Writing Sample: Blog Post for The Beijing Axis Charged Up: China’s Electric Vehicle Industry by: Leonard Schramm Given the worldwide importance of environmental protection and the continued drive for a shift away from fossil fuels, the market for electric vehicles is becoming one of the leading emerging markets for China and the world. With the electric vehicle industry rapidly gaining importance, and with HSBC anticipating China’s share of the global market to rise from 2.7% in 2010 to 35% by 2020, global players within the industry are already working to position themselves in China through new products and innovations. With a large and growing domestic market and emerging opportunities abroad, China could become a leader in this relatively new and untested electric vehicle segment of the transportation industry. Evolving market conditions have created an opportunity for China to establish itself as a predominant force, as for the first time it is entering a relatively immature industry in a state comparable with the global competition. Several factors suggest that China may yet become a leader and predominant player in the electric vehicle industry. China’s strong domestic market provides one advantage for China in that it will provide a solid footing for local manufacturers to progress domestically before entering overseas markets. Research by Ernst & Young's Global Automotive Center has stated that as much as 60% of Chinese consumers would consider purchasing an electric car. This high percentage, in addition to China’s already expanding automotive market, suggests that domestic electric vehicle producers will have ample opportunity to improve and expand their processes to satisfy local demand. However, the relatively high cost of electric vehicles has garnered some attention as potentially hampering growth of this industry within China. These concerns may be overcome with the help of government support for the expansion of China’s electric vehicle industry. The government is currently providing subsidies of up to RMB 60,000 (or USD 8,789) for consumers to purchase an electric vehicle, and strong government support for China’s electric vehicle industry may yet act as a springboard to drive sales, increase production, and in time, reduce manufacturing costs. In this the Chinese government is not alone in the promotion of electric automobiles. At least 12 other nations are also investing directly into the development of alternative energy sources through programmes similar to China’s ‘Revitalisation and Readjustment Programme for the Automotive Industry’. China’s programme is one of the largest of its kind, however, with a subsidy of RMB 10 billion (USD 1.5 billion) earmarked for alternative energy, to be distributed over a three year time period, for research and development. The availability of infrastructure to support the development of electric vehicles is another major advantage held by China. The government has plans to expand the electrical capabilities of public transit networks via the addition of more battery powered buses and charging stations. The development of individual charging stations also seems to be underway as, for example, a 100-vehicle electric taxi fleet made up of Chinese electric car maker BYD’s E6 model was recently launched in the city of Shenzhen as part of the green city initiative. According to China Daily the city plans to have 12,750 charging stations by 2012 to support the growing number of electric vehicles.
The global market by comparison seems less prepared to embrace the electric vehicle. The interest shown by 60% of Chinaâ€™s consumers is almost five times higher than that in countries such as the US, Germany and Japan. These foreign markets may become more receptive to alternative energy technologies with time, providing China with a competitive advantage from having developed production techniques domestically before expanding abroad. The vast size of the Chinese market will likely aid in bringing down production costs, as China will be able to leverage its traditional low-cost manufacturing along with innovative technologies in the global market to indeed become a leader in this industry.
A blog entry regarding the Chinese electric vehicle market written for the Beijing Axis China Sourcing blog.