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Swimming, and drowning, in the electric vehicle sea

November 23, 2010

When I lived in China in the early 90’s, going into business for ones’ self was known as “xia hai,” or jumping in to the sea. These days, many Chinese companies are jumping into the sea of electric vehicle manufacturing, and some of them are going to drown. That’s the way the market works.

I saw a lot of these companies in Shenzhen a few weeks ago at the 25th World Battery, Hybrid, and Fuel Cell Electric Vehicle Symposium and Exhibition, an international conference and electric vehicle show. 

There were several dozen companies showing mini EVs. Some were already manufacturing the tiny cars, some were hunting for partners. All saw the sector as a good business opportunity.

Why? The government. As I learned from several presentations by government officials at the Symposium, mini EVs and buses are important stepping stones in the evolution of China’s electric vehicle segment. So, the government is encouraging their production.

That, in turn, has encouraged companies that had no previous experience in manufacturing cars to jump into the electric mini vehicle sea.

At EVS25 I met people such as 24-year old Zhang Biao, assistant general manager of the Dongyuan Three New Electric Vehicle Technology Co. Ltd.  www.dg.sysu.com The company is attached to the Sun Yatsen University Research Institute in south China’s Guangdong province.

We have the technology and we see a good business opportunity, says Zhang of the EV sector.

The university has developed its own electric drive train and battery management system, he says. Now, it’s looking for someone to produce an EV using that technology.

“We think there are many opportunities in the EV sector now,” says Zhang.

Then there was the Shandong Bidewan Power Technology Co. Ltd., www.byvin.cn which gets my vote for the cutest mini EV, mostly because it was pink and had a stuffed bear hanging on the side mirror.  Byvin, as it goes by, started selling its low-speed EVs mini EVs last year for 29,800 RMB or US $4,487 at current exchange rates. More than an electric bike, but cheaper than a Chery QQ, which starts around 31,000 RMB.

Does the bear come with the car?

Privately-owned Shandong Baoya New Energy Vehicle Co. Ltd.  www.baoya-ev.com started making mini EVs three years ago, piggy backing on its electric bike technology.

Luojo (Weihai) EV R&D Co. Ltd. produced an electric vehicle that meets Euro 4 emissions standards a year ago, claimed sales manager Andy Yang. Now the company is looking for a partner to mass produce its mini EV.

Clearly not all of these companies are going to make it. For one, the government may not license their vehicles for sale. And there is a debate going on right now about allowing such low-speed vehicles on China’s roads. But, it seems that will be decided in the affirmative as the government is promoting the sector.

The privately-owned companies face the biggest hurdle because funding will be hard to come by and they won’t have a local government propping them up for job creation. So, is Beijing wrong to encourage investment in the sector?

No, I don’t think so. While this may not produce breakthroughs in EV technology, it already has produced a flurry of research and development. What the government should do is set high technical standards for these mini cars, to push companies to innovate.

Will some of the companies fail? Yes.  China may end up with a bunch of tiny EV makers on the local governments’ payrolls. That’s what has happened in the regular automotive sector. That would be bad.

And, the roads could be clogged with slow-moving mini EVs. That’s the biggest harzard.

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