By Yang Kaixin, Feng Xingke

Promising development prospect

New-energy vehicles can help China's automobile industry to transform and upgrade, seize the commanding point of the new round of development of the industry, and seek redistribution of the profit the global automobile industry chain.

The Development Plan of Energy-saving and New-energy Automobile Industry (2012-2020) points out that we should adopt pure electricity-powered vehicles as the main strategic direction of the transformation of the automobile industry, and that the priority currently is to promote the industrialization of purely electric vehicles and plug-in hybrid electric vehicles, popularize non-plug-in hybrid-powered vehicles and energy-saving internal-combustion engine vehicles, and elevate the overall technology standard of China's automobile industry. The goal is to catch up with international standard in terms of new-energy automobile, power battery, and key parts technology by the year 2015. 

It is generally believed in the industry that China will be the biggest new-energy car market in the future. In the Auto China 2012, multinational auto companies, including GM, Toyota, Volkswagen, and BMW, exhibited new breakthroughs and achievements in the field of new-energy cars. Chinese new-energy cars showed no weakness competing with their international counterparts on the same stage. According to Ren Lin, standing vice president of BYD Automotive Engineering Institute, some of BYD's first electric vehicles have run more than 500,000 km with satisfying performance, and BYD has received order of 1000 buses.

In the face of great environmental and traffic pressure, Beijing is placing a lot of hope on new-energy vehicles. During the Beijing Olympiad, Beijing created the record of Chinese purely electric buses running around the clock. According to Xu Xinchao, director of the New-material and New-Energy Department of Beijing Municipal Science & Technology Commission, Beijing has been committed to the R&D of such electric vehicles as sanitation trucks and buses for years; the pilot project has put 1,691 relevant vehicles into operation, and the number is expected to exceed 5,000 by the end of this year.

Despite that energy-saving and new-energy vehicles accounted for only 0.2 percent of China's total vehicles sales in the first quarter of this year, the Development Plan of Energy-saving and New-energy Automobile Industry (2012-2020) will undoubtedly promotes the development of China's electric vehicle industry. As an emerging industry, new-energy vehicles will help China's auto industry to reform and upgrade, and will become a new growth point of the economy. Experts point out that in spite of the promising situation we are currently in, we still need to plan the industry scientifically, seize the preemptive opportunity in controlling the commanding point of the new round of industrial development, and seek redistribution of profit of the global industrial chain.  

Battery becomes the bottleneck

Presently, battery technology faces three main problems: safety, circulation, and fast charging; the idea of battery shifting accords with the development requirement of society, and needs the collaboration of government, companies, markets, consumers, and other parties. 

The prospect of the industry is promising, but the development of the supporting system of electric cars, particularly the development of battery, is seriously impeding the development of the entire industry. According to industrial participants, electric car companies are having higher and higher requirements on the energy consumption and capacity of battery in recent years, the cost of battery generally accounting for half of the cost of the whole vehicle. 

There is a phrase "three verticals and three horizontals" in the R&D of new-energy vehicles. "Three verticals" refer to purely electric new energy source, fuel battery, and hybrid power, and "three horizontals" refer to electronic control, electric drive, and battery, battery being in both parts, an indication of its great importance. How to reduce cost, increase reliability, and produce safe and economic battery has become a tough problem that stands before other links of the industrial chain.  

Making recharging fast, convenient, and cheap is the goal of relevant companies. Nanjing Lvzhan Technology Company Limited, a company engaged in the R&D of electric car recharging technology and recharging equipments, has developed alternating current charging stand, direct current high-power charger, and in-car charger. Jiao Yuhua, managing director of the company, said that: "Big buses, sanitation trucks, and taxis can be recharged collectively at high efficiency, and they can also be recharged at a slower pace at night when the price of electricity is lower".
Financing is also a problem

Government subsidiary can greatly help the initial development of the industry; besides, a capital platform and investment and financing system should be established in order to attract more foreign and domestic capital to invest in the green industry

Early-stage investment in the electric vehicle industry is large, and the returns slow. How to gain sufficient funding is a problem that troubles many companies.

ZOTYE New-Energy Cars, who has started R&D of electric vehicles since 2006, scored the No.1 result in China's electric passenger cars market. Before the start of the demonstrative operation of electric cars, ZOTYE got its foothold in Hangzhou. Thanks to the significant policy and capital support of the Hangzhou municipal government, subsidies were given to the company punctually. The quick withdrawal of capital mitigated the production and operation pressure of the company, enabling it to put more resources and energy on products R&D. This is an example that relevant government subsidy can greatly help the initial development of the new-energy vehicle industry.

Xu Ji, managing director of Beijing Kaiyuan Investment Fund, says that the new-energy car industry represents a strategic direction of the auto industry, and attracts plenty of attention from the investment industry. Particularly after the publishing of the Development Plan of Energy-saving and New-energy Automobile Industry (2012-2020), the development direction of the electric car industry is set. Government support will greatly propel the industry onto a new level.   

"Regarding the solution to the capital problem of the electric car industry, we have established a complete set of financing approaches and financing models, covering a complete assessment system that includes such aspects as public listing, bank loaning, mortgage, and venture financing, greatly increasing the pertinence and effectiveness of investment", said Xu Ji, "We believe that this field will definitely become a direction of strategic development, and we hope to find more investment opportunities through pioneering work".

It is generally believed in the industry that accelerating and cultivation the development of energy-saving and new-energy car industry, particularly the electric car industry, is of great importance to promoting the reform and upgrade of the auto industry and cultivating new economic growth points. Experts suggest that government should attach importance to supporting industrial groups of key parts, such as electrical machinery, battery, and electric control equipments, and should give appropriate support to Chinese brands in such aspects as projects approval and government purchase. In the meantime, a capital platform and investment and financing system should be established in order to attract more foreign and domestic capital to invest in the green industry, helping to steer the electric car industry into the fast lane.