Electricity, gasoline and lots of hot air
BEIJING — The Beijing auto show gave automakers a chance to show off their green technology, but Chinese consumers aren’t likely to be impressed.
Later this year, several hybrid-powered vehicles will go on sale in China. But don’t expect to see many on China’s roads in the near future.
Industry observers agree that no viable market exists for hybrid vehicles in China. And this is unlikely to change for some time.
“The main purpose of these cars is not to make money. It’s public relations,” says Duan Chengwu, an industry analyst at Global Insight. “Putting them on display is just a way for carmakers to burnish their green credentials.”
Green showcase
An Feng, executive director of the Innovation Center for Energy and Transportation, agrees. “I don’t think Chinese hybrid vehicles are ready for large-scale production,” he says. “Companies want recognition for being the first to have them. It’s mostly about PR to start with, although it’s also about developing capability in the technology for the future.”
Among China’s domestic automakers, Chery Automobile Co. had no fewer than three hybrid variants of its A3 model on display at the auto show. Zhejiang Geely Automobile Group showed its 1.5-liter hybrid, the FC-E.
Meanwhile, Chongqing Changan Automobile Co. presented its mild hybrid, the Joice MPV. All vehicles are to enter production in less than a year.
At the show, a General Motors representative said production of a micro hybrid on display called the LaCrosse should start in China before fall. Unlike full hybrids, mild and micro hybrids do not run on electricity only. A hybrid Cadillac Escalade also was on display, but it had no launch date in China.
Elsewhere at the show, Honda introduced a mild hybrid version of its Civic, which is expected to be made in Wuhan this year or early 2009.
Costly powertrains
Although hybrids typically offer fuel savings of 20 percent or more, their powertrains push up the purchase price by a similar proportion.
In the United States, the federal and state governments compensate for this with tax credits, cheaper insurance and other incentives to make green cars more attractive.
But in China, no policies of encouragement exist. In fact, the opposite is more true. Fuel is untaxed and kept artificially cheap through price controls.
Gasoline in China now costs about 20 percent less than it does in the United States. Motorists, therefore, have less reason to buy a more efficient vehicle.
So it’s no surprise that Americans buy more hybrids. Americans purchased more than 350,000 new hybrids last year. But the only hybrid car now sold in China — the Toyota Prius — generated fewer than 2,000 sales over the same period.
“A lot of government officials have been ordered to drive a Prius to set a green example,” says Xin Tianshu, another analyst at Global Insight. “The rest of those who bought the car were rich people who could afford an expensive toy.”
Unleash controls?
An Feng reckons China’s fuel price controls — which the government now deems essential for social stability — eventually will be scrapped. The government subsequently might introduce incentives for green cars. But this will not happen before domestic carmakers are ready with fully developed hybrid car programs.
“Incentives today would only benefit Toyota, and of course we don’t want to subsidize the Japanese,” he says. “We’re looking at four or five years down the road.”
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