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BYD faces pressure from Toyota's hybrid
Source: Bloomberg News |
March 25, 2013, Monday
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TOYOTA Motor Corp's Prius hybrid is emerging as the likeliest winner from China's attempt to dictate the future of world motoring. Policies favoring Warren Buffett-backed BYD Co and other electric-vehicle makers were meant to help China vie for global leadership in a technology the government expected to replace clunkers that run on gasoline. But the fact is: EVs failed to impress the market.
Consumer appetite failed to materialize even with financial incentives that halved the price tag of a BYD e6. The 27,800 EVs on Chinese roads are fewer than 6 percent of the government's 2015 target - and 0.02 percent of the total civilian fleet. For now, China needs to promote other technologies to cut the tailpipe fumes choking its cities, says one minister.
"We're very anxious" about worsening air pollution, Miao Wei, industry minister and a three-decade veteran of China's auto industry, said during this month's annual National People's Congress in Beijing. "I've never believed that you can gain global leadership in one leap."
Hybrid subsidies
Translation: China may need to support more conventional technologies to lower pollution levels. Miao said he's seeking support from other government branches to raise hybrid subsidies, aiming to unveil the policy plan in the first half. Even Science and Technology Minister Wan Gang, one of the leading advocates of electric cars, is warming to the idea. At the gathering of more than 5,000 lawmakers and officials, he said the switch to EVs will take more time than planned.
"Subsidies should be based on the fuel consumption and emissions of the vehicle," Li Shufu, chairman of Volvo Cars-owner Zhejiang Geely Holding Group Co, said at the Beijing meetings. "The government should expand subsidies to include more types of vehicles, including all sorts of hybrids."
More subsidies for the Prius would offer Toyota a better chance to achieve in China the kind of success enjoyed by the 15-year-old gasoline-electric model in the US and Japan. The Toyota City, Japan-based automaker sold 362,845 Prius cars globally last year, making it not only the top-selling hybrid but also No. 3 among all car lines in the world. In China, sales only reached 2,434 units last year, China Association of Automobile Manufacturers data show.
While a 14 percent share of global car sales makes Toyota the top ranked manufacturer, in China it lags behind General Motors Co, Volkswagen AG, Hyundai Motor Co and Nissan Motor Co in fifth place, with about 5 percent of deliveries, according to CAAM estimates.
Unlike EVs, conventional hybrid cars have gasoline engines that help recharge the battery for longer journeys. They also don't need to be plugged in to a socket.
A Lack of recharging stations doesn't help. China's 1.3 billion people had only 168 charging stations across 25 cities at the end of 2011, according to the Industry Ministry's website. That's 10 percent fewer stations than in Hong Kong, home to 7.2 million people.
"Charging stations still need to be built," said Science Minister Wan, arriving in a BYD e6. "We should continue to promote the electrification of public transportation while at the same time push for new-energy vehicle use by private buyers."
Traffic snarl-ups can also put EV drivers at risk of breaking down.
"With traffic jams during summer or winter, you need to use the air conditioning or heating," said Yale Zhang, managing director of industry analysis firm Autoforesight Shanghai Co. "If you're in a jam, you'll need to shut down everything or run out of electricity."
That may leave EVs as a niche product in China for the time being, according to Bloomberg New Energy Finance, which estimates 80 percent of China's EVs now are public buses.
Unperturbed, BYD will introduce the Denza, a new electric car developed with Daimler AG, later this year.
SAIC Motor Corp, China's biggest automaker, has been offering the Roewe E50 electric car since November. SAIC, which has joint ventures with GM and Volkswagen, also plans to sell the all-electric Springo with its US partner and two electric cars with its German partner this year.
Unlike with hybrids, a category which Toyota has led since the launch of the Prius in late 1997, EVs remain relatively new and inconvenient relative to gasoline cars.
Battery charging
"You won't see mass production of all-electric vehicles without a major breakthrough in battery charging," said Chen Binbo, executive vice president at Honda Motor Co's venture with Dongfeng Motor, which introduced the Insight hybrid to China last year. "We need a transitional product."
Incentives are a critical step to cultivate market acceptance of electrified vehicles in China, said Dayna Hart, a Shanghai-based spokeswoman for GM. Only customers will determine which technology is successful, Ford Motor Co spokesman Trevor Hale said.
Volkswagen is developing all "relevant drive technologies," improving fuel economy and reducing emissions across all models, said spokesman Christoph Ludewig. Shenzhen-based BYD, in which one of Buffett's holding companies bought a 9.9 percent stake in 2008, declined to comment.
New-energy vehicles were one of seven emerging industries of strategic importance identified last year by the Chinese central government, which pledged 5 million EVs would be sold by 2020.
