A biodisel manufacturing enterprise in Ningbo City has made use of the recycled gutter oil to produce biodisel, with an annual production of more than 6,000 tons. The enterprise named Ningbo Jieshen Green Energy Technology Co., Ltd is located in Jinshan Industrial Area of Fenghua City in Zhejiang Province.
It is the sole one in China domestic market that is engaged in recycling gutter oil and producing biodisel in Zhejiang Province of China. At present, its customers are mainly some buses and freighters in Shanghai because the recycled gutter oils are collected in Shanghai and its surrounding cities.
The workers poured those gutter oils into two of the five oilcans, and then those gutter oils flew into the factory and were processed into biodisel.
Vice president of the company Linjun Zhu says, “Those gutter oils are heated into a flowable state before residues of the gutter oils are filtered thorough the sieve; then the remaining raw oils are dehydrated under heated and high vacuum conditions. After the dehydration, the raw oils are mixed with methanol, sulfuric acid and catalysts undergoing at least two times of esterification. After the esterification, methanol is retrieved from the raw oils through the condenser under the low vacuum environment with a temperature of 85 ℃ ~ 90 ℃.”
If you walk into the plant, you would feel sort of searing heat. Steams now and then belch from the machines.
Conversion from gutter oils to the finished biodisel only costs less than 50 meters long production streamline. When people come to the last process, they would notice that the gutter oils of the soy sauce color have changed into a rice soup-colored liquid with sheer purities, that is the outcome of the process, biodisel.
Will Biodisel Generate Black Smog?
Can biodisel be used in diesel powered cars? A diesel lorry parks along the production ground, we may take an experiment.
The diesel lorrydriver fills fullthrottle all together with biodisel, and then the car starts running. Diesel lorrys traveling on the road in the plant for a while, the start-up phase is a bit difficult due to cold weather. But with the increased temperature of the lorry engine, power provided by the bio-diesel becomes a steady supply. There is no blown engine between the throttle and the shifting gear. Also there is no black smog discharged from the lorry exhaust pipe and no pungent smell after the diesel combustion.
The lorry is driven out of the plant and into the rampway section. Now lorry’s power weakened as the lorry is ascending. But after 1-2 seconds the advantages of bio-diesel show, the diesel lorry can move easily uphill.
Linjun Zhu says, “biodisel has a high flash point, so during the uphill, biodisel needs to reach 170 ℃inorder to provide the power. But this process is relatively short,and can’t affect the vehicle’s normal running. In addition, the biodisel contains lots of oxygen can be fully burnt in the engine. So biodisel has a relatively strong dynamic performance as long as to reach a flash point.”
Biodisel Sells Well
Last July, the Shanghai bus energy supplier Shanghai Yapu Petrol Group went to test the operation of the buses powered by biodisel.
The general manager Guoping Qian of Shanghai Yapu Petrol Group says, “After a series of tests, biodisel is ideal for the bus. We will promote all the buses to use biodisel which will help save energy, reduce carbon emissions, and decrease operating costs for public transport.”
Qian adds, "From the beginning of November last year, we have powered the freighters with biodisel. Every month we purchase more than one thousand tons of biodisel from Ningbo Jieshen Green Energy Technology Co., Ltd most of which are used to power the freighters on Shanghai Huangpu River. Besides, we have set up 6 bund biodisel filling stations.”
Biodisel is around one thousand yuan cheaper than petroleum diesel per ton.
Linjun Zhu says, “100 tons of gutter oils can generate 85 to 90 tons of biodisels via our technology. Now one ton of gutter oils cost around 4,400 yuan. Instead, the price of biodisel per ton is 7,500 yuan, which is around one thousand yuan cheaper than petroleum diesel per ton on the market. 10 to 15 tons of generated waste oils after refinement from the gutter oils can be sold at the price 3,500 yuan per ton as boiler fuels. So we can obtain more than 2,700 yuan profit deducting the cost when producing one ton of biodisel.”
More of Gutter Oil Feedstock Is Gathered from Shanghai.
“The biggest problem is that we can’t gather those gutter oils. “ Linjun says frankly, “The price 4,400 yuan for one ton of gutter oils they give is not competitive. In Ningbo, they simply can not acquire a large number of raw materials, only go to the surrounding cities such as Shanghai, Jiaxing to buy the gutter oils. At present we can gather 1,000 to 2,000 tons of gutter oils per month in Shanghai. Instead, we only can gather 100 tons of gutter oils or the least 30 tons of gutter oils per month in Ningbo. Now shanghai can provide the most feedstock, which at the same time increases transportation cost.”
Why can the company gather gutter oils in Shanghai instead of Ningbo? Linjun Zhu says, “Shanghai has imposed strict management and supervision on the gutter oil treatment. The related companies in Shanghai are more willing to sell their gutter oils to the companies like Ningbo Jieshen Green Energy Technology Co., Ltd. In Ningbo the current regulatory management on gutter oils remains further improvement. The gutter oils’s price is far less than the market price, so food waste treatment companies wouldn’t be willing to supply the feedstock.”
Biodisel Industry Needs Policy’s Support
Jianbing Ji, the head of Energy Engineering Research Center of Zhejiang University of Technology, says, “Food waste oils and oil plants can be used as feedstock of biodisel production, which will not only solve the food waste oil treatment but also yield some economic value and social value.”
Ji adds, “Ningbo City is very suitable to develop biodisel. Every day there is an enormous amount of newly generated food waste, and if the food waste is converted into biodisel, its volume is very considerable. However, how to let those food waste get into the biodisel companies needs effective policy guidance.”
Monday, February 27, 2012
China Sets Up First Renewable-Energy Think Tank
China has established its first national think tank on renewable energy to conduct research and develop programs and policies, as part of the country's effort to deal with climate change and carbon emissions.
The China National Renewable Energy Center, launched on Thursday, will also draft industry standards and carry out international cooperation programs. The center was established by the National Energy Administration with the support of the National Development and Reform Commission.
The center also draws on previous cooperation with Denmark, which established a renewable development program in 2009. The Scandiavian country is providing financial and technology support for the center.
"In China, developing policies and strategies for renewable energy is a complex task because government leaders have to weigh all aspects to ensure that it will benefit the entire country," said Wang Zhongying, head of the center.
"That is not to say that our government doesn't have the courage to make policy. Rather, a strong think tank can provide solid research to support policymakers," said Wang, who is also the deputy head of the Energy Research Institute under the NDRC.
In 2011, installed generation capacity of "clean energy" - hydropower, nuclear, wind, solar power and biomass - accounted for 27.5 percent of the nation's total installed electricity generation capacity, up 0.9 percentage point year-on-year, said Sun Yucai, vice-president of the China Electricity Council. Sun made the comment during the 2012 China Power & Clean Energy Expo on Thursday in Beijing.
The tiny increase indicates that there's been slow progress so far in renewable energy development for the 12th Five-Year-Plan (2011-15).
Hydropower generation capacity stood at 230 million kilowatts, 21.8 percent of the total. For nuclear, the figure was 12.57 million kW (1.2 percent), while for wind power it was 45 million kW (4.3 percent), according to Sun.
"We have to build up a system of policies and management that can serve the industry better", said Liu Qi, deputy head of the NEA.
"The successful experience of the European Union and the United States proves that to set up a national organization to conduct research and manage the industry is necessary and beneficial for its long-term development."
The new center has a steering committee and management committee composed of government officials and a consultant committee with scientists, experts and analysts from China, Denmark, the US and Spain which specialize in wind, solar and biomass energy.
