Foreign Policy: China Steers Back To The Slow Lane

Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent

The conventional wisdom about the global electric-car race is that China is a shoo-in because of its enormous domestic market: The Chinese may be laggards in the laboratory, which is the current battleground, but they will best everyone else when the competition reaches the equally pivotal stage of the manufacturing scale-up. The Communist Party, it is thought, will simply order massive numbers of Chinese to buy electric cars. With their plants churning at full hilt, the Chinese will learn far more quickly than Americans, Japanese or South Koreans how to most efficiently create these vehicles, and hence give their vehicles a decisive advantage.

The Chinese are among more than a dozen countries vying to dominate the nascent advanced battery and electric-car industries. If these technologies turn out to be economy-makers over the next two or three decades as many project, the race will confer on the winner serious geopolitical leverage along with financial potency. The Obama Administration is fully engaged in the race, against biting criticism from its political opponents.

Because of everything else it has managed over the last quarter-century, China is regarded as the 800-pound gorilla in the room — it aspires to have a half-million electrics and plug-in hybrids on the road by 2015, and almost everyone has assumed that's what will happen. But one wonders how. A few hundred electric-taxis are on China's roads or nearly so — 50 BYD e6 cabs are in Pengcheng, with 250 more on their way by next month, write Fang Yan and Don Durfee of Reuters. Yet in Hangzhou (pictured above, batteries are installed in a Hangzhou taxi) there have been hiccups — 30 electric cabs had to be pulled off the road in January when the engine in one of them caught fire; they went back into service last month. But safety isn't the main problem with these cars in terms of taxis — as everywhere else, it is the high cost. The e6 costs 179,800 renminbi, accounting for subsidies, compared with less than 100,000 renminbi for the Volkswagen Santana, a popular Chinese taxi model.

When you turn to ordinary people, electrics haven't done better. Shanghai's 20 million residents have registered a total of 10 electric cars. Hangzshou, with 8 million people, has 25 registered electric cars, as Reuters quotes China Business News.

According to China Car Times, Chinese are no longer prepared to buy simply because a product is presented to them. In a survey of potential electric-car buyers by Tongji University and Sohu Auto, 76.8 percent of respondents said they wouldn't pay a electric-car sticker price 50 percent higher than that for a gasoline-driven model, the newsletter reports. Just 35 percent of Chinese said they would buy an electric solely for environmental reasons.

These results mirror similar U.S. surveys. The Boston Consulting Group has produced a new report concluding that electric cars will take another 25 years to capture a serious U.S. market, which seems reasonable against the history of the adaption of new technologies. It appears that China may be in the same loop. The race is still joined.

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