Chinese Cars Companies

China's new energy vehicle sector faces growing pains

BEIJING, July 16 (Xinhua) - Zhao Liang, a resident of Changchun in northeastern China, take bus number 66 to work every day, never noticed a difference between the bus, it can take and that it takes today - the one with the words "power hybrid" bearing on its back.

Changchun 100 introduced hybrid vehicles in its public transport network in 2010. It will add another 100 this year.

At the China Car eighth Fair being held in Changchun, China FAW Group, one of the largest automakers in the country, debuted two new models of hybrid buses.

Hybrid vehicles have been a sensation out of public transportation. On July 8, Changchun implemented 16 measures to promote the private purchase of new energy vehicles. The city plans to offer 500 new energy vehicles for customers affected, for which a system service base will be established.

"This year is a demonstration for the development of new energy vehicles in Changchun. We will stimulate the sector through a series of favorable policies, "said Xiao Wanmin, deputy mayor of Changchun.

Liu Minghui, the Director of Electric Vehicle Research of China FAW Group and development center, said the company also plans to launch a test for his model of B50-electric car this year. The company promised to develop hybrids and fully electric vehicles and all cars product lines.

"Ten years ago, when the country began to develop new energy vehicles, the electric vehicle industry was still in the research stage. Now our management team realized that his era has arrived, "said Liu.

Changchun isn't the only city working to promote the sale and use of new energy vehicles. In June 2010, five cities, including Shanghai, Changchun and Shenzhen, began to subsidize the purchases of new energy vehicles on a trial basis. This number has since increased to 25.

In addition, a new plan that will outline the development of the country's new energy vehicle sector of the next ten years is expected to be publicized soon.

However, most of these policies have so far failed to woo the private market. Several new energy car dealerships in Changchun have seen zero sales for electric cars, with some of them lacking even a proper display model for their stores.

"Sales of electric cars in other cities like Beijing, Shanghai and Hangzhou have been the same. Dealers in those cities also refrain from exhibiting the cars in their stores, as their sales have been pretty bad," said one car dealership employee in Changchun.

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Matthew DeBord has written about the auto industry for Slate, the New York Times, the Washington Post, the Los Angeles Times, and the Huffington Post. He has appeared on MSNBC, NPR, HDNet, and Russian TV to discuss the business of cars. He has given presentations on sustainable transportation and the future of mobility and helped put together Art Center College of Design's summits on sustainability. In 2010, his work for Slate's The Big Money was submitted for a National Magazine Award for blogging. In addition to covering cars, he has written about wine and published two books on the subject. He lives in Los Angeles and drives a 1998 Saab 900S but has his eye on an electric motorcycle.

Bear with me for one second while I explain how foreign carmakers get to build vehicles in China: they have to be partnered with a local manufacturer. So it has always been — until now. And guess who might bring about the change? Not General Motors (GM), nor Volkswagen, nor any other leviathan of the global auto industry. Rather, it’s Volvo.

First, the backstory

You may recall that after the financial crisis, Ford (F) sold Volvo to a major Chinese automakers, Geely , for what I then considered the paltry sum of $1.8 billion. Ford didn’t do this because it was desperate (for that, you have to look at GM’s sale of Saab and attempted sale of Hummer ).

No, Ford was the dismantling of its Premier Automotive Group, which also includes Jaguar and Land Rover (sold in 2008 to Indian automaker Tata), and Volvo has everything he held between the Blue Oval and concentrate CEO Alan Mulally on a "One Ford" agenda for the future of the company. Yet Ford has lost about 5 billion on the case.

Who owns Volvo? Who leads Volvo?

Anyway, Geely has ambitious plans for Volvo , which is now its

The plan [to build factories in China] is an important part of Volvo’s strategy, announced earlier this year, to more than double Volvo’s global sales to 800,000 vehicles by 2020. Volvo and Geely expect half of that desired total–slightly more than 400,000 cars–would come from sales in China, where it sold just 30,500 cars in China last year. Manufacturing cars in China is essential to make that happen…