China's new energy vehicle sector faces growing pains

Zhao Liang, a resident of Changchun in northeastern China, takes the No.66 bus to work every day, never noticing a difference between the bus he used to take and the one he takes now - the one with the words "hybrid power" emblazoned on its backside. Changchun introduced 100 hybrid vehicles to its public transportation network in 2010. It will add another 100 this year. At the eighth China Automobile Fair currently being held in Changchun, the China FAW Group, one of the country's largest automakers, debuted two new hybrid bus models. Hybrid vehicles have been making a splash outside public transportation as well. On July 8, Changchun implemented 16 measures that are intended to promote private purchases of new energy vehicles. The city plans to offer 500 new energy cars to assigned customers, for whom a basic post-sale service system will be established. "This year is a demonstrative year for the development of new energy vehicles in Changchun. We will boost the sector through a raft of favorable polices," said Xiao Wanmin, deputy mayor of Changchun. Liu Minghui, the director of the electric vehicle department of the China FAW Group's research and development center, said the company also plans to initiate a trial run for its B50-model electric car this year. The company has vowed to develop hybrid and purely electric vehicles for all of its commercial vehicle and passenger car product lines. "Ten year ago, when the country first started to develop new energy vehicles, the electric vehicle sector was still at the research stage. Now, our management team has realized that its era has arrived," Liu said. Changchun isn't the only city working to promote the sale and use of new energy vehicles. In June 2010, five cities, including Shanghai, Changchun and Shenzhen, began to subsidize the purchases of new energy vehicles on a trial basis. This number has since increased to 25. In addition, a new plan that will outline the development of the country's new energy vehicle sector of the next ten years is expected to be publicized soon. However, most of these policies have so far failed to woo the private market. Several new energy car dealerships in Changchun have seen zero sales for electric cars, with some of them lacking even a proper display model for their stores. "Sales of electric cars in other cities like Beijing, Shanghai and Hangzhou have been the same. Dealers in those cities also refrain from exhibiting the cars in their stores, as their sales have been pretty bad," said one car dealership employee in Changchun. Sales of new energy vehicles have not been encouraging in the country's trial cities. In Shanghai, licenses for new energy cars are rarely issued. BYD Co. Ltd., one of the country's leading carmakers, has only sold a few hundred of the vehicles. Consumers have largely held back due to concerns regarding the safety and ease of use of new energy vehicles. "Why don't the drivers of these new energy buses turn on the air conditioning?" complained commuters in Changchun during a recent heat wave. Along with good qualities such as low noise and high stability, new energy vehicles also have their share of weaknesses. "The buses will break down if the air conditioning is left on. We can afford no power increases, as water in the vehicle can reach 100 degrees Celsius when the air conditioning is on," a bus driver surnamed Chen said. Chen said the air conditioning system in his bus broke down after a year of use and cannot be used again until a new motor is installed in the bus. In addition to previously encountered problems such as the short lifespan of electric batteries, other factors such as incomplete industry standards, poor management and safety risks have troubled the growth of the new energy vehicle sector, according to industry experts. Due to a lack of relevant industry standards, electricity suppliers and automakers are still wrestling with questions over how the vehicles' batteries should be designed and operated. "From a global point of view, the battery problem is an obstacle that will be hard to hurdle for the new energy vehicle sector," Nigel Clark, a professor of mechanical and aerospace engineering at the United States' West Virginia University, said during the Changchun auto show. Guo Konghui, an academician from the Chinese Academy of Engineering, said the development of new energy vehicles is still at an exploratory stage, even in developed countries. "If the past five years can be viewed as a developing period for the sector, the next five years will be a time for the industry to crack down on key issues," Guo said.