research engineers have also designed the ferrous battery technology of the e6, which will be released before mass-produced electric cars from Honda and Nissan.

The plug-in five-seater will reportedly be able to travel 400 kilometres on a single charge and reach a top speed of 160 kilometres per hour. “We are trying to make an electric car that people can use like a normal car,” says Henry Li, the head of BYD Auto’s export and trade division, as we drive around the company’s car park in the BYD’s other new breakthrough vehicle, the F3DM.

Like the company, the hybrid starts out so quietly you barely notice it moving. At low speeds, the battery-powered engine makes only a fraction more noise than the tyres on the road. But put your foot on the pedal and the vehicle roars to life as the gas kicks in.

Acceleration from zero to 60 kilometres per hour in 10.5 seconds will not win any Formula One races. Nor will the hybrid’s current sales scare rivals. The company says orders are only in the “several hundred” range, mostly from the Shenzhen local governments and BYD’s main bank.

Analysts are withholding judgment on whether BYD can achieve its ambitious targets. “BYD’s battery technology is good and that is important, but cars are more complicated than that,” says Zhao Junhua of CSM Worldwide in Shanghai. “BYD will need more experience. Chinese firms are still behind Japanese rivals like Toyota, Honda and Nissan.”

There are also many questions about the environmental benefits of electric cars, given China’s reliance on coal. Electric vehicles drive down carbon emissions best if they are charged at night with wind or other forms of renewable energy, but this is not currently possible in the country.

But they do use energy more efficiently than both petrol- and diesel-driven cars, and environmental groups say electric vehicles can at least reduce the huge negative impact from the spread of car culture in China.

“Electric cars would be a big step forward,” said Greenpeace executive director Gerd Leipold on a recent visit to Beijing. “Hybrid cars have a better reputation than their ecological performance merits.”

BYD may lead the pack in China, but the government is encouraging others to move into clean transport manufacturing – an area where it hopes domestic companies can overtake bigger foreign rivals.

At an exhibition of clean energy technology in Beijing in March, the science and technology minister, Wan Gang, said the country aimed to come out of the current economic downturn greener and more advanced than it went in. “Accompanying every financial crisis is a revolution in technology that serves as an engine for economic development. This time, new energy technology will probably be the new driving force.”

Every few weeks there is fresh news that China is upgrading its transport and energy infrastructure. In March, Chery Auto unveiled a battery electric vehicle – the S18EV – that it says has a range of 150 kilometres on a single charge. Shortly before that, Xinri started building an industrial park capable of producing five million electric scooters and bicycles per year. And Tianjin-Qingyuan has recently announced that it may precede BYD with the autumn release of a fully battery-powered Saibao sedan.

More than a dozen other firms have begun manufacturing electric buses. However, the gusto with which many Chinese people have embraced the idea of clean energy was most evident however in a display of a sanlunche – the boxed three-wheel scooters that are a familiar sight in Beijing’s alleyways – fitted with wing-like solar panels.

But, so far, none have gone as far as BYD. Li says it is simply a matter of business. “We are not trying to save the world, we are making money. Our strategy aims to give value to shareholders. If we can help the planet at the same time, all the better.”

Copyright Guardian News and Media Limited 2009

Homepage photo by BYD Auto