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Summary:

This morning another China electric vehicle partnership has emerged: called the New Energy Sustainable Transportation International Alliance, the group includes auto parts maker Eaton, IBM, development firm AECOM, automaker Beiqi Foton Motor Co., lithium ion battery maker MGL and electric motor producer Broad Ocean.

What’s the Driving Force Behind China’s Great Green Leap Forward?

Electric car makers that don’t have a “China-strategy” are overlooking the world’s largest market. Most do, and after interviewing a half-dozen EV startups over the past several weeks, it’s clear that partnering with Chinese battery and auto makers is one of the dominant strategies for U.S. electric car startups like Coda, AC Propulsion, and even ZAP. This morning, another China electric vehicle partnership has emerged. Called the New Energy Sustainable Transportation International Alliance, the group includes auto parts maker Eaton, IBM, development firm AECOM, automaker Beiqi Foton Motor Co., lithium-ion battery maker MGL, and electric motor producer Broad Ocean.

The group says their first project is to develop and sell electric buses in Chinese cities that will use products from Eaton, Broad Ocean and MGL, and the alliance says they will be focusing particularly on city-owned fleets, taxis, and commercial charging infrastructure.

There are a couple of reasons why China’s plug-in vehicle market (all-electric and hybrids) is so crucial. With about 35 cars per 1,000 people in China’s 1.3 billion-person population, roughly 80 percent of car sales in the country are currently made to first-time buyers. As Josie wrote for GigaOM Pro (subscription required), this potentially lowers the barrier to adoption of alternative vehicles. Nearly half of the more than 5 million electric vehicle charge point installations anticipated worldwide by 2015 will happen in China, according to Pike Research. In addition, the government-owned utility State Grid Corp. plans to invest $586 million in a smart grid buildout over the next five years.

China has been investing in a green economy across the board, including clean power, energy efficiency and plug-in cars. As investor David Anthony wrote in a column for us in April, China is looking to clean up its economy and its air pollution via EVs:

A 2007 World Bank study found that air pollution kills three-quarters of a million Chinese every year. This number so embarrassed the Chinese government that it prevented parts of the report from being released to the public. Although things have improved somewhat in recent years, clean air remains a scarce commodity in Chinese cities, and pollution-related diseases are still the leading cause of death in China.

Fast-moving U.S.-based electric vehicle startups have already started to put their stakes in the ground in China. Coda Automotive has teamed up with Chinese battery maker Lishen to create a joint venture — called Lio (oil spelled backward) — to make battery cells for Coda’s all-electric sedan due out before the end of this year. EV drive train maker AC Propulsion has been developing an electric minivan with Yulon, Taiwan’s largest automaker, which has an agreement to produce electric cars in a joint venture with mainland China. ZAP recently bought out half of Chinese automaker Jonway, plans to buy out the other half next year, and last week showed off its electric SUV that will eventually be used as a taxi in China.

Other U.S. players interested in the Chinese market include electric motorcycle startup Mission Motorsbattery maker EnerDel (a subsidiary of Ener1), smart grid heavyweights General Electric and Cisco, and Atieva, a tight-lipped developer of battery pack management systems. IBM has its eyes on both electric vehicle IT management and the smart grid, and told us last year that it expects to generate a minimum of $400 million in smart grid revenues in China over the next four years.

For more research on how to break into the greentech market in China check out:

Carving a Path to Greentech in China

Image courtesy of Shell’s photostream.

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  1. Makes me wonder how a country with so massive coal power generation can clean up the air by going for electrical vehicles.

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  2. Couple ways… A) Electric motors are at least 3 times more efficient than internal combustion on a plug to wheel vs pump to wheel basis; B) Off peak EV charging would reduce emissions dramatically; C) Converse to B – Smart metering helps ensure EV charging is clean and affordable by regulating it during peak hours; D) China is working to reduce the amount of coal in its power plants, meaning the grid will become cleaner over time due to less reliance on fossil fuels.

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