China is working to set a timetable to phase out the production and sale of fossil-fuel-powered vehicles, in a move that will accelerate the push into the electric car market led by companies such as BYD Co. and BAIC Motor Corp.
BYD chairman Wang Chuanfu said on Thursday he expects “all vehicles in the country will be electric by 2030, including all passenger cars”.
And by 2020, buses in China will all be electric, followed by heavy trucks by 2025, he added.
Earlier this month, Xin Guobin, China’s vice minister of industry and information technology, disclosed that the country has started researching on when to ban the production and sale of cars using traditional fuels, without giving a timeframe for the shift.
The world’s largest car market is the latest to join countries such as the United Kingdom and France in seeking to phase out vehicles using gasoline and diesel.
“We are very confident about all the timetables [to eliminate fossil fuel cars] and we think it will happen earlier than expected,” Wang said at an event in Shenzhen. “Various governments have announced timetables to end the sale of fossil-fuel cars and this is putting pressure on everyone else.”
China had earlier targeted for electric and plug-in hybrid cars to make up at least a fifth of its auto sales by 2025 in order to combat the air pollution and close the gap of competition between domestic automakers and their global rivals.
Backed by billionaire Warren Buffett, BYD has invested heavily in the electric vehicle (EV) market. Wang said BYD is considering supplying batteries to competitors and also exploring joint investments in battery production projects.
Battery production is posing a stiff challenge to numerous carmakers as a battery factory can cost three times as much as an EV assembly plant, he said. The company expects to announce the first contract by the end of the year.
Chinese regulators may ease restrictions on foreign investment in EVs, allowing foreign automakers to set up wholly owned EV businesses in the country’s free-trade zones, according to a local media report, citing a commerce ministry spokesman.
If this turns out to be true, the policy would be a major revision of China’s requirement that foreign carmakers must form joint ventures with Chinese counterparts to produce vehicles in the market.
BYD is also discussing more investment in Shenzhen Denza New Energy Automobile, its joint venture with Daimler AG, to bring new models to the market under the Denza brand, Wang said, without elaborating.
In May BYD said it would increase its 500 million yuan (US$ 75.85 million) investment in the joint venture. The partnership started in 2012.
According to the China Passenger Car Association, BYD led the China market in less-polluting vehicles in the first seven months of this year, delivering 46,855 electric and plug-in hybrid cars. Beijing Electric Vehicle, the EV division of state-owned BAIC Motor, ranked second with 36,084 units.
“If you’re the leading seller of Chinese electric vehicles, then you’re going to want this to happen as soon as possible. So, of course, it’s logical for Wang Chuanfu to say it’s going to happen quickly,” Bill Russo, head of Automobility, a Shanghai-based consultancy, told the Financial Times in an interview.
Russo believes that most carmakers in China are not ready for a complete shift to electric vehicles. “I think you’re going to see a lot of lobbying on the part of Chinese companies and foreign enterprises who would prefer to keep the status quo,” he said.
In a move to diversify from the car business, Wang announced that BYD’s first Skyrail project was launched in the northwestern city of Yinchuan early this month. Next year, the company plans to start building the Skyrail monorail transport system in 20 cities across China.
This article appeared in the Hong Kong Economic Journal on Sept. 22
Translation by Ben Ng with additional reporting
[Chinese version 中文版]
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