The center will focus on four major aspects of renewable energy: estimates of the potential for offshore wind power, biomass energy, solar power and the grid integration of renewable energy.
Universities, companies and local governments can seek advice from the center for renewable energy programs, according to Gao Hu, the center's deputy director.
China has signed agreements with Denmark related to the new center, and will also pursue cooperation with the National Renewable Energy Laboratory in the US and energy agencies in Spain.
Friis Arnen Petersen, ambassador of Denmark to China, said the center's opening was a breakthrough in China's road to green growth. Denmark has donated 100 million krone ($17.9 million) to support bilateral work in renewable energy, said Sun Yuanjiang, deputy director of the international department of the Ministry of Commerce.
The China National Renewable Energy Center, launched on Thursday, will also draft industry standards and carry out international cooperation programs. The center was established by the National Energy Administration with the support of the National Development and Reform Commission.
The center also draws on previous cooperation with Denmark, which established a renewable development program in 2009. The Scandiavian country is providing financial and technology support for the center.
"In China, developing policies and strategies for renewable energy is a complex task because government leaders have to weigh all aspects to ensure that it will benefit the entire country," said Wang Zhongying, head of the center.
"That is not to say that our government doesn't have the courage to make policy. Rather, a strong think tank can provide solid research to support policymakers," said Wang, who is also the deputy head of the Energy Research Institute under the NDRC.
In 2011, installed generation capacity of "clean energy" - hydropower, nuclear, wind, solar power and biomass - accounted for 27.5 percent of the nation's total installed electricity generation capacity, up 0.9 percentage point year-on-year, said Sun Yucai, vice-president of the China Electricity Council. Sun made the comment during the 2012 China Power & Clean Energy Expo on Thursday in Beijing.
The tiny increase indicates that there's been slow progress so far in renewable energy development for the 12th Five-Year-Plan (2011-15).
Hydropower generation capacity stood at 230 million kilowatts, 21.8 percent of the total. For nuclear, the figure was 12.57 million kW (1.2 percent), while for wind power it was 45 million kW (4.3 percent), according to Sun.
"We have to build up a system of policies and management that can serve the industry better", said Liu Qi, deputy head of the NEA.
"The successful experience of the European Union and the United States proves that to set up a national organization to conduct research and manage the industry is necessary and beneficial for its long-term development."
The new center has a steering committee and management committee composed of government officials and a consultant committee with scientists, experts and analysts from China, Denmark, the US and Spain which specialize in wind, solar and biomass energy.
The center will focus on four major aspects of renewable energy: estimates of the potential for offshore wind power, biomass energy, solar power and the grid integration of renewable energy.
Universities, companies and local governments can seek advice from the center for renewable energy programs, according to Gao Hu, the center's deputy director.
China has signed agreements with Denmark related to the new center, and will also pursue cooperation with the National Renewable Energy Laboratory in the US and energy agencies in Spain.
Friis Arnen Petersen, ambassador of Denmark to China, said the center's opening was a breakthrough in China's road to green growth. Denmark has donated 100 million krone ($17.9 million) to support bilateral work in renewable energy, said Sun Yuanjiang, deputy director of the international department of the Ministry of Commerce.
China Xinjiang Goldwind Making Waves
Top Chinese wind turbine manufacturer power behind more jobs, projects in America
The company motto of one of the top Chinese wind turbine manufacturers, Xinjiang Goldwind Science & Technology Co, is "globalization through localization".
The marketing phrase is a summation of how CEO and Chairman Wu Gang views the company's global strategy, particularly in the United States where Chicago-based Goldwind USA has been extremely active of late.
Since its first project in 2010 in Pipestone, Minnesota, Goldwind has signed 18 deals in the US in less than two years, including one last month in Montana that received strong government support.
Its second project was a 109-megawatt tower called Shady Oaks in Illinois last year that will have a positive economic effect on North Dakota, Wisconsin, Minnesota, California, Illinois, Ohio, Texas and New Hampshire.
Tim Rosenzweig, CEO of Goldwind USA, says the company's goal is to "build our platform in the Americas, to continue gaining acceptance in building our brand with customers and to have a chance to prove how a Chinese/US combination can work together. We want to be a case study of how China and the US could and should work together."
Goldwind plans to install 12 turbines in two separate 10-megawatt towers in Montana next year.
"Montana is becoming a leader in wind energy and partnerships with innovative, world-class companies like Goldwind (that) are going a long way toward putting us on the map," Montana Senator Max Baucus said in a statement. "I'm pleased to welcome Goldwind to Montana, along with the local tax revenue and jobs this project will bring."
Rosenzweig has been thrilled with the reception Goldwind has received in the US. "We've been fortunate that way. We've worked hard to be good citizens and to build our credibility. We've brought teams with cultural skills to America," he says, comparing the approach to Toyota's in the 1980s where plants were built employing thousands of American workers.
Goldwind does not actually build the towers where the wind turbines are placed nor does it make the blades or bearings so a lot of contractors are engaged on each of its projects, creating about 400 American jobs thus far.
"For our prior project in Pipestone, Minnesota, over 62 percent of the total project cost through the start of commercial operation was for goods and services procured from US companies for work performed or produced in the United States," Rosenzweig says. "This figure includes blade and tower manufacturing (in North Dakota and Minnesota respectively), engineering, procurement, transportation, construction and a variety of ancillary work including legal and accounting services. Finally, 100 percent of the project work after commercial operation (operation and maintenance) has been contracted to a local company employing local labor."
The proprietary technology Goldwind provides is called the "Permanent Magnet Direct Drive" turbine that is built for the most efficient use of power, Rosenzweig says. "It works more efficiently to turn wind into energy while avoiding losses."
The reason is because the permanent magnet direct drive eliminates what Rosenzweig says was the gear box, the "Achilles heel of the wind business" that turbines have traditionally utilized but are susceptible to breakdowns and prohibitively expensive repairs. Without a gear box, the Goldwind turbine becomes one of the most cost-efficient turbines on the market over the life of the project, he says.
In the two years Rosenzweig has been at the helm in the US, he has focused on three key areas for growth: sales, the service business, and capital and finance. The formula has worked well as Goldwind is neck and neck with Sinovel as the top wind turbine maker in China and fourth largest in the world. There are approximately 80 wind turbine companies in China, Rosenzweig says.
Goldwind has a presence in nearly every continent with installations in South America and Australia, one newly built in Europe, and plans for a project in South Africa by the end of the year.
Rosenzweig, being in the industry, thinks wind has an advantage over solar power.
"Both wind and solar are good - they are renewable, clean energy - but wind is proven and takes up less land. You can still farm and grow crops near the towers whereas solar is very expensive, is not proven yet and uses a lot of land," he says.
While he's comfortable with the debate between wind and solar, Rosenzweig stays away from the politicization of Sino-US relations. "For me, generally there isn't a disconnect between what we do and what the politicians say," he says.
"(Americans) accept us because we make quality products. I leave politics to politicians. The reality is a turbine's a turbine. As a society, we should embrace this collaboration. This should be celebrated. They're smart people, we need to listen and learn from each other."
The company motto of one of the top Chinese wind turbine manufacturers, Xinjiang Goldwind Science & Technology Co, is "globalization through localization".
The marketing phrase is a summation of how CEO and Chairman Wu Gang views the company's global strategy, particularly in the United States where Chicago-based Goldwind USA has been extremely active of late.
Since its first project in 2010 in Pipestone, Minnesota, Goldwind has signed 18 deals in the US in less than two years, including one last month in Montana that received strong government support.