Added to central government incentives on EVs of as much as 60,000 yuan (US$9,650), some cities added sweeteners. In Shanghai, the total rebate can reach 175,000 yuan, Bloomberg New Energy Finance calculations show. That kind of discount on BYD e6's 329,800 yuan price tag puts the Prius, at 229,800 yuan, at a disadvantage. Similar rebates on Prius could make it cheaper than Ford Focus, China's best-selling car last year.
Consumer appetite failed to materialize even with financial incentives that halved the price tag of a BYD e6. The 27,800 EVs on Chinese roads are fewer than 6 percent of the government's 2015 target - and 0.02 percent of the total civilian fleet. For now, China needs to promote other technologies to cut the tailpipe fumes choking its cities, says one minister.
"We're very anxious" about worsening air pollution, Miao Wei, industry minister and a three-decade veteran of China's auto industry, said during this month's annual National People's Congress in Beijing. "I've never believed that you can gain global leadership in one leap."
Hybrid subsidies
Translation: China may need to support more conventional technologies to lower pollution levels. Miao said he's seeking support from other government branches to raise hybrid subsidies, aiming to unveil the policy plan in the first half. Even Science and Technology Minister Wan Gang, one of the leading advocates of electric cars, is warming to the idea. At the gathering of more than 5,000 lawmakers and officials, he said the switch to EVs will take more time than planned.
"Subsidies should be based on the fuel consumption and emissions of the vehicle," Li Shufu, chairman of Volvo Cars-owner Zhejiang Geely Holding Group Co, said at the Beijing meetings. "The government should expand subsidies to include more types of vehicles, including all sorts of hybrids."
More subsidies for the Prius would offer Toyota a better chance to achieve in China the kind of success enjoyed by the 15-year-old gasoline-electric model in the US and Japan. The Toyota City, Japan-based automaker sold 362,845 Prius cars globally last year, making it not only the top-selling hybrid but also No. 3 among all car lines in the world. In China, sales only reached 2,434 units last year, China Association of Automobile Manufacturers data show.
While a 14 percent share of global car sales makes Toyota the top ranked manufacturer, in China it lags behind General Motors Co, Volkswagen AG, Hyundai Motor Co and Nissan Motor Co in fifth place, with about 5 percent of deliveries, according to CAAM estimates.
Unlike EVs, conventional hybrid cars have gasoline engines that help recharge the battery for longer journeys. They also don't need to be plugged in to a socket.
A Lack of recharging stations doesn't help. China's 1.3 billion people had only 168 charging stations across 25 cities at the end of 2011, according to the Industry Ministry's website. That's 10 percent fewer stations than in Hong Kong, home to 7.2 million people.
"Charging stations still need to be built," said Science Minister Wan, arriving in a BYD e6. "We should continue to promote the electrification of public transportation while at the same time push for new-energy vehicle use by private buyers."
Traffic snarl-ups can also put EV drivers at risk of breaking down.
"With traffic jams during summer or winter, you need to use the air conditioning or heating," said Yale Zhang, managing director of industry analysis firm Autoforesight Shanghai Co. "If you're in a jam, you'll need to shut down everything or run out of electricity."
That may leave EVs as a niche product in China for the time being, according to Bloomberg New Energy Finance, which estimates 80 percent of China's EVs now are public buses.
Unperturbed, BYD will introduce the Denza, a new electric car developed with Daimler AG, later this year.
SAIC Motor Corp, China's biggest automaker, has been offering the Roewe E50 electric car since November. SAIC, which has joint ventures with GM and Volkswagen, also plans to sell the all-electric Springo with its US partner and two electric cars with its German partner this year.
Unlike with hybrids, a category which Toyota has led since the launch of the Prius in late 1997, EVs remain relatively new and inconvenient relative to gasoline cars.
Battery charging
"You won't see mass production of all-electric vehicles without a major breakthrough in battery charging," said Chen Binbo, executive vice president at Honda Motor Co's venture with Dongfeng Motor, which introduced the Insight hybrid to China last year. "We need a transitional product."
Incentives are a critical step to cultivate market acceptance of electrified vehicles in China, said Dayna Hart, a Shanghai-based spokeswoman for GM. Only customers will determine which technology is successful, Ford Motor Co spokesman Trevor Hale said.
Volkswagen is developing all "relevant drive technologies," improving fuel economy and reducing emissions across all models, said spokesman Christoph Ludewig. Shenzhen-based BYD, in which one of Buffett's holding companies bought a 9.9 percent stake in 2008, declined to comment.
New-energy vehicles were one of seven emerging industries of strategic importance identified last year by the Chinese central government, which pledged 5 million EVs would be sold by 2020.
Added to central government incentives on EVs of as much as 60,000 yuan (US$9,650), some cities added sweeteners. In Shanghai, the total rebate can reach 175,000 yuan, Bloomberg New Energy Finance calculations show. That kind of discount on BYD e6's 329,800 yuan price tag puts the Prius, at 229,800 yuan, at a disadvantage. Similar rebates on Prius could make it cheaper than Ford Focus, China's best-selling car last year.
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