By Ross Douglas, Founder & CEO, Autonomy
I was recently invited by China EV100 to participate in the Global Future Mobility Forum in Deqing, outside of Hangzhou. The city is famous for Alibaba being headquartered there. The Chinese government plans to make it even more famous by making it the centre of their EV and AV ambitions.
Electrification & Automation Domination
China has identified Electric and Autonomous vehicles as one of their key industries under the bold ambition of “Made in China 2025”. It is impressive to see how government, academia and industry work together in China on key industries. The event I participated in brought together members of the central committee, ministers and mayors, academics and finally tech and automotive companies.
With more than 28 million cars sold in China last year, there is a massive local market to serve but Chinese companies are looking for world dominance with EVs and vehicle automation.
On December 3, the Ministry of Industry and Information Technology (MIIT) announced the draft plan for the development of their new energy vehicles (NEV) industry from 2021-2035. The proposed plan includes:
- NEV penetration to reach 25% of total China auto market by 2025
- Penetration of Intelligent Connected Vehicle (ICV) to reach 30% of Chinese market by 2025 with high-level autonomous driving to achieve commercial application
- Average electricity consumption for battery electric vehicle (BEV) to reach 12kWh/100km (vs current 15-18kWh/100km), and average fuel consumption for plug-in hybrid electric vehicle (PHEV) to reach 2L/100km.
- The plan also states that the government will support the development of hydrogen fuel cell vehicles (HFCV), and infrastructure such as charging piles, battery swap stations and hydrogenation stations to support NEV development.
This means that China will have an annual domestic market of 7 million new-energy vehicles in 2025, giving them a good chance of putting supply chains under their control. We have seen it with battery technology where “According to an analysis by BloombergNEF, in early 2019 there were 316 gigawatt-hours (GWh) of global lithium cell manufacturing capacity,” a Forbes report noted. “China is home to 73% of this capacity, followed by the U.S., far behind in second place with 12% of global capacity.”
Leaders in AI Technology
But China’s dominance will not be limited to battery technology. They are also positioned to lead with the AI technology that will power much of tomorrow’s mobility because tech companies are integrated into mobility companies from the start. Alibaba and Tencent were early investors in Didi Chuxing who do more than 10 Billion trips per year. Cheng Wei, Founder and CEO of Didi Chuxing gave a keynote on how they reduce urban congestion by re-programing a city’s traffic lights using their traffic data and AI platforms. This would be unimaginable in Europe with it’s suspicion of large tech companies and strong data protection laws.
Can Chinese Companies Overcome Obstacles to Exporting?
European automakers have enjoyed strong exports to China with nearly 18% of European car exports, by value, going to China, according to the European Automobile Manufacturers Association. Chinese Automakers are wanting to reverse the flow and export to Europe as local sales have slowed. What is the likelihood of this?
Three Chinese companies make nearly all the free-floating electric scooters we see on the streets of Europe. Niu scooters, raised capital, built a factory and became the world’s biggest electric moped/scooter manufacturer in 5 years and with 25% growth this year the likes of Vespa will find it hard to catch up. But when it comes to e-bikes Chinese companies have been unable to enter the lucrative EU market due to strong EU anti-dumping laws.
China will make great EVs at competitive prices that Europeans and Americans will want to drive but the resistance will not come from consumers but politicians. I recently attended the Positive Economic Forum seminar in Paris where French Minister of Economy Bruno Le Maire spoke. He talked of France’s plans to be the first country in Europe to be carbon neutral and then went on to explain that there is no point in France being carbon neutral if we can import into France products with a high embedded carbon footprint. He suggested solving this by having a carbon tax at the border and the example he gave was on battery imports from Asia. I believe that the EU will position itself as the first low carbon economy and will use a carbon border tax to keep cheaper Chinese imports out. China has built its industry on coal power and now consumes more coal than the rest of the world combined. France gets 75% of its energy from nuclear, making it uniquely positioned to be the world’s first carbon neutral country.
There is another obstacle Chinese OEMS will face. Intelligent Connected Vehicles are data harvesting machines connected to the cloud via 5G. American and European regulators will be reluctant for Chinese vehicles to be integrated into their transport systems if the data is managed by Chinese AI platforms. Compatibility might be a problem too. William Li, Nio’s founder and CEO explained at the conference that “before we had global supply chains and brands but now we have local data and connectivity”. He believes that like smartphones are dependent on the local telcos so will AVs be reliant on local operators and there is a good chance that there will not be compatibility between US and Chinese systems.
What This All Means for a Warming World
I attend numerous transport and mobility conferences each year and am always surprised that key objective of participants is not to reduce CO2 emissions from transport but rather give consumers more choice, time or freedom. We have missed the Paris target of 1.5 degrees and will have warming of 3 degrees or more and sea level rises of 0.65 meters by the end of the century according to the research institutes quoted in this recent Op-Ed in the New York Times – “Climate Change is Accelerating, Things are getting worse”.
How will electric autonomous vehicles navigate their way through floods and fires? Pacific Power and Gas cut power to more than a million people in California to reduce the chance of fires this year. If this becomes an annual precaution, what chance is there that Californians will switch to EVs? The Cities network C40 puts 800 million people at risk from sea level rises and storm surges by 2050. How will hyper-connected smart cities and autonomous vehicles cope with Hurricanes more powerful than Sandy, Katrina or Maria?
The real need is for the US, China and the EU to collectively work on reducing our CO2 emissions for our mutual benefit.