Its second project was a 109-megawatt tower called Shady Oaks in Illinois last year that will have a positive economic effect on North Dakota, Wisconsin, Minnesota, California, Illinois, Ohio, Texas and New Hampshire.
Tim Rosenzweig, CEO of Goldwind USA, says the company's goal is to "build our platform in the Americas, to continue gaining acceptance in building our brand with customers and to have a chance to prove how a Chinese/US combination can work together. We want to be a case study of how China and the US could and should work together."
Goldwind plans to install 12 turbines in two separate 10-megawatt towers in Montana next year.
"Montana is becoming a leader in wind energy and partnerships with innovative, world-class companies like Goldwind (that) are going a long way toward putting us on the map," Montana Senator Max Baucus said in a statement. "I'm pleased to welcome Goldwind to Montana, along with the local tax revenue and jobs this project will bring."
Rosenzweig has been thrilled with the reception Goldwind has received in the US. "We've been fortunate that way. We've worked hard to be good citizens and to build our credibility. We've brought teams with cultural skills to America," he says, comparing the approach to Toyota's in the 1980s where plants were built employing thousands of American workers.
Goldwind does not actually build the towers where the wind turbines are placed nor does it make the blades or bearings so a lot of contractors are engaged on each of its projects, creating about 400 American jobs thus far.
"For our prior project in Pipestone, Minnesota, over 62 percent of the total project cost through the start of commercial operation was for goods and services procured from US companies for work performed or produced in the United States," Rosenzweig says. "This figure includes blade and tower manufacturing (in North Dakota and Minnesota respectively), engineering, procurement, transportation, construction and a variety of ancillary work including legal and accounting services. Finally, 100 percent of the project work after commercial operation (operation and maintenance) has been contracted to a local company employing local labor."
The proprietary technology Goldwind provides is called the "Permanent Magnet Direct Drive" turbine that is built for the most efficient use of power, Rosenzweig says. "It works more efficiently to turn wind into energy while avoiding losses."
The reason is because the permanent magnet direct drive eliminates what Rosenzweig says was the gear box, the "Achilles heel of the wind business" that turbines have traditionally utilized but are susceptible to breakdowns and prohibitively expensive repairs. Without a gear box, the Goldwind turbine becomes one of the most cost-efficient turbines on the market over the life of the project, he says.
In the two years Rosenzweig has been at the helm in the US, he has focused on three key areas for growth: sales, the service business, and capital and finance. The formula has worked well as Goldwind is neck and neck with Sinovel as the top wind turbine maker in China and fourth largest in the world. There are approximately 80 wind turbine companies in China, Rosenzweig says.
Goldwind has a presence in nearly every continent with installations in South America and Australia, one newly built in Europe, and plans for a project in South Africa by the end of the year.
Rosenzweig, being in the industry, thinks wind has an advantage over solar power.
"Both wind and solar are good - they are renewable, clean energy - but wind is proven and takes up less land. You can still farm and grow crops near the towers whereas solar is very expensive, is not proven yet and uses a lot of land," he says.
While he's comfortable with the debate between wind and solar, Rosenzweig stays away from the politicization of Sino-US relations. "For me, generally there isn't a disconnect between what we do and what the politicians say," he says.
"(Americans) accept us because we make quality products. I leave politics to politicians. The reality is a turbine's a turbine. As a society, we should embrace this collaboration. This should be celebrated. They're smart people, we need to listen and learn from each other."
Plan for Industrial Energy Saving To Be Issued in China
According to the Ministry of Industry and Information Technology (MIIT), the Twelfth Five Year Plan (2011-2015) of industrial energy saving will be established soon, Shanghai Securities News reported.
The plan will set the energy saving goals for major industries during the Twelfth Five Year Plan period, according to Yang Tiesheng, vice director of the Department of Energy Conservation and Resources Utilization of the MIIT.
Yang told the paper the energy consumption per unit of industrial value-added output during the Twelfth Five Year period will decrease by 21 percent compared to the Eleventh Five Year period.
The energy consumption of industrial value-added output of steel, non-ferrous metal, building materials, petrochemical and the power industry will decrease by 18 percent to 20 percent, the paper reported.
The plan will set the energy saving goals for major industries during the Twelfth Five Year Plan period, according to Yang Tiesheng, vice director of the Department of Energy Conservation and Resources Utilization of the MIIT.
Yang told the paper the energy consumption per unit of industrial value-added output during the Twelfth Five Year period will decrease by 21 percent compared to the Eleventh Five Year period.
The energy consumption of industrial value-added output of steel, non-ferrous metal, building materials, petrochemical and the power industry will decrease by 18 percent to 20 percent, the paper reported.
Old Models Find New Life under Policy Shift
Two venerable old Chinese auto brands are poised for revival as China redoubles its efforts to breathe new life into the domestic car industry.
The Shanghai brand, whose production was suspended more than 20 years ago, reappeared on a list of new car previews posted recently by the Ministry of Industry and Information Technology.
China's largest auto group, SAIC Motor Corp, said it is in process of planning to revive production of the Shanghai brand and include it among its stable of domestic brand vehicles.
The time-honored Red Flag sedans, made by FAW Group Corp, are also being resuscitated. Red Flags were once the official cars of top national leaders. The brand may once again serve as the official car for ministerial-level officials, according to Chinese media.
The Red Flag and Shanghai brands were milestones in the Chinese auto industry during the 1960s and 1970s. At the time, they represented the best in domestic car manufacturing capability.
But the two brands faded after China opened its market to foreign carmakers, which quickly became the driving force of technological development in the sector.
It's interesting to look back on the car history of the past half century.
In 1958, SAIC rolled out its first auto. It was called the Phoenix, but the name was changed to Shanghai in 1963. About 80,000 of the cars were manufactured before production stopped in 1991.
By that time, SAIC was investing most of its resources into its joint venture with Volkswagen AG. Demand for Shanghai brand cars faded.
Although production of the Red Flag never quite ceased, its sales, too, suffered from the appearance of Western-style models in China - many of them were produced in new joint ventures.
Now that China has become the world's largest auto market, the nation's leaders are keen to revive domestic industry prominence.
Premium Car
Both Red Flag and Shanghai cars are targeted at the premium car segment, which will help them tap into government fleets now dominated by the likes of Audi, BMW and Mercedes-Benz.
China's domestic carmakers have been calling on the government to buy more Chinese brands to set a good public example and to encourage consumers to buy them. Earlier, the government released new guidelines on government vehicle purchases. They require officials cars to have an engine displacement at or below 1.8-liter and be priced no more than 180,000 yuan (US$28,571).
The rules supersede old criteria that set the threshold at 2.0-liter and 200,000 yuan. The new guidelines are expected to open new business opportunities for Chinese automakers.
It's not just that the Chinese government is trying to encourage sales of domestic brand cars. Beyond that, there's a desire to upgrade innovation and technology in the domestic manufacturing sector.
In recent years, foreign investment has dominated China's car industry. Nearly all mainstream international automobile manufacturers have set up Chinese ventures and factories, putting the squeeze on domestic rivals, whose manufacturing prowess still lags in technology and design.
The Chinese government opened its auto market to foreign carmakers to bring advanced technology to the country. But instead of sharing their know-how, many overseas carmakers eager to get a toehold in China have zealously kept their expertise to themselves, leaving their Chinese partners with token crumbs. Only in recent years did the central government intervene to push domestic auto groups to develop their own models and to upgrade their technologies to compete on global standards.
Too little, too late?
