Published on May 14th, 2018 | by Zachary Shahan0
China X Cleantech — 1st Half of Q2 2018
May 14th, 2018 by Zachary Shahan
China is the hottest kid on the block when it comes to cleantech. As such, we try to keep an exceptionally close eye on what’s going on there and share regular reports of the most significant news of the past month or quarter. We call this series China X Cleantech. You can subscribe to the China X Cleantech newsletter here.
First of all, it’s not news, but we were lucky to get an in-depth, exclusive interview with BYD Founder, CEO, and Chairman Wang Chuanfu in Shenzhen, China, recently. Check that out for a thorough look at one of the world’s premier cleantech companies — if not the premier cleantech company.
Batteries, Batteries, Batteries
If there’s one cleantech message these days, it’s: It’s the batteries, stupid! The batteries are the hearts of electric vehicles and a key enabler of 100% renewable energy.
One of the largest battery producers in the world, LG Chem, stepped a bit out of its comfort zone recently in order to try to take advantage of the massive and growing Chinese market while also working to secure precious cobalt resources. The South Korean battery giant jumped into two new joint ventures with China’s Zhejiang Huayou Cobalt.
We already knew that the Chinese electric bus market dwarfs the electric bus market for the rest of the world combined, but who’s producing the batteries for all of those electric buses? The 5 biggest producers are apparently CATL, BYD, OptimimNano, Guoxuan High-Tech, and Yinlong.
As we reported in the last edition of Cleantech X China, battery giant CATL is targeting a giant IPO. Last month, Chinese authorities approved the IPO plan. As a reminder, CATL is aiming for a 13.1 billion yuan (~$1.97 billion) IPO.
Speaking of CATL, Renault & Nissan reportedly just made a deal with the company to get batteries for coming models (a move away from AESC, LG Chem, and others).
But it’s not all CATL and LG Chem. Actually, Panasonic may be winning the show right now due to its partnership with Tesla. The question is whether that partnership will extend deep into the heart of China when Tesla announces a Chinese gigafactory later this year.
Looking backward into 2017, IRENA estimates that China installed nearly half of the world’s new renewable power capacity, including 53 gigawatts (GW) of solar and 15 GW of wind.
Not about the past, but about the future and what’s expected of the big red giant this year, IHS Markit forecasts that China will again install 53 GW of solar power in 2018, which would account for nearly half of the 113 GW IHS Markit thinks the world will install.
In the first quarter of 2018, Bloomberg New Energy Finance (BNEF) estimates that China accounted for 43% of all clean energy investment — $26 billion — but that its investment compared to the first quarter of 2017 was down 27%. Meanwhile, China’s National Energy Administration announced that 9.65 GW of new solar PV were installed in the quarter.
At long last, China announced new rules for foreign car manufacturers. The new rules include eliminating the country’s “50-50 rule” by the end of 2018 for foreign manufacturers who manufacture new energy vehicles (essentially, battery electric or plug-in hybrid cars). Surely, there are implications for the companies mentioned below.
As has long been supposed and hinted, Tesla looks set to produce Model Y in China. Though rumors based on slim information were suggesting that could begin in late 2019, Elon Musk said on Tesla’s recent shareholder conference call that Model Y is more like 24 months out. Adjusting for “Elon Standard Time,” that might be more like 30 months, right? Well, we’ll see — in any case, Elon seemed to be indicating that it was anything but certain when things would get rolling on Model Y production, but that a Chinese factory location would probably be announced later this year.
Far younger than Tesla, Chinese newcomer Lynk & Co has revealed the vehicle it has been teasing for a year or so — a plug-in hybrid electric SUV called the Lynk & Co 01 PHEV SUV. Yep, it was unveiling in China.
Volkswagen, meanwhile, just launched its first Chinese EV. It was produced in partnership with Chinese joint venture buddy JAC … and it’s basically just a rebadged JAC iEV7S. For a deep dive post-unveiling, check out our China expert Tim Dixon’s take on the car. Volkswagen is also reportedly exploring a potential joint venture with China-based Didi Chuxing (the Uber/Lyft of China). The partnership would concern “purpose built” vehicles. “Current expectations are reportedly for these talks to lead to the signing of a deal early in May, according to that account — with initial terms to see Volkswagen manage a fleet of 100,000 or so new vehicles for China’s top on-demand taxi service.” (No small plans in China!)
Nissan is another major automaker with a sharp eye on the Chinese EV market, and CEO Carlos Ghosn argues that range is no longer an issue — 300 km is fine. Bringing down the costs is the supreme goal. As such, Nissan’s EV strategy (especially for China) is shifting its focus from range to affordability.
Fellow Japanese giant took a bit longer to get into the plug-in vehicle bonanza, but it is now aiming to bring 10 new electrified vehicles to the Chinese market by the end of 2020. “Toyota backed its statement up with the reveal of 3 new plug-in vehicles. Toyota brought out plug-in hybrid electric (PHEV) versions of the Toyota Corolla and Toyota Levin, which will come to market next year, as well as a fully electric version of Toyota’s popular C-HR / IZOA Compact SUV, which will follow in 2020.”
In terms of actual electric car sales, the BAIC EC-Series is sitting very pretty at the top of the charts, but BYD is the leading electric car manufacturer — by far. BYD is gobbling up 24% of the Chinese electric car market, while BAIC has 17%, Roewe has 11%, and JAC has 10%.
Electric vehicles are almost beginning to seem old-school. Autonomous vehicles are the new cutting edge. China’s big step last month in its leadership in this realm was unveiling national self-driving vehicle guidelines.
In the building and construction arena, “The World Green Building Council (World GBC) and China Green Building Council (China GBC) announced that they plan to collaborate on efforts to increase green buildings around the world and to reduce global greenhouse gas emissions.” Like with renewable energy and electric vehicles, China is expected to account for nearly half of all construction around the world in 2018. The greener, the better, so let’s hope this partnership leads to significantly greener Chinese buildings.
One episode back: CHINA X Cleantech — Q1 2018