EV Future Depends on U.S./China Bond
While Americans are preoccupied with the recent introductions of the Nissan LEAF and Chevrolet Volt, the long term success of the plug-in vehicle (PEV) market may rest on the development of a robust market in China. According to Pike Research, the two nations are forecast to be neck-and-neck in PEV sales during the next five years, and together will comprise nearly 60% of the global market. Sales of PEVs in the two countries in 2015 will total almost 600,000.
Like in the United States, the government of China is strongly encouraging the adoption of PEVs through incentives and publicly-funded projects aimed at reducing emissions in urban centers. Although hybrid and PEV sales in China have been slow to start, in looking to become a global automotive power, China will largely leapfrog the established ICE industry by focusing on producing hybrid and electric vehicles. As gas prices climb in China and around the globe, consumers are likely to increase their interest in hybrid and electric vehicles.
Even more important than their combined market share is the extensive collaboration and dependency between the United States and China. China plays an important role in American PEV auto and component makers’ manufacturing and sales efforts. Ford has three PEVs planned for China as part of its expansion into the region, while GM is partnering with SAIC on a new electric vehicle platform.
Other examples of the intercontinental collaboration include Coda Automotive sourcing batteries and the body for its upcoming EV from China, and Johnson Controls-Saft supplying batteries to Beijing Electric Vehicle Company.
Government agencies are also integral to the market develop, as both the city of Denver and Ford have an Eco Partnership with the city of Chongquing and Chang’an Motors, and the city of Los Angeles is sharing EV data with China.
While automakers have been reluctant to buy batteries from China due to quality concerns, these initiatives are bringing necessary intellectual property to China’s massive manufacturing capacity, which should enable the country to compete with battery makers in Japan, Korea, and the United States. Automakers are challenged by balancing the desire to participate in the lucrative Chinese market with protecting their IP so that the technology is not copied.
For EV and battery prices to come down through larger scale manufacturing volumes, both the U.S. and Chinese markets need to be vibrant and competitive. Joint ventures and technology sharing agreements is the chosen course today.
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