The answer to BP oil: China challenges the US as their electric car goes global

Can the fastest growing Chinese vehicle manufacturer offer an affordable solution to the industry’s oil dependency?

Image: etiennecoutu

As BP are faced with paying $2bn in compensation to victims of the Gulf oil spill, this environmental disaster is yet another horrifying signifier of the problems associated with oil. Yet could this be an energy Sputnik moment? Two important developing technology trends, that could point the way to the end of this oil dependency, are the drop in the cost of solar power and the downward cost curve in electric storage – car batteries. Battery-electric vehicles (EVs) are five times more energy-efficient than petrol-powered ones, while being five times cheaper to operate and maintain. The main problem with EVs is that their batteries, which account for 50 percent of the cost, are expensive. Lithium-ion battery costs about $1,000 (£690) per kilowatt-hour of electricity storage when fully installed.

Yet it seems that the fastest growing Chinese vehicle manufacturer, BYD Auto, has an affordable solution. Following the launch of its e6 electric car at Detroit auto show at the beginning of the year, on May 19 BYD’s public relations manager Du Guozhong announced that the model had passed all US safety tests including battery-related assessments. The electric car, with a 48-kilowatt-hour battery, is set to go on sale in the US by the end on the year, priced at $40,000. This means the battery would cost about $500 per kilowatt-hour, putting BYD years ahead of the downward cost curve.

Image: Jochen Siegle/MotorShowNetwork

Who are BYD?

The company BYD (Build Your Dreams) started in 1995 as a battery manufacturer, and led the way in green technology by producing 100% recyclable batteries made from non-toxic electrolyte fluid. In 2003 it expanded into the automotive business; going on to launch eight models the company has enjoyed rapid growth. When they announced that they aimed to sell 800,000 units in the Chinese car market in 2010, after selling only 400,000 in 2009, many saw them as being unrealistically ambitious. Yet sales figures released for the first quarter of 2010 show that they’re on track; they sold 68,129 cars in March alone, a 99.3% increase on the same period last year, pushing them into third place on the Chinese car market sales board just below Shanghai VW and Shanghai GM.

In China, BYD cars are appealing as they have a good cost-benefit ratio; seen as being of better quality than other Chinese cars and cheaper than cars made by foreign manufacturers. Their expertise in battery technology awarded them the support of legendry American investor Warren Buffet, who brought 10 percent of the BYD Company in 2008. The CEO of the company, Wang Chuan-Fu, was so keen to prove his green credentials to Buffet’s business partner that he drank his own battery fluid. His point was if they were going to help solve green issues, they couldn’t create new environmental problems with their technology.

BYD successfully married their battery expertise with efficient manufacturing processes. Wang Chuan-Fu keeps manufacturing costs down in several ways: by employing a cheaper manual workforce rather than investing in machines; manufacturing all the various components in-house, from the seatbelts to the air conditioning; and granting himself a very modest wage that sees him living alongside his employees in the company’s purpose-built compound.

Safety at Stake

It was these efficiency savings that became BYD’s biggest hurdle as it tried to expand into the global market. Jim Federico, vehicle line engineer for Buick, has argued that while Chinese engineers are capable in single-skill areas like brakes, suspensions and wheels, they struggle when it comes to integrating all the systems in a complete vehicle. This has resulted in BYD’s failure to meet Euro NCAP crash tests.

Image: femaletrumpet02

Therefore, the news that BYD has passed the US safety test would suggest that there is nothing stopping the company expanding globally; this will come as much awaited good news for the Australian car dealer Denzel, which was so impressed by the company’s electric cars that for that last two years they have been eager to start importing them.

However, sceptics say that BYD’s battery cannot both be more powerful and cheaper than those made by competitors, and question the credibility of this announcement. Motoring journalist Eric Loveday said:

“Nearly everyone has been sceptical of the claims put forth by BYD from day one; from outrages range estimates, to production dates that simply couldn’t be met, and prices that seemed far too low to be reasonable. We don’t have any validation that points to actual test results, so needless to say, take BYD’s claim with a bit of caution and a shaker full of salt.”

Although BYD’s announcement is yet to be verified, sceptical or not no one can question their ambition; they are determined to become China’s largest automaker by 2015 and the world’s largest by 2025. An extremely important part of realising this ambition is to establish themselves as a world leader in the fast-growing solar power industry.

Can the sun suffice?

Using electric cars while their power comes from coal or nuclear means all this is achieving is shifting the pollution and the risk of industrial accidents onto other dirty energy sources. Luckily, the other key technology trend that could move us away from oil dependency is the rapid drop in the cost of solar power. Solar costs are projected to drop 80% over the next decade. This means that by 2020, unsubsidised solar power will be cheaper than subsidised coal, oil and nuclear.

As a result of the BP oil spill, a group of Florida businessmen created a website Solar Spill, to educate energy consumers about the potential of solar. They state:

“The sun ‘spills’ enough energy onto the Earth every four minutes to provide enough electricity to meet the needs of the world’s current population. This is not to say that 100% of the electricity should be from solar energy, but to advocate that a significant role can and should be played by solar power.”

Photovoltaic (PV) solar technology is improving fast, in terms of cost and efficiency. Dow Chemical Company, a global leader in sustainable chemical manufacture, announced in January that it would launch a line of solar PV shingle that would be widely available in 2011. They state that just by replacing old roofs with solar shingles instead of the asphalt ones, you could soon be generating solar power for less than 1 cent per kilowatt-hour. With the average American paying 10 cents per kilowatt-hour, they claim you’d be able to “fill up” your electric car for 53 cents.

In March, BYD demonstrated its commitment to become leaders in the field of solar panel technology when it started marketing the world’s first mass-produced dual mode electric vehicle, the F3DM, to private customers at the reduced price of 169,800 RMB ($24,800). The model has a solar panel charging system on the roof that transforms the solar power into electric power and stores it in a Fe battery.

This year, the Chinese government has stepped up its efforts to make electric cars a viable option for its populate; from announcing the introduction of state subsidies for those who pick green vehicles, to their plan to increase the number of electric charging stations across the country. Promoting electric car development is a way to curb surging demand for imported oil, which communist leaders see as a strategic weakness. David Sandalow, the assistant energy secretary for the US government has said:

“The Chinese are well positioned to be global leaders in the electric vehicle industry. I believe that we’ve got a lot to learn from each other, and that the world would benefit from us challenging each other in this industry.”

As Obama declared to end the “cosy relationship” between oil companies and US regulators, China challenges the US to become global leaders in EV technology. Is this the moment renewable energy campaigners have been waiting for? A move away from oil, as two superpowers battle to be green.

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An environmental journalist and communications trainer, Bethan specialises in nature conservation and social justice

Posted in Green Issues
3 comments on “The answer to BP oil: China challenges the US as their electric car goes global
  1. Roy says:

    I missed this first time around…

    as good as this sounds, I’m sorry to say I’m yet to spy an electric car in China…

    electric bicycles (not scooters…) are all the rage however; I’m considering one myself…

  2. bethan john says:

    @Roy It’s interesting the policies that the Chinese government are bringing in to try and encourage people to buy EV’s, but as you suggest at the moment they are still way to expensive for the general population.

    How much are electric bikes, cheap?

    The idea that Chinese EV’s could compete internationally is more what I wanted to focus on; as they’re comparatively inexpensive they could challenge the US market. Although safety standards have always been an issue!

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