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The skeptical electric side of Guangzhou Auto Show

IHS Automotive analyst Namrita Chow’s note on Guangzhou Auto Show and the outlook for electric vehicles – Editors

The Guangzhou Auto Show has begun with a flurry of electric vehicle (EV) announcements. International automakers have been quick to announce plans for new local brands in China with their Chinese joint venture (JV) partners, while they have also been quick to respond to the government calls for electric and alternative powertrain vehicles for China. However, analysts remain skeptical of how readily these new EV concepts will be accepted by the Chinese consumer base.
The JV between Daimler and BYD will reveal a concept car at the Beijing Auto Show in 2012 as well as reveal their new brand name and logo the automaker has said in a news release sent to IHS Automotive. The Shenzhen BYD Daimler New Technology Company (BDNT) will unveil the design concept of the JV’s first EV at the Beijing Auto Show next year with production slated to begin in 2013. The BDNT JV has already begun prototyping the production version of the EV concept and supplier sourcing is nearly completed.
General Moters has announced the price of the Chevrolet Volt, which will go on sale at 13 Shanghai GM Chevrolet dealerships in eight cities across China. The car is priced at ¥498,000 ($78,000). GM’s China president Kevin Wale is skeptical of how many Volts will actually sell in China, saying, “This will be relatively low-volume,” in an interview with Bloomberg. “We’re trying to use this as a statement for technology and the beginning of the path towards electrification.”
VW aims to build electric vehicles in China from 2013. The German automaker’s president and chief executive officer Karl-Thomas Neumann said that VW may build two electric models in China with its JV partners, probably starting from end-2013. The models are likely to have a range of 100-200 km and VW aims to have 10,000 EVs in the country by the end of 2018.
Beijing Hyundai, a JV between Hyundai and Beijing Automotive Industry Corp (BAIC) has finally launched its new local brand for China. The new brand is called Shouwang and was launched on the first day of the Guangzhou Auto Show. The brand’s first model on display is an electric concept car, the BHCD-1.
Senior vice-president of Volvo and chairman of Volvo Cars China Operations, Freeman Shen, said that the automaker plans to develop a second generation of its pure electric C30 compact car. “Mass production of electric C30 cars in China is also our plan. However, the timetable depends on the Chinese government’s support policies and infrastructure construction for electric vehicles,” said Shen. The electric C30 is already being tested in Shanghai.

Outlook and Implications

Global and local automakers are keen to show that they are meeting the Chinese government’s calls for electric vehicles. However volume sales of electric vehicles will be a stumbling block and it is still uncertain how quick Chinese consumers will be to adopt the technology. The reality is that EVs are not yet advanced enough to make them as appealing as regular gasoline (petrol) or diesel engine vehicles. The price tag is another hindrance, with consumers unlikely to pay high prices for models that do not meet their daily travel requirements.
GM’s Chevrolet Volt for example is priced at just under half a million yuan, making the model unaffordable for regular Chinese car buyers. Even with government subsidies, it is more expensive than the average compact car available for the mass market in China. The Volt is currently imported to China, and GM is unlikely to begin local production due to the low anticipated sales. GM is using the Volt to show its commitment to the government’s agenda to have a million EVs on the roads within the next decade.
International automakers are all trying to appease the government, showing that they are indeed able to bring EVs to China. But whether EVs will sell in China and whether policies to encourage volume sales in China will be effective, are left to the government in the country. Almost every international automaker has announced plans for EVs in China, but almost all are equally skeptical of volume sales. IHS Automotive analysts remain skeptical of whether the new Shouwang brand will actually build EVs. “I doubt they will design a brand new EV that might hardly sell in China. It could be a petrol car or hybrid at best,” said Lin Huaibin, light vehicle sales forecast manager at IHS Automotive in China.
Meanwhile IHS Automotive’s light vehicle production analyst Boni Sa is questioning when EVs will begin production in China. So far most announcements have been for a few years in the future, with only concept models displayed. In the future it is therefore expected that many new EV production schedules will be postponed. EV sales in China will depend on if they are able to compete with gasoline-powered cars: they will need to be priced in competition with regular cars; adequate infrastructure across China and consumer confidence in the safety and reliability of EVs. Although the government has announced discounts, subsidies and special electricity usage prices for EVs, the overall effect of the policies is still limited and unlikely to attract car buyers away from regular cars.

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