China flicks the EV switch

On Monday last week, a Switchable Electric Car Experience Center was officially opened in China's third largest city – the Pearl River New Town of Guangzhou. The center is a joint project between Better Place and China Southern Grid (CSG), China's second largest utility and the eighth largest utility worldwide.

The Experience Center is the first of its kind in southern China, and is modeled on the successful Better Place Centers in Israel and Denmark. The 1,900m2 Center is designed to showcase the benefits of affordable electric cars with switchable batteries to government officials, industry leaders, Chinese consumers and international delegations.  

The opening marked Guangzhou as the starting point for EV network infrastructure in the five southern provinces served by CSG. To put that into context, CSG serves 230 million people over an area only slightly bigger than the entire state of NSW. If only 1 per cent of the population switch to an electric car, that's 2.3 million sales. That figure is twice the size of the entire annual new car market in Australia.

This is a significant step for China, but more importantly, it sends a strong signal to the global market about the rapid emergence of electric cars and infrastructure worldwide. China is at the forefront of EV adoption. In the most populated country on earth, the government is faced with addressing some of the world's worst air pollution, and a soaring demand on resources of all kinds. It is the largest automotive market in the world by a considerable order of magnitude, with sales soon expected to top over 20 million new cars per year – with consequent impacts on energy price, availability and environmental impact.

For China, making the switch to electric is more than just a national goal, it is a national imperative.

Electric cars are one of the ‘Magic 7' emerging industries of strategic importance that the government has prioritised as a future driver of economic growth in the 2011-2015 Five Year Plan. Fortune magazine estimates that the total value of Chinese government investments in electric car manufacturing, infrastructure and purchaser subsidies is now over $US17 billion.

More importantly, the Chinese government sees battery-switching as an important pre-condition to mass adoption. This policy direction is driven by the lack of off-street parking to facilitate at-home charging and the fact that mass fast charging is impractical due to the high cost of the augmentation that would be required for grid capacity. Battery switch gives electric cars a fully charged battery in under five minutes.

Both of China's utilities have adopted battery switch as their preferred model. China Southern Grid has partnered with Better Place and the other Chinese utility, State Grid, is working with government. Large companies such as Key Power are developing their own automated battery switch stations in collaboration with the car makers.   

And the cars are coming ever more quickly. At last year's Beijing Auto Show, the biggest privately owned Chinese car maker, Chery, displayed a switchable model of their A5 sedan; and Beijing Auto (BAIC - who by themselves sell more cars per year than the entire Australian auto industry) exhibited a switchable battery car based on the Saab 9-5 platform. New entrants such as Qoros are already hinting at rapid development of EVs suitable for the European market and virtually every western car maker with a joint venture in China has some domestic announcement of EV development. BMW & Brilliance Jinbei, Hyundai & BAIC, Nissan & Dongfeng – and BYD, who have been touting their e6 for the past three years have, in 2011, released the car to the public and opened an office in California. 

Electric vehicles will be transformative across the global automotive industry, and Australia will be no exception. In an open and extremely competitive market – where more than 60 brands compete for just over one million new vehicle sales per year – new vehicle models and new automakers will rapidly emerge.

Many of those new players will be Chinese and their inroads into the Australian market will also accelerate. Like the Japanese, and the Koreans before them, the Chinese car makers are choosing Australia as the test market for their global competitiveness, and as their EV plans accelerate so will our exposure to cheap and increasingly competitive cars.

In these circumstances, it is critical that the Australian industry maximise its own competitive advantage to participate. Subsidiaries of significant global players have been established in Australia for many years. The industry is mature and has developed a depth of engineering capability as yet unmatched by the new, emerging players.

However, this gap is rapidly closing. Ensuring that the Australian automotive sector retains a seat at the electric car table will be crucial to its on-going success.

Alison Terry is head of automotive at Better Place Australia