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May 22, 2017

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Like riding on dynamite? Braving leaps of faith

TO embrace China’s crusade to become the green car capital of the world, you may need a great leap of faith.

The latest test of trust was an accidental fire involving 90 electric buses at a parking lot in a Beijing tourist resort earlier this month. The disturbing scenes of black smoke burned a negative image in the public psyche.

The batteries used in electric buses are supposed to be safer than the ones packed into Samsung’s notoriously explosive Galaxy Note 7 and in many other electric vehicles. But the Beijing incident made people wonder if driving an electric vehicle is like riding on a bundle of dynamite.

And the fact that so many buses were sitting idle outside a famous resort during the high tourist season added an unsettling tone of mystery.

“They might have been taking a ‘big nap’ there because they don’t function well as commute vehicles, with their limited driving range and spotty access to charging infrastructure,” said my auto industry friend Vincent.

The real myth has always been the actual size of the electric-car market in China. Officially, the sales target for 2025 is 7 million green vehicles, or an estimated fifth of all sales. To reach that level, the market needs to grow more than an average 30 percent a year from the 500,000 units sold in 2016.

Sales last year were dominated by car rental companies following the government’s green directive and sprucing up their green credentials. Most individual buyers of green cars are more interested in gaining access to the free plates they offer than they are in doing their civic duty to help clean up the air.

So, when fluttering, highly flammable willow catkins were blamed for starting the Beijing bus fires, a sigh of relief went up. Authorities didn’t want any new dents in their public policy, after having tackled scandals like green-car subsidy fraud.

The high-flying goals of the government’s new energy vehicle policy have turbo-charged the industry to the brink of a short circuit. The cars are there; the buyers are not.

My auto journalist friend Sean, after test-driving all the electric cars on the Chinese market, said he couldn’t find a single that he rated good enough to buy, except for Tesla models, which were beyond his budget.

“Within the price I can pay, I deserve higher specifications,” he said. “Electric cars are not just competing with each other, but also with a wide range of traditional vehicles that are good value for the money.”

Some 30 percent of the green auto market lies in cities like Shanghai, which have adopted policies to discourage purchases of internal combustion cars and promote buying pollution-free vehicles. Getting a license plate for a traditional car gets harder and harder, while free plates are freely handed out for green cars.

Beijing’s annual quota of green plates was used up in April, suggesting that green car sales in the capital may not be very robust for the rest of the year.

The buzz and fuss surrounding the green vehicle industry evokes, for some, memories of China’s Great Leap Forward period in the late 1950s and early 60s, which hid disappointing results behind romanticized illusions.

Back then, it was the development of small backyard steel furnaces to aid the nation’s industrialization. Today, is it the development of car-making startups specializing in new energy vehicles. The startups now number 200, but only 14 of them have been given the green light to manufacture their concepts. The rest are struggling to prove that their ideas are worthy of manufacture.

“How many of those startups do you expect to still see next year?” I asked my friend Andrew, who is in the venture capital business.

“Not many,” he replied. “But you will always have dauntless newcomers. It is not that hard to start a car company these days. It’s like opening a boutique shop that sources top-quality goods from outside suppliers. You just need the money and the presentation skills to complete the whole look.”

While most startups are still billions of yuan short and several years shy of turning out serious cars for sale, the cozy club of established carmakers doesn’t show much self-initiative. They are weighing up prospects. How affordable does a new energy car need to be at the initial stage of investment? How big a dent can the bottom line take? Will dealerships want to bother trying to sell the cars if government incentives are withdrawn?

Having seen the leapfrog development of China, from a country of cyclists into the world’s largest auto market in just two decades, optimists like me still tend to keep the faith that this nation will once day be a global kingpin in green vehicle manufacturing. The question is: how fast will that occur?

“The fastest way is to build a concept car, based on some outrageous sketches,” my designer friend Mickey said, scorning some of the odd-looking electric cars now available in China. “A true standout would need to be different inside and out.”

In this worldwide movement to move to electricity from fossil fuels, the focal points for the auto industry have always been — and probably always will be — the battery, the electric motor and the electronic control unit. A carmaker lacking intellectual property related to these three factors is really left with just an empty shell.

And every news report about battery fires in electric vehicles around the world will contribute to our anxieties about the green age of driving.

As the Chinese proverb goes: pure gold does not fear the furnace.


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