China sees a bright future for electric vehicles

EV sales are slumping in the rest of the world, so why have China's automakers been investing so strongly in them?
Written by Channtal Fleischfresser, Contributor

Despite all the media focus on electric cars, their adoption in the U.S. and around the world can be considered halting at best. The much-hyped Nissan Leaf, for instance, sold only 9,819 units in 2012 - even Nissan CEO Carlos Ghosn admitted that was a disappointment.

Yet Chinese companies have made a serious investment push behind EVs recently. Geely Automobile, Dongfeng Motors, and other Chinese automakers are in the process of bidding to take over Fisker, the maker of the electric Karma model. BYD, another Chinese automaker, plans to launch a new model, the Denza, in a joint venture with Daimler later this year.

Furthermore, the country's Wanxiang Group has just received the go-ahead from the U.S. government to buy the bankrupt A123 Systems for $256 million. Before declaring bankruptcy, the company was a high-quality developer of electric car batteries, and it had received $133 in federal grants.

Meanwhile, the fortunes of electric cars elsewhere continue to be shaky. A recent, controversial New York Times test drive of Elon Musk's highly touted Tesla Model S electric vehicle went sour when the car ran out of battery and had to be towed.

China has promised to get 5 million electric vehicles on the road by 2020 - and it appears that the country's automakers are betting that the government will keep its promise.

While consumers in most of the world are held back by EVs' cost as well as range anxiety, China's government, keen to avoid long-term dependency on oil, can provide consumers with significant rebates (including a $9,600 subsidy to EV buyers) and direct purchase mandates, and can facilitate widespread charging infrastructure initiatives. This can shield the consumer EV market from some of the market considerations (like price) that keep most other consumers from adopting electric vehicles.

It seems that at least in China, electric vehicles may in fact have a bright future.

Photo: Denza

via [Wall Street Journal]

This post was originally published on Smartplanet.com

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