Going green at the Shanghai show

Posted by: Ian Rowley on April 20, 2009

BYD E6.JPG

In recent times, environmental themes have been unavoidable at big auto shows and this year’s Shanghai show, which opened to the media today, is no different. That many of the hybrids, EVs and fuel cells cars on show looked impractical, expensive or far off seemed to matter not to carmaker executives, most of which looked happy to be attending a show where budgets weren’t being reined in.

Among the foreign makers GM, using the slogan “drive to green”, showed off its Cadillac Escalade hybrid (although one doubts the eco credentials of a six liter SUV) and the Chevy Volt. Toyota had the Prius, a hybrid Crown sedan and a couple of EV prototypes. Honda showed the new Insight and Hyundai showed an innovative new hybrid which uses a lithium polymer battery system to power the electric motor and liquefied natural gas to power the engine.

Chinese automakers, spearheaded by the innovative BYD Auto had their fair share of eco models with Chery, First Automotive and Shanghai Automotive all showing hybrid models. BYD, which launched a li-ion powered plug-in late last year, also showed an EV with a range of 300-400km, which it plans to launch this year in China (called the E6, it is pictured above).

For all the hype and noise (and the sound systems were deafeningly loud) one wonders how much interest there will be from Chinese car buyers. With customer interest still strong and the government offering tax breaks, sales could top 10 million this year for the first time. Yet there are few signs that the green alternatives on show today are making much of an impression.

For foreign carmakers, one big problem is import taxes. Sales of the Prius barely register in China in part because of a 25% import tax. The tax is levied on imported vehicles and cars like the Prius which, while assembled in China, includes too many imported parts (in particular, the hybrid system). Honda sold just 280 Civic hybrids in China last year for similar reasons. And unless the government changes the rules, GM will face the same issue with the Volt as would Honda with its new Insight, which it has no plans to build in China. The alternative, of course, is to build them locally, as they do with non-hybrid vehicles, but that involves sharing proprietary technology with local partners.

Foreign automakers, meanwhile, doubt whether local players’ hybrid technology is up to scratch, citing doubts over battery reliability and ranges of EVs. Even BYD Auto, which grew out of a battery maker, is a hazy about how many of its plug-in hybrids it is actually delivering. So far, customers have only been corporate clients, although the company says it will begin selling to individuals in the second half of this year. One challenge, though, is that its $22,000 price, while cheaper than an imported Prius, is roughly double the cost of an equivalent BYD non-hybrid. And while there has been lots of talk lately about the Chinese government’s plans to back electric vehicles in a big way, there are plenty of hurdles, including how to build necessary infrastructure, high costs and the amount of C02 that would be saved in China which relies heavily on coal-fired power stations.

Still, green gripes aside, the Shanghai show is a fascinating, if somewhat chaotic, spectacle. The event, the biggest ever auto show in China, befits a country which will be soon the largest market in the world and largest producer of cars. Unlike recent shows elsewhere, almost every major global automaker is represented along with dozens of Chinese firms. Porsche chose Shanghai to unveil the new Panamera, its first sedan. It was also a pleasant change to hear auto execs discussing growth forecasts rather than losses. GM, for instance, had its best ever month in March, mainly due to sharp growth at the SAIC-GM-Wuling arm, and reckons the China market will grow 5%-10% this year. Executives insisted that even if GM enters bankruptcy, it would be business as usual in China, which doesn’t rely on the U.S. for funding. Ford, showing off the Fiesta which went on sale in China on March 6, said it hopes to meet or beat the market’s growth rate. Daimler chief Dieter Zetsche told reporters that in global terms China was“more or less the only bright spot.”

Reader Comments

Paul (Vw)

April 21, 2009 6:56 AM

>>> Sales of the Prius barely register in China in part because of a 25% import tax. The tax is levied on imported vehicles and cars like the Prius which, while assembled in China, includes too many imported parts (in particular, the hybrid system). Honda sold just 280 Civic hybrids in China last year for similar reasons.

Isn't China a member of the WTO? How are they able to have such tariffs like that then?

I certainly hope Mr. Obama seriously considers reciprocating with similar tariffs, particularly if China wants to export cheap cars to the US. If China uses tariffs to protect its domestic auto industry--perhaps we should too.

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