We have launched E-mail Alert service,subscribers can receive the latest catalogues free of charge

You Are Here: Home > Publications> Articles

Seize Historic Opportunity to Develop New-Energy Vehicles


Chen Qingtai

By Chen Qingtai, Development Research Center (DRC)

Research Report No 94, 2009

Under the tremendous pressure of energy environment, the auto industry has been looking for clean energies and substitute energies for a long time. As a result of the major breakthroughs made in recent years in power cell technologies, the "auto electrification technology" has stood out among diverse technological paths for new-energy vehicles. President Barack Obama explicitly noted that plug-in vehicle represented the technological direction of the American auto industry. His view soon won widespread recognition, and the technological revolution in auto power is regarded as the breakthrough for revitalizing the economy. The moves taken by all major auto-producing countries and automakers have been unprecedented in speed, intensity and coordination that they have evolved into a competition to conquer the future commanding heights of the auto industry. At present, how to seize this historic opportunity with understanding, policy and action will have impacts on China's auto industry.

I. Electric Vehicle Represents Major Strategy

Auto electrification is a mjor issue that concerns a country's national energy strategy. Obama's vigorous promotion of "plug-in vehicle" shortly after he took office was a strategic decision, based on the result and prospect of technological development and designed to reduce the dependency on foreign oil, which has changed America's passive position in climate change and rejuvenated the American auto industry.

For over a century, industrial societies have been based on oil energy. Today, oil accounts for 40% of world energy consumption and 90% of transportation energy. The developed countries have tried every possible means to secure oil supply, which resulted in volatile oil geopolitics and frequent regional wars over the last 100 years. Today, the population of the new industrializing countries, including China and India, is more than twice as much as that of all industrialized countries. It is expected that the conflict between the growing energy demand and the eventual depletion of oil resources will bring the age of cheap oil to an end and will drastically push up the cost of oil-based industrialization. As the allocation pattern of global oil resources has long been established, those countries with a late start in development will find it increasingly difficult to acquire oil resources.

While China's auto industry is prospering in both production and sales, one of our lingering concerns is how the country with a population of 1.3 billion will solve the growing energy and environmental problems at a time when motor vehicles are vigorously entering families.

China was a net oil exporter before 1993, but its dependency on imported oil rose to 25% 10 years later in 2002. China became the world's second largest oil consumer and third largest oil importer in 2003, and its dependency on imported oil reached 51.4% in 2008. Moreover, China's energy demand will continue to grow vigorously for a considerable time to come. The shortage of local oil resources, the rapid growth of oil import, the high oil prices and the pollution arising from energy production and consumption have all exposed China to the largest and most serious challenges related to energy and environment. In fact, in reducing dependency on foreign oil and cutting greenhouse gas emission, China's task is as pressing as that of America.

This new energy revolution has provided China with new ideas and new ways, and can greatly ease China's pressure from energy security and environmental protection in the course of industrialization, urbanization and motorization. Therefore, China should regard new energy revolution as a major strategy and vehicle electrification as a historic opportunity to reexamine the situation of new-energy vehicles and the state auto energy strategy by proceeding from national energy security and from the new forward-looking and long-term strategic perspectives.

In the long run, the "auto dream" of the 1.3 billion Chinese people also pins on electric vehicles. II. Making Breakthroughs in Indigenous Innovation and Proprietary Brands

At present, China is a major auto-producing country, but not a strong one. This most important revolution in auto power technology in a century has provided a historic opportunity for Chinese enterprises to catch up in technology.

China began to formulate and implement a technological plan for new energy vehicles in the 10th Five-Year Plan period. In this process, dozens of institutions engaged in production, academics and research institutions were involved and follow-up studies were undertaken on all main technological paths. The 863 National Program earmarked 2 billion yuan as R&D funding. The R&D plan highlighted "three vertical" vehicle models, namely pure electric vehicles, oil-electric hybrid vehicles and fuel cell vehicles, "three horizontal" generic technologies, namely multi-energy power system,drive motor and its control system, and power cell and its management system, and new-energy vehicles based on "vehicle power electrification". In this race, China was basically on the same "start line" with other countries, for the first time in the country's auto history.

As plug-in vehicle can fundamentally reduce dependency on oil and realize zero emission, it should become the main direction of China's new-energy vehicles. China already has accumulated some technology related to electric vehicle and its main auto enterprises have sufficient funds to increase inputs in the relevant technologies. China has abundant lithium and rare earth resources required for electric vehicles and therefore enjoys a resource advantage. The country has relatively less sunk investment in the traditional auto power technologies and therefore its technological change-over involves a relatively low cost. Its auto consumption is in a period of growth and therefore enjoys a visible advantage in market scale. Because of all these advantages, China enjoys relatively favourable conditions for developing electric vehicles. During the Olympic Games last year, China's domestic-developed new-energy vehicles made the largest application test in the world, which provided the basis for further research and development. The "Plan for the Rejuvenation of the Auto Industry" and the "Pilot Project for Thousand Vehicles in 10 Cities" will lay a foundation for industrialization. China is entirely possible to take advantage of auto power technological change-over to change its passive position of excess dependency on foreign technologies and make breakthroughs in indigenous innovations and proprietary brands.

It is expected that the coming two or three decades will be a crucial period for forming a world order of new-energy auto industry. This megatrend, which will influence the future, is both a fine opportunity and a grave challenge to us.

If you need the full text, please leave a message on the website.