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Despite challenges, EV Alliance shows central resolve

The EV Industry Alliance of Centrally Administered Enterprises (the Alliance) established by China’s State-owned Assets Supervision and Administration Commission (SASAC) is a major attempt by the State Council to rally the country’s financial, R&D and industry resources in executing a national strategy in developing new energy vehicles.

The significance of the EV Alliance is the determination on the part of central decision makers to tap into the resources of the 16 State-owned companies in the oil, electric power, automotive, battery and other related industries for a government-industry alliance in the facilitation of the country’s electrification efforts, with an eye to winning global competition.

However, the challenges for such an unprecedented alliance are as great as, if not greater than, it promises. The biggest challenge seems to be how to reach the goal of “commonly developing and sharing successful technologies among Alliance members and create an open technology platform.”

As core technology is a basic assurance for any business enterprise in a successful market operation and sustainable growth, no enterprise will be generous enough to share its core technology with others. It is most unlikely, for example, that the three OEM members of the Alliance, FAW, Dongfeng and Chang’an, would be willing to share their core technologies, if any, in the electric or hybrid vehicle field.

It is also extremely difficult for Chinese OEMs to build a technology platform that they can share because the hundred or so OEMs in China produce too many brands with widely different technical platforms and requirements. The emphasis on sharing technology platforms among Alliance members may stifle individual enterprise’s incentive and motivation in technology advancement. Any real core technologies are usually the result of market competition.

The other fear expressed by enterprises still outside of the Alliance is whether the entity would represent the interests of both State-owned, joint venture and private companies in China. The 16 members of the Alliance are the biggest and most influential State-owned enterprises in the power generation, automotive and battery segments and many of them are monopolies. Standards to be set by these enterprises may not fairly reflect the interests of non-State-owned companies.

Despite challenges, the EV Alliance is China’s effort to form a government-industry alliance similar to the Electrification Coalition of the U.S., the CHAdeMO of Japan and the National Electric Mobility Platform (NEMP) of Germany.

Although still a developing nation, China does not want to fall behind automobile power houses such as the U.S., Japan and Germany on its road to the new paradigm of vehicle transportation. The purpose of the EV Alliance is to better coordinate government and enterprise efforts in the strategic planning for the commercialization and industrialization of electric vehicles.

The founding of the EV Alliance shows the resolve of the State Council in executing a national strategy. It will help speed up the drafting of EV, battery, charging station and other relevant standards with an obvious attempt in having an important say in the formation of international EV standards.

Although it will take some time for the EV Alliance to expand participation by regional and non-State-owned companies, form operable committees and develop effective programs, the real significance of the Alliance is the direct and tangible involvement by central decision makers in the electrification of China’s motor vehicles.

The one interesting phenomenon about China since the country embarked on the road to economic reform is that when the central government makes a strategic decision, things get done and done fast.

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