Electric battery-powered cars are more in demand in China than ever. After five years of the Chinese government offering incentives for electric cars, the transition to electricity is picking up speed. BYD Co., the Shenzhen-based maker of electric buses and fully electric and plug-in hybrid electric passenger cars is out front and doing well. With strong 2014 sales, BYD’s stock price jumped a few days ago, and has held steady at that higher price. Along with BYD’s successes, more optimism about the Chinese electric car market is coming from BMW. BMW predicts that China will surpass the US as the top EV market.
According to International Business Times, BYD, which is partially owned by Warren Buffett’s Berkshire Hathaway Inc, reported higher revenue but a drop in 2014 profit. Investments to increase its battery production capabilities were a stimulus to the drop in profit. This year looks to be much better. Investors came together due to predictions from BYD of a rapid rise in first-quarter earnings.
Last year, the BYD Qin, with very strong sales, rose to be China’s most desired new energy vehicle (which includes 100% electric and plug-in hybrid electric vehicles). It goes 43 miles on electricity before switching to gasoline, similar to GM’s Chevy Volt.
International Business Times continues that the company promoted the Qin as “a sedan that’s powered by ‘electricity for trips and gasoline for journeys.’” Also, it reported that the China Association of Automobile Manufacturers found “sales of new-energy vehicles more than tripled last year, to 74,499 units.” It is true that with more than 20 million vehicles bought in the country last year, this only reflects a small piece of the pie, but it’s good growth an a young market nonetheless.
China’s electric car market “has been elevated to the national strategy level and can look forward to invaluable opportunities for rapid development,” BYD Chairman Wang Chuan-fu said in a letter to shareholders released April 5th.
2015 1st quarter profits are expected to grow to $24.2 million. This is an increase from $1.9 million in the first three months of last year.
China is playing catch-up, but it is going as fast as it can. Immediate needs to relieve air pollution in some of the planet’s smoggiest cities have prompted the ongoing transition to hybrid and electric vehicles. The government is offering strong incentives for the purchase of Chinese electric and plug-in hybrid cars.
BMW China has chimed in about the shift in the market, too. “We are coming with ours; others are coming as well,” Karsten Engel, BMW’s head of China operations said during an evening in Shanghai last week, according to the South China Morning Post. BMW expects that, “no later than 2020, the mainland will become the world’s largest market for electric cars – a position currently held by the US.” Of course, Volkswagen Group, Nissan, Tesla Motors, and others are also making strides to become part of China’s expanding market.
Reports from Gas2 and EV Obsession support the big news from BYD and BMW’s statements. BYD has plans for battery gigafactories that will together effectively match Tesla & Panasonic’s own gigafactory in production capacity. As EV Obsession points out, “BYD may have been born in China, but it has global ambitions. That includes rivaling the battery production of the much-vaunted Gigafactory with a battery business of its own.” Meanwhile, Tesla may begin production in China within just 3 years.
Nowhere on Earth does a country need quick improvements in air quality as much as China does as a byproduct of high-speed, unchecked economic growth. Along with incentives for cleaner cars, the country is trying to undo the bad it has done in a number of ways. For example, see: “China Prioritizes Clean Energy For Public Transport,” “China’s 2020 Coal Cap = 50,000 Lives Saved Annually,” and “Beijing’s Four Major Coal-Fired Power Plants Will Completely Shut Down.”
Image by El monty (Own work), CC BY-SA 3.0