Beginning this month, China ended its official policy of encouraging foreign investment in the car industry.
The question remains: Is it all too little, too late? As auto sales begin to slow, Chinese brands may have missed their golden opportunity for growth.
Foreign auto companies are now firmly entrenched in China and there will continue to be stiff competition for domestic companies. They are not only turning out stylish models that consumers crave, but they are also expanding into inland cities where cheaper Chinese cars once dominated.
Although Chinese companies have been catching up by acquiring overseas companies with advanced technologies and by buying complete product lines, their output still suffers from weak brand recognition and a general perception that Chinese domestic brands just aren't as well made as foreign cars.
I still remember when SAIC launched its first Roewe 750 sedans, a brand developed from Rover 75 models after the Shanghai-based company bought from the bankrupt British carmaker. The Shanghai municipal government purchased the cars for its official fleet.
But many of those Roewes were replaced by the Buick Regal, a model produced by SAIC's venture with General Motors, because there are malfunctions in the model from time to time. It often seems the case that actual orders don't live up to government procurement promises.
The lesson seems clear. Chinese car brands will be successful only if domestic automakers lift their game and match the innovation, technologies and designs of their rivals. They won't survive on government crutches alone.
In its plans to revive the Shanghai brand, SAIC has unveiled an electric model of the car, along with a fuel-cell model.
FAW Group also said in August in 2010 that it plans to invest 3.1 billion yuan to develop new Red Flag models. It will have annual production capacity for 30,000 premium C131 sedans by next year.
The road ahead is a bumpy one. The government has thrown its support behind China's domestic auto brands.
Now it remains to be seen: Will consumers embrace them, too?
The Shanghai brand, whose production was suspended more than 20 years ago, reappeared on a list of new car previews posted recently by the Ministry of Industry and Information Technology.
China's largest auto group, SAIC Motor Corp, said it is in process of planning to revive production of the Shanghai brand and include it among its stable of domestic brand vehicles.
The time-honored Red Flag sedans, made by FAW Group Corp, are also being resuscitated. Red Flags were once the official cars of top national leaders. The brand may once again serve as the official car for ministerial-level officials, according to Chinese media.
The Red Flag and Shanghai brands were milestones in the Chinese auto industry during the 1960s and 1970s. At the time, they represented the best in domestic car manufacturing capability.
But the two brands faded after China opened its market to foreign carmakers, which quickly became the driving force of technological development in the sector.
It's interesting to look back on the car history of the past half century.
In 1958, SAIC rolled out its first auto. It was called the Phoenix, but the name was changed to Shanghai in 1963. About 80,000 of the cars were manufactured before production stopped in 1991.
By that time, SAIC was investing most of its resources into its joint venture with Volkswagen AG. Demand for Shanghai brand cars faded.
Although production of the Red Flag never quite ceased, its sales, too, suffered from the appearance of Western-style models in China - many of them were produced in new joint ventures.
Now that China has become the world's largest auto market, the nation's leaders are keen to revive domestic industry prominence.
Premium Car
Both Red Flag and Shanghai cars are targeted at the premium car segment, which will help them tap into government fleets now dominated by the likes of Audi, BMW and Mercedes-Benz.
China's domestic carmakers have been calling on the government to buy more Chinese brands to set a good public example and to encourage consumers to buy them. Earlier, the government released new guidelines on government vehicle purchases. They require officials cars to have an engine displacement at or below 1.8-liter and be priced no more than 180,000 yuan (US$28,571).
The rules supersede old criteria that set the threshold at 2.0-liter and 200,000 yuan. The new guidelines are expected to open new business opportunities for Chinese automakers.
It's not just that the Chinese government is trying to encourage sales of domestic brand cars. Beyond that, there's a desire to upgrade innovation and technology in the domestic manufacturing sector.
In recent years, foreign investment has dominated China's car industry. Nearly all mainstream international automobile manufacturers have set up Chinese ventures and factories, putting the squeeze on domestic rivals, whose manufacturing prowess still lags in technology and design.
The Chinese government opened its auto market to foreign carmakers to bring advanced technology to the country. But instead of sharing their know-how, many overseas carmakers eager to get a toehold in China have zealously kept their expertise to themselves, leaving their Chinese partners with token crumbs. Only in recent years did the central government intervene to push domestic auto groups to develop their own models and to upgrade their technologies to compete on global standards.
Too little, too late?
Beginning this month, China ended its official policy of encouraging foreign investment in the car industry.
The question remains: Is it all too little, too late? As auto sales begin to slow, Chinese brands may have missed their golden opportunity for growth.
Foreign auto companies are now firmly entrenched in China and there will continue to be stiff competition for domestic companies. They are not only turning out stylish models that consumers crave, but they are also expanding into inland cities where cheaper Chinese cars once dominated.
Although Chinese companies have been catching up by acquiring overseas companies with advanced technologies and by buying complete product lines, their output still suffers from weak brand recognition and a general perception that Chinese domestic brands just aren't as well made as foreign cars.
I still remember when SAIC launched its first Roewe 750 sedans, a brand developed from Rover 75 models after the Shanghai-based company bought from the bankrupt British carmaker. The Shanghai municipal government purchased the cars for its official fleet.
But many of those Roewes were replaced by the Buick Regal, a model produced by SAIC's venture with General Motors, because there are malfunctions in the model from time to time. It often seems the case that actual orders don't live up to government procurement promises.
The lesson seems clear. Chinese car brands will be successful only if domestic automakers lift their game and match the innovation, technologies and designs of their rivals. They won't survive on government crutches alone.
In its plans to revive the Shanghai brand, SAIC has unveiled an electric model of the car, along with a fuel-cell model.
FAW Group also said in August in 2010 that it plans to invest 3.1 billion yuan to develop new Red Flag models. It will have annual production capacity for 30,000 premium C131 sedans by next year.
The road ahead is a bumpy one. The government has thrown its support behind China's domestic auto brands.
Now it remains to be seen: Will consumers embrace them, too?
Wind Can Power the Future of China
Developing new energy technology, new energy resources, and optimizing the energy structure are necessary for China, as the country requires a huge amount of energy to support its industrialization and modernization.
With growing dependency on foreign oil (55 percent in 2010), China has ample motive to exploit new energy in an effort to guarantee its energy security and to address environmental problems.
China is rich in renewable resources, and its new energy industry has expanded rapidly in recent years, including the wind power sector. It is estimated that China has exploitable wind power resources equaling 2.38 billion kW on land, and about 200 million kW offshore.
With government policy support, China had an installed wind power capacity of 41.8 gW by 2010, surpassing the US to be the largest wind-installation country in the world.
Despite the impressive growth, the industry is still facing some difficulties, such as the technology level, which is not in tune with the market size, and the lack of independent research and development.
Grid connection remains another obstacle constraining the development of wind power in China. In 2010 alone, the newly installed capacity of wind power reached 18 million kW, but grid expansion could not keep up with the rapid development of wind power capacity. Wind power electricity has high requirements for grid stability, grid backup and long-distance transmission.
Therefore, the main problem of wind power development in China is the lack of a developed industrial chain. The lack of independent innovation and the grid connection problems have resulted in serious overcapacity of equipment manufacturing.
China had more than 80 wind power equipment manufacturers by the end of 2010, with a total planned production capacity of 40 million kW.
Developing wind power is important, but the key issue is how to minimize costs. To achieve that and realize an "orderly" development, investment in the wind power sector needs not only resources and markets, but policy support from the government.
