The driver threw the stick shift into high gear and sent the 31-seat electric bus careening full-tilt down the length of the factory parking lot – as long as a football pitch. It was a Saturday morning, late summer 2010, at the new Zonda Bus factory. We disembarked at the far end of the factory and were given a tour of the company’s Lithium-ion battery production lines. Zonda Bus is one of China’s largest bus companies, with export sales to the Middle East and Europe. The company is also on the leading edge of R&D and implementation of battery technologies that make its buses go faster and further than most others in its class in China. The operation I had visited was located in Yancheng, Jiangsu province, about two hours drive north of Shanghai. Several factory managers and local government officials led my colleague and I through a series of rooms, each of which was dominated by a single working machine that had some vital part to play in the manufacture and assembly of huge battery packs for the buses. The company spokesperson announced the batteries in their buses could charge and discharge more than 1,000 times, and operate for more than 500,000 kilometers. The battery-equipped buses could approach speeds of 110km/hr. The fifty buses the company had just provided Tianjin for the Davos meeting in September could run for 500km off a single charge – 300km with the air conditioner running all day.
The Chinese government is intent on introducing electric vehicle (EV) technology onto the country’s roads. In October this year Minister of Science and Technology Wan Gang announced that China would be producing one million electric vehicles for Chinese roads by the year 2020 – still a small portion of the projected 46 million to 71 million cars expected to be sold that year – but still the largest EV market in the world. The central government, in August 2010, promoted a subsidy of RMB60,000 (US$9,037) for buyers of electric vehicles to kick-start purchases.
It’s still early days for mass electric car manufacture, though. A visit to the Jiangsu Aoxin New Energy Automobile Company, Ltd., also in Yancheng, revealed a great near-empty hangar in which small teams of workers languidly assembled small, compact electric vehicles. The simple suspension chassis and skin-thin bodies of the seven models on display underscored just how much of a learning curve Chinese industry has to go to match the robustness and sophistication of combustion-engine vehicles. The lady bug-like AV2 and AV3 could seat two uncomfortably in a space that would see most Westerner’s knees pressed firmly against the dashboard; the load of the “Dynamic Free Dream” sanitation truck would need to be dumped after a single swing around any Chinese high rise apartment complex; and the AXG mini bus with its maximum speed of 40km/hr and a range of only 100km would be easily run off the road by a swarm of China’s ubiquitous electric scooters. Clearly, the factory was only geared to supply made-to-order quantities of vehicles.
Nevertheless, Chinese companies are racing ahead in the EV industry in the same way they are in other alternative energy fields. The stage at which the EV industry is at now reminded me of where the Chinese automotive industry was eight years ago, when I had visited the newly-opened Chery automobile factory in Wuhu, Anhui province. Chery, maker of the popular QQ on Chinese roadways, is one of the top ten Chinese automobile manufacturers by sales volume in the Chinese domestic market and is the largest exporter of automobiles in China now. The new factory was highly automated, though with just a few cars coming off the assembly line back then. Now, Chery has just opened a US$500 million R&D center in Wuhu for research and development of its own EV technologies, mostly developing control systems.
Concerns abound that the conventional vehicle market in China still suffers from quality issues, and that more sophisticated battery technology, control systems and materials technology are a greater leap than Chinese manufacturers – especially the State-owned ones like SAIC – are able to take on their own. The slack time between the scrum of car makers entering the market and consolidation of the market is a prime opportunity for American, German and Japanese technology companies with greater experience in the field to make their presence felt in the China market. As is the case with wind and solar power, the foreign companies may find China a more welcoming and lucrative environment in which to do business than their home countries offer. As Marco Gerrits, a former Daimler auto engineer and a consultant with Boston Consulting Group in Beijing, told Fortune Magazine, the foreign companies could capture up to half the EV industry.
If the Zongda bus trip is any indication, though, the window of opportunity for foreign makers is closing fast.