The Future of EV Vehicles in China- Part 2

Mitsubishi_Electric_CarLast week, we posted the first of two blogs about electric-vehicles in China. Bloomberg recently reported that the government in China may give as much as 100 billion yuan ($16 billion) in funding to build EV charging facilities in order to spur demand for clean cars. This week, John Kua, Ph.D., an EV consultant specializing in EV systems and components technologies with 18 years of experience in EVs, shares his views. In the past 6 years, Dr. Kua has been consulting in the Asia-Pacific region:

Ever since 2010, when China announced its intention (as part of its 12th Five-Year Plan to conserve energy, leapfrog automotive technology and reduce pollution) to introduce 1 million new energy vehicles, (mainly EVs and plug-in hybrids), into the local market by 2015, the initial euphoria has somewhat petered out. This is due to over-expectation, poorer-than-expected market take-up, in part due to poor consumer perception of EVs – followed by the apparent vacillation within the government on which strategy to adopt going forward.

To be fair, there are other external factors that China has been observing closely that affects her EV adoption plans – the aftermath of the Japan earthquake of 2011, which derailed Tepco’s plan (Tepco is owner of the damaged reactors) for EV charging network in Japan, Obama policy of massive funding for green energy companies (failed companies like Solyndra, EnerDel, A123, Fisker Karma, Ecotality, etc.) , and EU’s massive debt burden.

China’s recent purported intention to provide 100 billion yuan funding for public EV charging infrastructure is the latest attempt to revive the initiative – but will it spur the actual adoption of EVs this time round?

With benefit of hindsight from past five years of EVs experience in China, (the common complaints of poor consumer perception, limited electric range, lack of charging points and long charging time), China’s intention to fund the fledgling EV market would certainly alleviate consumer’s “range anxiety” and reduce the developmental cost for manufacturers. An added boost can come in the form of recent government subsidies for these clean energy vehicles (60,000 yuan~ $9800 for pure EVs, and 35,000 yuan for plugin-hybrids). However, having worked in this area in both China and U.S., I think China should learn from the recent U.S.’s policy in funding green energy industries (about 50 such companies now troubled or bankrupt). The crucial lesson is that such initial funding and subsidies should never be a blank endorsement, but are meant only to “jumpstart” the industry, such as by critically identifying and selecting crucial EV technologies to fund, which will in turn act as the catalyst for private innovation, experimentation and market exploration, to a point where sufficient sales volume is realized and market dynamics takes over. It is here that these subsidies should be reduced gradually and withdrawn.

Also, missing from this discussion of the need for charging stations, I believe, is a crucial ingredient – the charging standards – a national standard that defines the type of connector used, the pins configuration, safety, and communications protocols between the EVs and the charging station. On this, to her credit, China has established an initial draft in 2011 based on 220V AC standard (Level 2 charging) – the GB/T 20234.2-201, as well as a proposal for high voltage (DC> 400V charging). However, industry experts are still skeptical about its details, or lack there-off, especially with regards to safety aspects, compared with current standards from U.S. Japan and the EU. A case in point: Telsa’s recent launch of their model S in China. The lack of compatible charging stations has prompted a local businessman, Zong Yi, to purchase 20 charging stations from Tesla (at his own expense) and distributed them across 16 cities between Beijing and his home in Guangzhou. Another related piece of good news is Tesla’s recent joint venture with China Unicom (China’s second largest mobile phone company) to introduce up to 400 charging points in 120 cities all over China – with Tesla obviously providing the charging technology and Unicom the electric grid infrastructure and land.

All this is well and good, but at the national level, with current rate of progress with China’s standards, these charging stations can now only be used for Tesla EVs only. Thus China will have to play catch up game to align their standards to be at least compatible with current U.S. (e.g. J1772 connector) Japan (Yazaki CHAdeMO JEVS) or EU (Mennekes connector) standards. This crucial point seem to have been marginized in the past five years of excitement to promote local EV innovation in China during the government’s engagement with industry players and the scientific community, as evident from the various charging connector types used by local EV manufacturers all over China.

Finally, I believe the success of China’s EV initiative with charging stations this time round depends on China’s ability to synchronize her fledgling EV standards with new EVs and charging stations, in addition to engaging key stakeholders in industry, academia and community. The other key issues for EV adoption, such as lithium battery reliability and high initial cost, should be alleviated as market penetration gradually materializes and economies of scales take over.

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