Steps should also be taken to prevent the waste of funds and resources. The government should concentrate on research and development, innovation and end-use of products, and leave equipment manufacturing to companies. Such a step is necessary to avoid surplus capacity.
Pricing is another major constraint for the development of the wind power sector. Compared with conventional energy, the cost of wind power generation is much higher. Solving to the pricing problem lies in short-term subsidy commitments and longer-term changes in the energy pricing system to reflect the cost of resources and the environment. These steps will make clean energy more competitive.
If China maintains its rapid economic growth, it would become the largest energy market in the world. The country's economic structure, with relatively low energy efficiency, huge energy consumption and high emissions, is likely to continue until 2020.
China's huge energy market has provided a broad horizon for the development of the wind power industry, and is an important profit channel for companies that are engaged in new technologies.
Wind energy has a bright future in China. The government has set plans for eight 10-million kW wind power bases in seven provinces and autonomous regions. By 2020, China's wind power capacity will reach 150 million kW.
With growing dependency on foreign oil (55 percent in 2010), China has ample motive to exploit new energy in an effort to guarantee its energy security and to address environmental problems.
China is rich in renewable resources, and its new energy industry has expanded rapidly in recent years, including the wind power sector. It is estimated that China has exploitable wind power resources equaling 2.38 billion kW on land, and about 200 million kW offshore.
With government policy support, China had an installed wind power capacity of 41.8 gW by 2010, surpassing the US to be the largest wind-installation country in the world.
Despite the impressive growth, the industry is still facing some difficulties, such as the technology level, which is not in tune with the market size, and the lack of independent research and development.
Grid connection remains another obstacle constraining the development of wind power in China. In 2010 alone, the newly installed capacity of wind power reached 18 million kW, but grid expansion could not keep up with the rapid development of wind power capacity. Wind power electricity has high requirements for grid stability, grid backup and long-distance transmission.
Therefore, the main problem of wind power development in China is the lack of a developed industrial chain. The lack of independent innovation and the grid connection problems have resulted in serious overcapacity of equipment manufacturing.
China had more than 80 wind power equipment manufacturers by the end of 2010, with a total planned production capacity of 40 million kW.
Developing wind power is important, but the key issue is how to minimize costs. To achieve that and realize an "orderly" development, investment in the wind power sector needs not only resources and markets, but policy support from the government.
Steps should also be taken to prevent the waste of funds and resources. The government should concentrate on research and development, innovation and end-use of products, and leave equipment manufacturing to companies. Such a step is necessary to avoid surplus capacity.
Pricing is another major constraint for the development of the wind power sector. Compared with conventional energy, the cost of wind power generation is much higher. Solving to the pricing problem lies in short-term subsidy commitments and longer-term changes in the energy pricing system to reflect the cost of resources and the environment. These steps will make clean energy more competitive.
If China maintains its rapid economic growth, it would become the largest energy market in the world. The country's economic structure, with relatively low energy efficiency, huge energy consumption and high emissions, is likely to continue until 2020.
China's huge energy market has provided a broad horizon for the development of the wind power industry, and is an important profit channel for companies that are engaged in new technologies.
Wind energy has a bright future in China. The government has set plans for eight 10-million kW wind power bases in seven provinces and autonomous regions. By 2020, China's wind power capacity will reach 150 million kW.
The Joy and Pain of Renewable Energy of China
Chinese companies must look beyond equipment manufacturing and exports for future growth
Renewable energy, wind and solar power in particular, has become another of those industry issues that cause excitement and anguish in interactions between China and the rest of the world.
Excitement can be seen in the continuation of government policy support for equipment manufacturing and deployment in China. In August, China announced a national feed-in-tariff for solar PV. Similar policy schemes in Germany and Italy saw the solar market in those countries clock growth rates of 95 percent and 194 percent respectively.
China's feed-in-tariff scheme for wind power has already led to a doubling of the production every year after the scheme was implemented five years ago. The sky, which offers limitless supply of wind and sun, looks closer in reach.
Pledges for cooperation in renewable energy industry have become a standard item in diplomatic communiqus between China and virtually all major governments. Since China excels in faster and more affordable equipment manufacturing, a rationale of collective welfare in further expansion of the renewable energy industry chain is at work.
Anguish breaks out when China's exports of wind and solar equipment run into anti-dumping and/or anti-subsidy customs tariffs in the United States and the European Union.
The World Trade Organization dispute resolution framework is in place for handling such disputes. But affected industries on both sides often talk of material injury even as they strive to improve efficiency in production and out-compete each other. In an aggregate sense, such disputes are conducive to improvements in quality and services.
The everyday world is more reticent about accepting a similar academic assessment. Few societies are as self-conscious as the Chinese one is about foreign commentaries on its behavior and motives. American and European media and politicians' words of alarm and accusations of ill intent are frequently taken to be representative of a hostile external environment. A typical resultant claim is that wind and solar industry has entered a stage of oversupply in China.
But that is erroneous.
"In-sourcing" has become a new mode of government policy support for manufacturing in the United States and Europe. With distress in "financial engineering" a continuing reality to deal with, Chinese industry operators and observers have fewer choices than coping with temporary job protection measures in those countries.
The way the Japanese automobile industry handled similar disputes with the US and Europe offers a valuable lesson for Chinese companies. Moving manufacturing facilities into those importing societies proved to work on two fronts: reduction in trade disputes and improving global competitiveness of the Japanese companies themselves.
A few Chinese renewable energy equipment makers have already set foot in the US and Europe. This is a necessary movement in the right direction. For the trickle to grow, US and European companies in similar lines of industry have an opportunity to foster cross-national integration.
Yes, there will be more negative media and political commentary. But the cause is right.
Price parity with conventional (coal, that is) sources of primary energy continues to be a formidable obstacle.
A frequent point of reference is the public's willingness and capacity to contribute a larger share of their income. But recent moves on raising end user price of water - another daily essential item of consumption - indicate that public acceptance is more amenable than expected.
As such, renewable energy industries operating in China have good reason to cast their eyes wider than equipment manufacturing and its international trade.
For example, China's vast rural and mountainous areas offer ready and enormous business opportunities for solar power and heating equipment to find markets. The general trend of rural residents aging implies less manpower to secure wood-based energy. Coal is a costly option, financially and environmentally.
So far, government work in this area is still largely limited to poverty reduction and demonstration projects. Industries can fill the gap by commercializing solar energy use.
Since reduction of use in firewood, crop residues and animal waste contribute to meaningful reduction of pollution that migrates into urban centers, government at all levels can be more easily persuaded to aid such industry efforts.
Rhetoric of a "surplus" in China's wind and solar industries is misplaced, reflecting impatience on the part of investors for speedy returns. Industry and government have a new opportunity to collaborate and speed up their deployment at home.
Renewable energy, wind and solar power in particular, has become another of those industry issues that cause excitement and anguish in interactions between China and the rest of the world.
Excitement can be seen in the continuation of government policy support for equipment manufacturing and deployment in China. In August, China announced a national feed-in-tariff for solar PV. Similar policy schemes in Germany and Italy saw the solar market in those countries clock growth rates of 95 percent and 194 percent respectively.
China's feed-in-tariff scheme for wind power has already led to a doubling of the production every year after the scheme was implemented five years ago. The sky, which offers limitless supply of wind and sun, looks closer in reach.
Pledges for cooperation in renewable energy industry have become a standard item in diplomatic communiqus between China and virtually all major governments. Since China excels in faster and more affordable equipment manufacturing, a rationale of collective welfare in further expansion of the renewable energy industry chain is at work.
