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Home / Business / China's electric vehicle ambitions in spotlight at the Shanghai auto show

China's electric vehicle ambitions in spotlight at the Shanghai auto show



BEIJING – This year's car show in Shanghai highlights the global industry's race to create electric cars that Chinese drivers want to buy as Beijing is cutting down subsidies that promote sales.

Communist leaders shift the burden to automakers by introducing mandatory electricity sales targets, adding financial pressure to them among a painful downturn. Chinese purchases of clean electric and hybrid sedans and SUVs increased by 60% last year to 1.3 million – half of the global sum – but total car sales declined 4.1% to 23.7 million.

Buyers of electricity were lured with subsidies of up to 50,000 yuan ($ 7,400) per car, but the aid was cut by half in January and ending next year.

"The competition is getting more fierce," said industrialist Paul Gong from UBS.

Read: Volkswagen reveals electric SUV for China that can compete with Tesla Model X

Communist leaders have been promoting electricity for 1

5 years in the hope of clearing smog-smacked Chinese cities and gaining early leadership in a promising industry.

General Motors

GM, + 0.97%

Volkswagen

VOW, + 1.20%

Nissan

7201, + 0.75%

and other global principals develop models to suit Chinese tastes. They have money and technology, but local rivals have experience: brands like BYD Auto and BAIC Group have sold low-cost electronics for a decade.

At the Shanghai show, which opens to the public on Saturday, car manufacturers are planning to show dozens of electricity, from luxury SUVs to microcompactors priced below $ 10,000. They aim to compete with gasoline-powered models for performance, cost and appearance.

By the end of next year, it will be very difficult for a customer to decide on an electric car, says President and CEO of Volkswagen AG, Herbert Diess.

"The cars will offer room, space, fast charging," Diess said during a January visit to Beijing. "They will look exciting."

Car manufacturers are looking at China, their largest global market, to increase revenue growth at a time when US and European demand is flat or declining. It gives them an incentive to work with the Beijing campaign to promote electricity.

General Motors Co. presents this week's first all-electric model in Buick's only Velite series in China, which includes a hybrid based on the Chevrolet Volt. VW will show a concept SUV as part of plans to launch 50 electric models by 2025.

Nissan Motor Co. and its Chinese partner will show Sylphy Zero Emission, an all-electric model designed for China sold in August. BYD Auto will display an all-electric sedan with an advertised area of ​​400 kilometers (250 miles) on a charge.

The pressure to switch to electric is "more an opportunity than a threat" for Chinese automakers, UBS Gong said. 19659002] Lowers for petrol-powered vehicles, Chinese brands account for only 10% of worldwide sales, mainly at low price levels, Gong said. But they account for 50% of the electrical sales worldwide.

"In the EV world, Chinese businesses began earlier and reacted faster," Gong said.

The governing Communist Party has spent thousands of dollars on research grants and buyer incentives. State-owned power companies have blanketed China with 730,000 charging stations, a large larger network than any other country.

Meanwhile, automakers are driving revival of traditional SUVs, minivans and sedans which fell last year for the first time in three decades.

A wage war with Washington and the weakening of economic growth made jittery consumers reluctant to commit to big purchases. That ski worsened this year. Turnover in the quarter fell 13.7% from the previous year.

Despite that, people in the industry say that Chinese sales could exceed 30 million vehicles annually by 2025.

Ford launched its China operation this year after the 2018 sale pushed 37%. The company blamed an aging product line.

Global brands connect with Chinese partners with experience in low cost production.

Ford

F, + 0.64%

has an electric venture with Zotye Auto. GM and its Chinese partners are planning 10 electric models next year. Mercedes Benz launched the Denza brand with BYD. VW's electric joint venture, SOL, began selling an SUV last year.

Under the new system, automakers have to make money from selling electricity equivalent to at least 10% of purchases this year and 12% by 2020. Car manufacturers that go down can buy credits from competitors who exceed their targets.

Regulators say goals will rise later.

An electric stamp price in China is still higher than a petrol model. But charging and maintenance costs less. Industrial analysts say that owners who drive at least 16,000 kilometers save money in the long run.

China's largest SUV brand, Great Wall Motors, has responded to the sales quotas by launching an electric brand, Ola. The R1 compact, while looking like a toy next to the Great Wall's hulking SUV, was sold in December as low as $ 59,800 ($ 8,950) after the subsidy.

In a move to spur competition, Beijing lifted ownership restrictions on electric car manufacturers last year.

Tesla

TSLA, -0.27%

responded by announcing plans to build their first factory outside the United States in Shanghai.

Official aspirations collide with the Chinese people's love for large SUVs, seen as the safest solution to crowded, bumpy streets. But sentiments change.

A UBS survey found 71% of Chinese buyers willing to try an electric one, up from 58% a year ago. The frequency for the US and Europe was below 20%.

"The customer's will is always higher in China," Gong said.


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