China emerges as a global leader in EVs
It’s an ill wind that doesn’t blow somebody some good, and it’s an ill pollution day that doesn’t have an upside somewhere.
Last week, for the first time, Beijing went on “red alert” over air pollution. Automobile access to the city was restricted to odd and even license plates, and few people walked around without masks covering their faces.
But there was one category that didn’t suffer any harm from the pollution: owners of electric vehicles. EVs were allowed unlimited access to the city, and the sale of EVs experienced an uptick as people realized that they could be the wave of the future.
EV sales are expected to surge this year to 600,000 vehicles sold, with China leading the way with about 220,000. This means China will push past Europe and the Unites States for the first time in this category. U.S. sales are estimated at about 180,000 for next year. China now has its own EV industry, with some of the models barely bigger than golf carts. But with only short distances to travel in heavy urban traffic, these vehicles are finding a market and appearing on the road in significant numbers.
Just to make the point, Faraday Future, the Chinese-funded electric vehicle company, announced last week that it will build its own battery “gigafactory” outside Las Vegas and hopes to start producing cars by 2017. Faraday is set to compete head-to-head with Elon Musk’s $35,000 Tesla Model 3, which the company says will be unveiled in 2016, with sales starting in 2017.
Faraday is proving to be one of the most elusive and mysterious operations in the business world. Until the company signed its factory agreement with Nevada, almost nothing was known about it. Rumors persisted throughout the summer that Faraday was really a front for Apple’s venture into the automotive world. But that has proved to be untrue. The company is the work of Chinese billionaire Jia Yueting, 42, who ranks as the 557th-richest man in the world on the Forbes list, and the 41st richest man in China. Jia says he is building the factory solely as a way of improving the environment. “Look at China’s skies,” he said. “All responsible citizens want to do something about it. That’s the truth.”
If that’s the case, then, the question arises: Where are these cars headed? Will Faraday find the market big enough in the United States, or will some of these cars head back to China? This would be an indication that California and Silicon Valley are becoming a world manufacturing center, as the technology of the cloud and the Internet merges into the “Internet of Things.”
On its website, Faraday says it wants to create “clean, connected, smart mobility for all.” This will mean “fully electric vehicles that will offer smart and seamless connectivity to the outside world. Beyond traditional electric vehicles, we are also developing other aspects of the automotive and technology industries including unique ownership models, in-vehicle content and autonomous driving.”
As Matthew DeBord wrote in Business Insider: “If you parse that, Faraday Future could be building … anything. An electric car. An infotainment system. A self-driving electric car. A self-driving electric are with an infotainment system. Or … not even a car! Maybe a self-driving-electric-car-sharing service!” In any case, it sounds as if Elon Musk has met his match in developing new concepts for automobiles.
If the EV market is opening up in China, however, there is no indication that a similar surge is about to take place here in the United States. EV sales have, in fact, been rather flat over the past year and promise to remain so.
The extra-low price of oil is obviously having an impact. The Chevy Volt sold only 1,980 cars in November, for a year-to-date total of 13,279, down more than 4,000 units from the previous year. The Nissan Leaf has also slumped, with an 11-month total of 15,992, down 41 percent from 2014. Other models were even lower, with the Volkswagen e-Golf selling only 3,623 for the first 11 months, and the Mercedes-Benz B-Class Electric selling only half that.
EV manufacturers are looking forward to a better year in 2016. Volkswagen is planning to introduce a new electric concept car in January. The new model will be part of an effort to put the Dieselgate episode behind it. Toyota is also looking to plug its slumping sales with brand-new, much more stylish version of the Prius. All these new models will have an extended driving range, which remains the holy grail of electric cars.
But things keep moving ahead in China. BYD (Build Your Dreams) is a company that few Americans have heard of, but it’s the largest electric bus manufacturer in the world, with Warren Buffet as a principal investor. BYD has just signed a long-term contract to supply Washington state with close to 800 buses for its public transportation network. The company has developed its own iron-phosphate battery that has a 12-year warranty. The buses have in-wheel hub motors that renew their charge through regenerative braking. They also have solar collectors on the roof. In addition, the company has a crossover vehicle that is used by 200 Uber drivers in Chicago.
Even as people are choking on pollution in the streets of Bejing, China is moving ahead as a world leader in the development and consumption of electric vehicles.
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