Anguish breaks out when China's exports of wind and solar equipment run into anti-dumping and/or anti-subsidy customs tariffs in the United States and the European Union.
The World Trade Organization dispute resolution framework is in place for handling such disputes. But affected industries on both sides often talk of material injury even as they strive to improve efficiency in production and out-compete each other. In an aggregate sense, such disputes are conducive to improvements in quality and services.
The everyday world is more reticent about accepting a similar academic assessment. Few societies are as self-conscious as the Chinese one is about foreign commentaries on its behavior and motives. American and European media and politicians' words of alarm and accusations of ill intent are frequently taken to be representative of a hostile external environment. A typical resultant claim is that wind and solar industry has entered a stage of oversupply in China.
But that is erroneous.
"In-sourcing" has become a new mode of government policy support for manufacturing in the United States and Europe. With distress in "financial engineering" a continuing reality to deal with, Chinese industry operators and observers have fewer choices than coping with temporary job protection measures in those countries.
The way the Japanese automobile industry handled similar disputes with the US and Europe offers a valuable lesson for Chinese companies. Moving manufacturing facilities into those importing societies proved to work on two fronts: reduction in trade disputes and improving global competitiveness of the Japanese companies themselves.
A few Chinese renewable energy equipment makers have already set foot in the US and Europe. This is a necessary movement in the right direction. For the trickle to grow, US and European companies in similar lines of industry have an opportunity to foster cross-national integration.
Yes, there will be more negative media and political commentary. But the cause is right.
Price parity with conventional (coal, that is) sources of primary energy continues to be a formidable obstacle.
A frequent point of reference is the public's willingness and capacity to contribute a larger share of their income. But recent moves on raising end user price of water - another daily essential item of consumption - indicate that public acceptance is more amenable than expected.
As such, renewable energy industries operating in China have good reason to cast their eyes wider than equipment manufacturing and its international trade.
For example, China's vast rural and mountainous areas offer ready and enormous business opportunities for solar power and heating equipment to find markets. The general trend of rural residents aging implies less manpower to secure wood-based energy. Coal is a costly option, financially and environmentally.
So far, government work in this area is still largely limited to poverty reduction and demonstration projects. Industries can fill the gap by commercializing solar energy use.
Since reduction of use in firewood, crop residues and animal waste contribute to meaningful reduction of pollution that migrates into urban centers, government at all levels can be more easily persuaded to aid such industry efforts.
Rhetoric of a "surplus" in China's wind and solar industries is misplaced, reflecting impatience on the part of investors for speedy returns. Industry and government have a new opportunity to collaborate and speed up their deployment at home.
Dark Clouds Loom over Solar Industry of China
Overcapacity, shrinking external markets dampen profit outlook for Chinese companies.
They have often been hailed as some of China's biggest successes in recent times and champions for their efforts in reducing carbon emissions, creating jobs, lowering technology costs and entry barriers. But the sun no longer seems to be shining brightly for the more than 500 Chinese solar companies as trade wars and uncertain overseas prospects are threatening to strain growth prospects and profits.
Lower demand from Europe, the biggest export market for Chinese companies, and the plans by some European nations like Germany to do away with solar subsidies along with the rising trade complaints filed by US solar companies have triggered much of the current problems for the industry. Things have also been further compounded as the ongoing debt crisis in Europe has forced many European nations like Spain to halt subsidies for renewable energy projects.
Though most of the companies are banking on the largely untapped domestic market to tide over the crisis, that may not be the case, say experts, pointing to a possible industry shakeout and exit of several small- and mid-sized companies. Even then the problems may be far from over as the solar industry needs to find markets that can account for its huge output capacity. The production capacity of solar panels in China stands at about 23 gW and currently accounts for more than half of the global output.
"Though domestic deployment of solar power in China has started to take off, it alone cannot account for the huge manufacturing capability," says Zhu Junsheng, president of the China Renewable Energy Industries Association.
Zhu says that days of unprecedented growth are over and the future belongs to the companies that have cutting-edge technologies and high-quality products. With supply greatly exceeding the demand, overcapacity is another problem that needs to be fixed immediately, say experts. Signs that the industry is not taking stock of the situation have emerged after some Chinese polysilicon makers, a key ingredient for solar panels, decided to idle nearly one-third of their production and shut plants till there was a recovery in prices.
"Most of the solar manufacturers saw their margins decline in 2011. Excess global solar cell capacity and output could not keep pace with the massive slowdown in demand from the end markets," says Craig Stevens, president of NPD Solarbuzz, an international solar energy market research and consulting company.
According to NPD Solarbuzz, the growth rate of the global solar PV industry dropped from 153 percent in 2010 to 22 percent in 2011, driven largely by reduced government incentives in many major European markets, which account for more than 70 percent of Chinese solar product exports. Some companies like Yingli Solar, Suntech Power, Trina Solar and Canadian Solar that were earlier reliant mostly on the US markets have decided to focus on the domestic markets instead.
"We are not in the solar industry to make impressive strides in foreign markets. Rather our intention is to focus on the Chinese market, which has strong demand for clean power," says Qu Xiaohua, president of Canadian Solar.
Solar power deployment in China in 2011 grew by 500 percent over 2010 levels, with an accumulative installed capacity of 3 gW at the end of 2011. The National Energy Administration in China has raised its original plan of 5 gW accumulative installed capacity of solar power in China to 15 gW by 2015, which in turn opens up huge possibilities for Chinese solar PV makers.
Qu feels that the industry has a bright future in China, considering that solar power output prices are declining and inching toward price parity with conventional energy resources. Despite the substantial drop in prices, from 10 yuan (1.21 euros, $1.59) kW/h in 2002 to about 1 yuan kW/h, the current solar power costs are still not competitive enough, when compared with other clean energy, let alone conventional energy.
Wang Yiyu, chief strategy officer with Yingli Solar, says the overall market in 2012 will be better than 2011, but he refuses to label the situation as "optimistic". The New York Stock Exchange-listed company with a production capacity of 2 gW is a leading solar player in China and has recently decided to diversify its business into olive oil.
"After what we had been through in 2011, no one I know in this industry has the guts to increase their production capacity. The demand in 2012 will at least remain the same as 2011, so the competition will not be that tough compared to what we had last year," Wang says.
The Chinese market contributed 15 percent to 20 percent of Yingli's revenue in 2011, jumping from about 5 percent in the previous year. "The Chinese market will see rapid growth this year but Europe is still our predominant market, accounting for 45 percent to 50 percent of our revenue," he says.
Wang says that the solar panel industry is going through a restructuring that is needed for it to evolve in a more mature fashion. "The era of just building a factory and making easy money is over. There are still plenty of chances, but one has to be on top of the game to succeed."
They have often been hailed as some of China's biggest successes in recent times and champions for their efforts in reducing carbon emissions, creating jobs, lowering technology costs and entry barriers. But the sun no longer seems to be shining brightly for the more than 500 Chinese solar companies as trade wars and uncertain overseas prospects are threatening to strain growth prospects and profits.
Lower demand from Europe, the biggest export market for Chinese companies, and the plans by some European nations like Germany to do away with solar subsidies along with the rising trade complaints filed by US solar companies have triggered much of the current problems for the industry. Things have also been further compounded as the ongoing debt crisis in Europe has forced many European nations like Spain to halt subsidies for renewable energy projects.
Though most of the companies are banking on the largely untapped domestic market to tide over the crisis, that may not be the case, say experts, pointing to a possible industry shakeout and exit of several small- and mid-sized companies. Even then the problems may be far from over as the solar industry needs to find markets that can account for its huge output capacity. The production capacity of solar panels in China stands at about 23 gW and currently accounts for more than half of the global output.
