On the Green Road
China's automakers look to energy-saving hybrid vehicles as a hedge against high fuel prices
Several Chinese automobile manufacturers are now producing
energy-efficient hybrid vehicles, hoping more car buyers will opt for
this kind of vehicle given the rising price of gasoline
China's automotive manufacturers already have won over some of the country's most hard-nosed auto consumers to the nascent hybrid vehicles market-taxi drivers.
"Hybrid vehicles are indeed much more fuel efficient," Yang Fusheng, a Beijing taxi driver who worked for the recently concluded Olympic Games, told Beijing Review. "The Chery A5 hybrid vehicle that I'm driving now saves nearly 2 liters of fuel per 100 km compared with its predecessor
, a Fukang."
China's Chery Automobile Co. Ltd. (Chery) had outbid an array of domestic rivals with its 50 hybrid vehicles to offer transport services for athletes and visitors between the Olympic venues during the Games
. Yang said the vehicle had remarkable engines and control systems, and more importantly was less fuel-consuming. He said he could save around 1,500 yuan ($219) per month, which would add up to about 20,000 yuan ($2,926) a year, on gas.
The lower-emitting and energy-saving vehicles feature two power systems-an onboard rechargeable electric energy storage system and a fueled power source for vehicle propulsion. They have been deemed as the future of China's automobile sector. A string of automakers have been engaged in developing them, including the joint-venture Shanghai General Motors Co. Ltd. and Guangzhou Honda Automobile Co. Ltd., as well as local players such as the Shenzhen-based BYD Auto Co. Ltd.
Wang Hewu, an associate professor with the Vehicle Engineering Department of Tsinghua University, told Beijing Review that new-energy automobiles such as hybrid, electric and hydrogen vehicles would eventually displace traditional fuel- and diesel-powered automobiles. Deficient global power supplies and soaring oil prices have been quickening the process, he said.
Wang said that hybrid vehicles have raced ahead of other new-energy automobiles in terms of market penetration, because their maturing technologies combine combustion engines and electric motors. A variety of hybrid vehicles are now on offer in China, catering to different consumer groups, he added.
The dawn of hybrids
The debut of hybrid vehicles in China dates back to 2006 when the Toyota Prius first went on sale, but their high price tags, usually around 300,000 yuan ($43,892), turned off many consumers.
The Chery A5 Hybrid, which is the lowest priced of its kind in China, has been a relative market hit
. The car sells for no more than 100,000 yuan ($14,631) domestically. Brisk hybrid vehicle sales have helped make Chery one of the country's top auto brands.
Large hybrid buses are also proving popular in China and are grabbing market shares. This January, Guangzhou-based Beiqi Foton Motor Co. Ltd. (Foton) put its first 30 EuroV hybrid buses into use-a landmark stride for the Chinese automotive industry. The company has projected that its annual hybrid bus sales will surpass 500 units by 2010 and that its annual production capacity will reach 1,500 units by 2012.
The hybrid ambitions of Foton, Chery and others are not unfounded.
An online survey conducted in April by TNS Inc., the world's largest customized research company, highlighted the huge potential of China's hybrid automobile market. Of the 1,251 potential hybrid vehicle purchasers surveyed in 24 cities nationwide, 76 percent said they were well acquainted with hybrid engine technologies and would prefer buying hybrids over the fuel-powered automobiles at the same price. Wang of Tsinghua University said he believes that China's hybrid automobile market would peak around the year of 2010.
The Chinese Government has supported the research and development of new-energy vehicles, demonstrated by favorable policies enacted last November to encourage and help fine-tune the country's automakers into the sector.
In May, the National Development and Reform Commission (NDRC) approved seven hybrid vehicle varieties for production. It is the first time that automakers have been allowed to produce so many hybrid vehicle brands.
According to Chen Quanshi, Director of the Automobile Research Institute at Tsinghua University, hybrid vehicles become a top priority for the government because they are the most instrumental in easing power shortages that are crimping the country's automobile industry. While China still lags behind such developed countries as the United States and Japan in developing fuel and diesel vehicles, it has been almost on equal footing with them in producing hybrid engine technologies, he said.
Automakers could get a further boost if the government reduces or cancels its 10-percent vehicle purchase tax on new-energy automobiles later this year as part of its energy-conservation endeavors. The draft policy adjustment has been submitted to the NDRC for approval.
Despite all the good news, the country's hybrid automakers are still concerned about sagging sales. A recent report in the Automobile Observation newspaper said China's sales of Toyota Prius in July decreased a monthly 15 percent to 32 units. Jia Xinguang, chief analyst at the China Automobile Industry Consulting and Development Corp., attributed the wilting sales to the car's high price, which is unaffordable for most domestic consumers. High maintenance costs and patchy after-sale services also have upset consumers, he added.
As an emerging alternative to established traditional automobile brands, hybrid vehicles still need time to be embraced by consumers both in China and around the world in terms of their quality and prices, Jia said.
But it is widely believed in the industry that hybrid vehicles will not become a mainstay in China's automotive market over the next 50 years, because their high prices will remain a barrier to sales.
"The price cannot be lower, as it costs more to have double power systems after all," Jia said.
Even if the government reduces or exempts the tax on the sales of hybrid vehicles, their prices will still be higher than comparable fuel-powered cars, Jia said. That would remain unacceptable for domestic price-sensitive customers.
Meanwhile, expensive maintenance costs that have mainly resulted from a lack of hybrid vehicle part suppliers, also have hindered demand, said Zhang Chao, General Manager of Beijing Zhonglian Auto Market, in an article in Automobile Observation. It has been imperative for the country to fill the gap in hybrid vehicle part supplies, Zhu Jun, a manager in the technology center at Shanghai Automotive Industry Corp., told the newspaper.
Chen Qingquan, President of the Asian Electric Vehicle Association, echoed Zhu's opinion, saying that China should make further efforts to ensure part supplies for hybrid vehicles and higher-quality batteries for the autos.
Jia Xinguang said domestic automakers should not expect instant success in promoting hybrid vehicles, but focus on exploring the market's potential. He added that their current promotional efforts amount to preparations for future development and sales. The more they pump into developing the hybrids now, the more returns they will be rewarded in the future, he said.