"Though domestic deployment of solar power in China has started to take off, it alone cannot account for the huge manufacturing capability," says Zhu Junsheng, president of the China Renewable Energy Industries Association.
Zhu says that days of unprecedented growth are over and the future belongs to the companies that have cutting-edge technologies and high-quality products. With supply greatly exceeding the demand, overcapacity is another problem that needs to be fixed immediately, say experts. Signs that the industry is not taking stock of the situation have emerged after some Chinese polysilicon makers, a key ingredient for solar panels, decided to idle nearly one-third of their production and shut plants till there was a recovery in prices.
"Most of the solar manufacturers saw their margins decline in 2011. Excess global solar cell capacity and output could not keep pace with the massive slowdown in demand from the end markets," says Craig Stevens, president of NPD Solarbuzz, an international solar energy market research and consulting company.
According to NPD Solarbuzz, the growth rate of the global solar PV industry dropped from 153 percent in 2010 to 22 percent in 2011, driven largely by reduced government incentives in many major European markets, which account for more than 70 percent of Chinese solar product exports. Some companies like Yingli Solar, Suntech Power, Trina Solar and Canadian Solar that were earlier reliant mostly on the US markets have decided to focus on the domestic markets instead.
"We are not in the solar industry to make impressive strides in foreign markets. Rather our intention is to focus on the Chinese market, which has strong demand for clean power," says Qu Xiaohua, president of Canadian Solar.
Solar power deployment in China in 2011 grew by 500 percent over 2010 levels, with an accumulative installed capacity of 3 gW at the end of 2011. The National Energy Administration in China has raised its original plan of 5 gW accumulative installed capacity of solar power in China to 15 gW by 2015, which in turn opens up huge possibilities for Chinese solar PV makers.
Qu feels that the industry has a bright future in China, considering that solar power output prices are declining and inching toward price parity with conventional energy resources. Despite the substantial drop in prices, from 10 yuan (1.21 euros, $1.59) kW/h in 2002 to about 1 yuan kW/h, the current solar power costs are still not competitive enough, when compared with other clean energy, let alone conventional energy.
Wang Yiyu, chief strategy officer with Yingli Solar, says the overall market in 2012 will be better than 2011, but he refuses to label the situation as "optimistic". The New York Stock Exchange-listed company with a production capacity of 2 gW is a leading solar player in China and has recently decided to diversify its business into olive oil.
"After what we had been through in 2011, no one I know in this industry has the guts to increase their production capacity. The demand in 2012 will at least remain the same as 2011, so the competition will not be that tough compared to what we had last year," Wang says.
The Chinese market contributed 15 percent to 20 percent of Yingli's revenue in 2011, jumping from about 5 percent in the previous year. "The Chinese market will see rapid growth this year but Europe is still our predominant market, accounting for 45 percent to 50 percent of our revenue," he says.
Wang says that the solar panel industry is going through a restructuring that is needed for it to evolve in a more mature fashion. "The era of just building a factory and making easy money is over. There are still plenty of chances, but one has to be on top of the game to succeed."
Wheels of BYD Start Rolling for New Energy Vehicles
BYD Co Ltd, the Chinese electric carmaker backed by United States billionaire Warren Buffett, has started weaving its green dream in the US. After setting up its North America headquarters in Los Angeles last year, it has unveiled plans to roll out its green products in the US market.
The company announced recently that it will focus on fleet sales of its electric car model e6 in the US market over the next 18 months. Last year, the company delivered around 300 e6 in China, mostly to taxi companies.
BYD, which stands for Build Your Dreams, made its debut in the US in 2000 as a supplier of batteries for major cell phone makers such as Motorola and Apple.
Since BYD has only one office in the US designated for "green products", Los Angeles is serving as a research and development center for electric vehicles, solar panels, energy storage products and LED lighting systems.
Micheal Austin, vice-president of BYD America, says Los Angeles is an optimal place for BYD to develop electric vehicles and other green products. "California has plenty of renewable resources, and the state is already rewarding people buying electric cars by granting them incentives and helping them to set up charging facilities. It is a very green state that leads the country."
In 2011, California offered consumers about 20 different state incentives to ignite purchases of green vehicles. One example was a rebate of up to $2,500 for a plug-in hybrid or a zero-emissions vehicle that was approved or certified by the California Air Resources Board.
Though BYD is known as an automaker, the company has much bigger dreams. "BYD is far beyond a car manufacturer, but a zero-emissions solution provider in the US," Austin says.
Its solution is a zero-emissions ecosystem, which Austin describes as getting power from solar panels, storing it in batteries that are used to charge electric vehicles to jolt the electric transportation market.
Over the past few months, BYD has been in talks with a major US company to collaborate in such a system, with investment estimated at $50 million.
The ecosystem, to be established in California, will operate with the same principle as the Laurel Mountain wind farm, where 1.3 million batteries and electronic components use wind to power the grid.
"That will be the largest implementation in the US," Austin says, adding that the details of the project will be disclosed in March.
According to BYD's vision, burning coal is much more harmful to the environment than combustion vehicles, so swapping electric vehicles for fuel-powered cars won't be enough to solve the emission problems.
"I believe this ecosystem is more promising in the US market because it is easier for American people to understand," Austin says.
These new initiatives are also helping BYD to diversify its product line and to ease the pressure from selling electric vehicles in a highly competitive market with strong competitors such as Chevrolet Volt, Nissan Leaf and Tesla Roadster.
Eileen W. Tutt, executive director of the California Electric Transportation Coalition, says entering the local EV market is very hard because it is expensive to produce EVs, which is the reason for the high sticker prices.
"GM (General Motors) has a large fleet of products to balance the high cost of the Chevy Volt, but it is not easy for BYD to do that. And there is almost no chance that BYD is going to get the same subsidy from the government as it does in China."
In Shenzhen, where BYD is based, electric car buyers are provided subsidies of up to 120,000 yuan ($19,063, 14,428 euros) per vehicle by the government, which reduces the sticker price by 32 percent.
But Jeff Schuster, senior vice-president of global forecasting at the consulting firm LMC Automotive (formerly JD Power automotive forecasting), says operating without incentives in the US might be a good thing for BYD in the long run.
"In the short term, the US government should offer incentives to encourage people to buy EVs; but in the long term, EV companies have to be financially viable to survive."
Although BYD has been in the US for more than 10 years, its e6 is less popular than the Volt, Leaf and CODA. These cars are mostly commuter cars that can reportedly eat up 150 miles per charge.
"Maybe it is right to keep a low-profile if BYD only wants to do fleet-sales. But if it aims to enter the individual market, they still have much more to do," Tutt says.
Austin says this is because the e6 is positioned differently than its competitors.
"BYD's focus is on long range EVs that target the mass market," he says, "E6 can last 220 miles per charge, so it is not a commute car like others."
Considering all of the e6s on the roads, combined they have racked up 6 million miles, making BYD the top EV manufacturer, Austin says. "I don't think Volt or Leaf comes anywhere near that."
"For many Americans, they can charge EVs in their garage. But if cars can only be charged at home at night, it is just a commute car confined within 40 miles. BYD is designed for the long-range transportation that needs to be supported by public charging infrastructures."
But Tutt says the ability to drive longer distances could backfire for BYD given the current availability of charging stations in the US.
"From the market perspective, longer range is a huge advantage, and there is certainly a market for EVs with a range more than 200 miles; but even in California where the number of charging stations is ahead of other states, locations of charging stations are not that easy to find."
He admits that e6 is more dependent on public charging stations. Currently there are 1,541 electric charging outlets available in the state, 26 percent of the total number in the country, according to figures from the US Department of Energy.
And a longer range would result in a higher cost of the vehicle. "Once an electric car is priced over $50,000, it is hard to sell," she says.
The price of e6 hasn't been announced in the US because "it would depend on the volume of the order", as Austin says. The same model in China is priced at 369,800 yuan (about $58,000).
As a company with multiple product lines, BYD is encountering challenges never met by Volt or Leaf.
"The biggest challenge for BYD is finding local partners in the US," Austin says. "We are the only company that does battery, solar and EV. Nissan Leaf gets the battery from NEC, Toyota doesn't build batteries, either, and Ford buys their batteries from a Korean company."
Austin says when they seek partners, they want them to sell solar, LED lighting as well as the zero-emission vision.
"We don't want a batch of GM dealers, but we want them to educate the customers, like the Apple stores, on what the technology can bring to them. It is about how you live, not just how you drive."
As promising as it sounds, Schuster from LMC says the prospect of e6 is not only a matter of technology, but also a customer behavior issue.
"The public is still concerned about the battery life, known as the 'battery anxiety'. And the premium price has to be brought down before the market really takes off," he says.
He cites the forecast from LMC that EV penetration in the US can reach 1 percent by 2020, or 10 percent if hybrids are part of the same category.
"Certainly we need to publicize more to raise people's awareness, but the soaring oil price and the reduced price of EVs are really the two pushing hands," Schuster says.
"Fortunately, there is a large group of young people who learned about EVs, and are willing to buy environment-friendly cars."
The company announced recently that it will focus on fleet sales of its electric car model e6 in the US market over the next 18 months. Last year, the company delivered around 300 e6 in China, mostly to taxi companies.
BYD, which stands for Build Your Dreams, made its debut in the US in 2000 as a supplier of batteries for major cell phone makers such as Motorola and Apple.
Since BYD has only one office in the US designated for "green products", Los Angeles is serving as a research and development center for electric vehicles, solar panels, energy storage products and LED lighting systems.
Micheal Austin, vice-president of BYD America, says Los Angeles is an optimal place for BYD to develop electric vehicles and other green products. "California has plenty of renewable resources, and the state is already rewarding people buying electric cars by granting them incentives and helping them to set up charging facilities. It is a very green state that leads the country."
In 2011, California offered consumers about 20 different state incentives to ignite purchases of green vehicles. One example was a rebate of up to $2,500 for a plug-in hybrid or a zero-emissions vehicle that was approved or certified by the California Air Resources Board.
Though BYD is known as an automaker, the company has much bigger dreams. "BYD is far beyond a car manufacturer, but a zero-emissions solution provider in the US," Austin says.
Its solution is a zero-emissions ecosystem, which Austin describes as getting power from solar panels, storing it in batteries that are used to charge electric vehicles to jolt the electric transportation market.
Over the past few months, BYD has been in talks with a major US company to collaborate in such a system, with investment estimated at $50 million.
The ecosystem, to be established in California, will operate with the same principle as the Laurel Mountain wind farm, where 1.3 million batteries and electronic components use wind to power the grid.
"That will be the largest implementation in the US," Austin says, adding that the details of the project will be disclosed in March.
According to BYD's vision, burning coal is much more harmful to the environment than combustion vehicles, so swapping electric vehicles for fuel-powered cars won't be enough to solve the emission problems.
"I believe this ecosystem is more promising in the US market because it is easier for American people to understand," Austin says.
These new initiatives are also helping BYD to diversify its product line and to ease the pressure from selling electric vehicles in a highly competitive market with strong competitors such as Chevrolet Volt, Nissan Leaf and Tesla Roadster.
Eileen W. Tutt, executive director of the California Electric Transportation Coalition, says entering the local EV market is very hard because it is expensive to produce EVs, which is the reason for the high sticker prices.
"GM (General Motors) has a large fleet of products to balance the high cost of the Chevy Volt, but it is not easy for BYD to do that. And there is almost no chance that BYD is going to get the same subsidy from the government as it does in China."
In Shenzhen, where BYD is based, electric car buyers are provided subsidies of up to 120,000 yuan ($19,063, 14,428 euros) per vehicle by the government, which reduces the sticker price by 32 percent.
But Jeff Schuster, senior vice-president of global forecasting at the consulting firm LMC Automotive (formerly JD Power automotive forecasting), says operating without incentives in the US might be a good thing for BYD in the long run.
"In the short term, the US government should offer incentives to encourage people to buy EVs; but in the long term, EV companies have to be financially viable to survive."
Although BYD has been in the US for more than 10 years, its e6 is less popular than the Volt, Leaf and CODA. These cars are mostly commuter cars that can reportedly eat up 150 miles per charge.
"Maybe it is right to keep a low-profile if BYD only wants to do fleet-sales. But if it aims to enter the individual market, they still have much more to do," Tutt says.
Austin says this is because the e6 is positioned differently than its competitors.
"BYD's focus is on long range EVs that target the mass market," he says, "E6 can last 220 miles per charge, so it is not a commute car like others."
Considering all of the e6s on the roads, combined they have racked up 6 million miles, making BYD the top EV manufacturer, Austin says. "I don't think Volt or Leaf comes anywhere near that."
"For many Americans, they can charge EVs in their garage. But if cars can only be charged at home at night, it is just a commute car confined within 40 miles. BYD is designed for the long-range transportation that needs to be supported by public charging infrastructures."
But Tutt says the ability to drive longer distances could backfire for BYD given the current availability of charging stations in the US.
"From the market perspective, longer range is a huge advantage, and there is certainly a market for EVs with a range more than 200 miles; but even in California where the number of charging stations is ahead of other states, locations of charging stations are not that easy to find."
He admits that e6 is more dependent on public charging stations. Currently there are 1,541 electric charging outlets available in the state, 26 percent of the total number in the country, according to figures from the US Department of Energy.
And a longer range would result in a higher cost of the vehicle. "Once an electric car is priced over $50,000, it is hard to sell," she says.
The price of e6 hasn't been announced in the US because "it would depend on the volume of the order", as Austin says. The same model in China is priced at 369,800 yuan (about $58,000).
As a company with multiple product lines, BYD is encountering challenges never met by Volt or Leaf.
"The biggest challenge for BYD is finding local partners in the US," Austin says. "We are the only company that does battery, solar and EV. Nissan Leaf gets the battery from NEC, Toyota doesn't build batteries, either, and Ford buys their batteries from a Korean company."
Austin says when they seek partners, they want them to sell solar, LED lighting as well as the zero-emission vision.
"We don't want a batch of GM dealers, but we want them to educate the customers, like the Apple stores, on what the technology can bring to them. It is about how you live, not just how you drive."
As promising as it sounds, Schuster from LMC says the prospect of e6 is not only a matter of technology, but also a customer behavior issue.
"The public is still concerned about the battery life, known as the 'battery anxiety'. And the premium price has to be brought down before the market really takes off," he says.
He cites the forecast from LMC that EV penetration in the US can reach 1 percent by 2020, or 10 percent if hybrids are part of the same category.
"Certainly we need to publicize more to raise people's awareness, but the soaring oil price and the reduced price of EVs are really the two pushing hands," Schuster says.
"Fortunately, there is a large group of young people who learned about EVs, and are willing to buy environment-friendly cars."
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